€¦ · GODREJ INDUSTRIES LIMITED (Incorporated in the Republic of India with limited liability...

GODREJ INDUSTRIES LIMITED (Incorporated in the Republic of India with limited liability under the Companies Act, 1956)

Godrej Industries Limited (“GIL” or our “Company”) is issuing 27,906,950 Equity Shares of Rs. 1 each (the “Equity Shares”) at a price of Rs. 215 per Equity Share, which represents a premium of Rs. 214 per Equity Share, aggregating Rs. 6000 million (this “Issue”).

THIS OFFERING AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING MADE IN RELIANCE UPON

CHAPTER XIII-A OF THE SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000, AS AMENDED (THE

“SEBI GUIDELINES”). THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR, AND DOES

NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY

OTHER PERSON OR CLASS OF INVESTORS. Invitations, offers and sales of Equity Shares shall only be made pursuant to the Placement Document, Confirmation of Allocation Note and the Application Form. See “Issue Procedure” beginning on page 112 of this Placement Document. The distribution of this Placement Document or the disclosure of its contents to any person, other than Qualified Institutional Buyers (as defined in the SEBI Guidelines) and persons retained by them to advise them with respect to their purchase of Equity Shares, is unauthorized and prohibited. Each Qualified Institutional Buyer, by accepting delivery of this Placement Document agrees to observe the foregoing restrictions, and to make no copies of this Placement Document or any documents referred to in this Placement Document.

This Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies in India, and will not be circulated or distributed to the public in India and will not constitute a public offer in India.

Investments in equity shares involves risks and prospective investors should not invest any funds in this Issue unless they are

prepared to take the risk of losing all or part of their investment. Investors are advised to read “Risk Factors” carefully before

making an investment decision in this Issue. Each prospective investor is advised to consult its advisers about the particular

consequences to it of an investment in the Equity Shares being issued pursuant to this Placement Document.

All of our Company’s outstanding Equity Shares are listed on the Bombay Stock Exchange Limited (the “BSE”) and the National Stock Exchange of India Limited (the “NSE”, and together with the BSE, the “Indian Stock Exchanges”). The Company has undertaken to apply to have the Equity Shares to be issued in connection with this Issue approved for listing on the Indian Stock Exchanges. The closing price of our outstanding Equity Shares on the BSE and on the NSE on November 15, 2007 was Rs. 253.25 and Rs. 253.70 per Equity Share, respectively. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or the Equity Shares.

YOU MAY NOT AND ARE NOT AUTHORIZED TO (1) DELIVER THE PLACEMENT DOCUMENT TO ANY OTHER PERSON OR (2) REPRODUCE SUCH PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SEBI GUIDELINES OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.

A copy of the Preliminary Placement Document has been delivered to the Stock Exchanges. A copy of the Placement Document will be filed with the Stock Exchanges and will also be delivered to the Securities and Exchange Board of India (the “SEBI”) for record purposes.

THIS PLACEMENT DOCUMENT HAS BEEN PREPARED BY THE COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE PROPOSED ISSUE OF THE EQUITY SHARES DESCRIBED IN THIS PLACEMENT DOCUMENT.

The Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’) and, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as such term is defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons reasonably believed to be qualified institutional buyers (as such term is defined in Rule 144A under the Securities Act) pursuant to Section 4(2) of the Securities Act and (b) outside the United States in reliance on Regulation S under the Securities Act. The Equity Shares offered hereby are not transferable except in accordance with the restrictions described under “Placement”. The Equity Shares have not been approved or disapproved by the SEBI or any other regulatory authority.

This Placement Document is dated November 15, 2007

Global Coordinator and Book Runner

PLACEMENT DOCUMENT Not for Circulation

Serial Number [●]

KOTAK MAHINDRA CAPITAL COMPANY LIMITED

3rd Floor, Bakhtawar, 229, Nariman Point, Mumbai 400 021, India

(i)

TABLE OF CONTENTS

NOTICE TO INVESTORS..................................................................................................................................... 1

PRESENTATION OF FINANCIAL DATA......................................................................................................... 6

FORWARD-LOOKING STATEMENTS............................................................................................................. 7

ENFORCEMENT OF CIVIL LIABILITIES....................................................................................................... 9

DEFINITIONS AND ABBREVIATIONS .......................................................................................................... 10

SUMMARY............................................................................................................................................................. 13

SUMMARY OF THE ISSUE................................................................................................................................ 16

RISK FACTORS.................................................................................................................................................... 18

MARKET PRICE INFORMATION................................................................................................................... 39

USE OF PROCEEDS............................................................................................................................................. 41

CAPITALISATION AND INDEBTEDNESS..................................................................................................... 42

DIVIDEND POLICY............................................................................................................................................. 45

SELECTED HISTORICAL FINANCIAL INFORMATION .......................................................................... 46

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS ....................................................................................................................................................... 50

INDUSTRY OVERVIEW..................................................................................................................................... 67

OUR BUSINESS..................................................................................................................................................... 79

REGULATIONS AND POLICIES...................................................................................................................... 99

BOARD OF DIRECTORS AND SENIOR MANAGEMENT........................................................................103

ORGANISATIONAL STRUCTURE AND PRINCIPAL SHAREHOLDERS............................................109

ISSUE PROCEDURE..........................................................................................................................................112

PLACEMENT ......................................................................................................................................................118

SELLING RESTRICTIONS ..............................................................................................................................119

TRANSFER RESTRICTIONS...........................................................................................................................124

INDIAN SECURITIES MARKET ....................................................................................................................126

DESCRIPTION OF THE SHARES ..................................................................................................................132

TAXATION ..........................................................................................................................................................138

LEGAL PROCEEDINGS ...................................................................................................................................145

INDEPENDENT ACCOUNTANTS ..................................................................................................................149

GENERAL INFORMATION.............................................................................................................................150

AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS..................................................................151

FINANCIAL STATEMENTS ............................................................................................................................153

DECLARATION..................................................................................................................................................198

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NOTICE TO INVESTORS

We accept full responsibility for the information contained in this Placement Document and to the best of our

knowledge and belief, having made all reasonable enquiries, confirm that this Placement Document contains

all information with respect to our Company and the Equity Shares, which is material in the context of this

Issue. The statements contained in this Placement Document relating to our Company and the Equity Shares

are, in every material respect, true and accurate and not misleading, the opinions and intentions expressed in

this Placement Document with regard to our Company and the Equity Shares are honestly held, have been

reached after considering all relevant circumstances, are based on information presently available to our

Company and are based on reasonable assumptions. There are no other facts in relation to our Company and

the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this

Placement Document misleading in any material respect. Further, all reasonable enquiries have been made by

us to ascertain such facts and to verify the accuracy of all such information and statements. The Global

Coordinator and Book Runner has not separately verified the information contained in this Placement

Document (financial, legal or otherwise). Accordingly, neither the Global Coordinator and Book Runner nor

any of their respective members, employees, counsels, officers, directors, representatives, agents or affiliates,

make any express or implied representation, warranty or undertaking, and no responsibility or liability is

accepted, by the Global Coordinator and Book Runner, as to the accuracy or completeness of the information

contained in this Placement Document or any other information supplied in connection with the Equity Shares.

Each person receiving this Placement Document acknowledges that such person has not relied on the Global

Coordinator and Book Runner, nor on any person affiliated with them, in connection with its investigation of

the accuracy of such information or its investment decision, and each such person must rely on its own

examination of our Company and the merits and risks involved in investing in the Equity Shares.

No person is authorized to give any information or to make any representation not contained in this Placement

Document and any information or representation not so contained must not be relied upon as having been

authorized by or on behalf of our Company or the Global Coordinator and Book Runner. The delivery of this

Placement Document at any time does not imply that the information contained in it is correct as at any time

subsequent to its date.

The Equity Shares have not been approved, disapproved or recommended by the U.S. Securities and

Exchange Commission, any state securities commission in the United States or the securities commission

of any non-U.S. jurisdiction or any other U.S. or non-U.S. regulatory authority. None of these

authorities have passed on or endorsed the merits of this issue or the accuracy or adequacy of this

Placement Document. Any representation to the contrary is a criminal offence in the United States and

may be a criminal offence in other jurisdictions.

The distribution of this Placement Document and the issue of the Equity Shares in certain jurisdictions may be

restricted by law. As such, this Placement Document does not constitute, and may not be used for or in

connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not

authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action

has been taken by our Company or the Global Coordinator and Book Runner to the Issue which would permit

such issue of Equity Shares or distribution of this Placement Document in any jurisdiction, other than India,

where action for that purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly

or indirectly, and neither this Placement Document nor any issue material in connection with the Equity

Shares may be distributed or published in or from any country or jurisdiction except in compliance with any

applicable rules and regulations of any such country or jurisdiction. See “Placement”. In making an investment decision, investors must rely on their own examination of the Company and the terms of this Issue, including the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, business, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this offering. In addition, neither the Company nor the Global Coordinator and Book Runner is making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or regulations. The information on our Company’s website, www.godrejinds.com or on the websites of the Global

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Coordinator and Book Runner, does not constitute nor form part of this Placement Document. This Placement Document contains summaries of certain terms of certain documents, but reference is made to the actual documents, copies of which will be made available upon request during the offering period for physical inspection at the Registered Office of the Company located at Mumbai, India, subject to applicable confidentiality restrictions. All such summaries are qualified in their entirety by this reference.

REPRESENTATIONS BY INVESTORS

By purchasing any Equity Shares under this Issue, you are deemed to have acknowledged and agreed as

follows:

• you are a QIB and undertake to acquire, hold, manage or dispose of any Equity Shares that are allocated to you for the purposes of your business in accordance with the SEBI Guidelines;

• you are aware that the Equity Shares have not been and will not be registered under the SEBI regulations or under any other law in force in India; the Placement Document has not been verified or affirmed by the SEBI or the Indian Stock Exchanges and will not be filed with the Registrar of Companies. The Placement Document will be filed with the Indian Stock Exchanges and has been displayed on the websites of our Company and the Indian Stock Exchanges;

• you are entitled to subscribe for and/or purchase the Equity Shares under the laws of all relevant jurisdictions which apply to you and that you have fully observed such laws and obtained all such governmental and other guarantees and other consents in either case which may be required thereunder and complied with all necessary formalities;

• you are entitled to acquire the Equity Shares under the laws of all relevant jurisdictions and that you have all necessary capacity and have obtained all necessary consents and authorities to enable you to commit to this participation in this Issue and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorities to agree to the terms set out or referred to in the Placement Document) and will honor such obligations;

• the Global Coordinator and Book Runner is not making any recommendations to you, advising you regarding the suitability of any transactions it may enter into in connection with this Issue and that participation in this Issue is on the basis that you are not and will not be a client of the Global Coordinator and Book Runner and that the Global Coordinator and Book Runner has duties or responsibilities to you for providing the protections afforded to their clients or customers or for providing advice in relation to this Issue;

• you are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to the general public and the allotment of the same shall be on a discretionary basis;

• you shall be provided a serially numbered copy of the Placement Document and shall have read the Placement Document in its entirety;

• that in making your investment decision, (i) you have relied on your own examination of our Company and the terms of this Issue, including the merits and risks involved, (ii) you have made your own assessment of our Company, the Equity Shares and the terms of this Issue based on such information as is publicly available, (iii) you have consulted your own independent counsel and advisors or otherwise have satisfied yourself concerning, without limitation, the effects of local laws, and (iv) you have received all information that you believe is necessary or appropriate in order to make an investment decision in respect of our Company and the Equity Shares;

• you have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Equity Shares and you and any accounts for which you are subscribing the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to the Global Coordinator and Book Runner, our Company and/or the officers of our Company for all or part of any such loss or losses that may be

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suffered, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares;

• that where you are acquiring the Equity Shares for one or more managed accounts, you represent and warrant that you are authorized in writing by each such managed account to acquire the Equity Shares for each managed account;

• you are not a person related to the Promoters of our Company, either directly or indirectly and your bid does not, directly or indirectly, represent any Promoter or Promoter Group of our Company;

• you have no rights under a shareholders agreement or voting agreement with the Promoters or persons related to the promoters, no veto rights or right to appoint any nominee director on the Board of our Company other than that acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoters;

• you will have no right to withdraw your bid after the bid closing date;

• the Equity Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the equity shares including the right to receive all dividends and other distributions declared, made or paid in respect of equity shares after the date of issue of the Equity Shares;

• if you are allotted Equity Shares pursuant to this Issue, you shall for a period of one year from allotment, sell the Equity Shares so allotted only on the floor of the Indian Stock Exchanges;

• you are eligible to bid and hold Equity Shares so allotted and together with any equity shares held by you prior to this Issue; you further confirm that your holding upon the issue of any of the Equity Shares shall not exceed the level permissible as per any applicable regulations;

• the bids made by you would not eventually result in triggering a tender offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the “Takeover Code”);

• to the best of your knowledge and belief; together with other QIBs in this Issue that belong to the same group or are under common control as you, the allotment under the present issue shall not exceed 50% of the size of this Issue; for the purposes of this statement:

a. the expression ‘belongs to the same group’ shall derive meaning from the concept of ‘companies under the same group’ as provided in sub-section (11) of Section 372 of the Companies Act;

b. “Control” shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of the Takeover Code;

• you shall not undertake any trade in the Equity Shares credited to your depository participant account until such time that the final listing and trading approval for the Equity Shares is issued by the Indian Stock Exchanges;

• you are aware that application has been made to the Indian Stock Exchanges for in-principle approval for listing and admission of the Equity Shares to trading on the Indian Stock Exchanges’ market for listed securities;

• you are aware and understand that the Global Coordinator and Book Runner will have entered into an agreement with our Company whereby the Global Coordinator and Book Runner have, subject to the satisfaction of certain conditions set out therein, undertaken to use its reasonable endeavors as agent of our Company to seek to procure purchasers for the Equity Shares;

• that the content of the Placement Document is exclusively the responsibility of our Company and the Global Coordinator and Book Runner and any person acting on their behalf shall not have any

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liability for any information, representation or statement contained in the Placement Document or any information previously published by or on behalf of our Company and will not be liable for your decision to participate in this Issue based on any information, representation or statement contained in the Placement Document or otherwise; by accepting a participation in this Issue, you agree to the same and confirm that you have neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Global Coordinator and Book Runner or our Company or any other person and neither the Global Coordinator and Book Runner nor our Company and any other person will be liable for your decision to participate in this Issue based on any other information, representation, warranty or statement which you may have obtained or received;

• that the only information you are entitled to rely on and on which you have relied in committing yourself to acquire the Equity Shares is contained in the Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares and that you have neither received nor relied on any other information given or representations, warranties or statements made by the Global Coordinator and Book Runner nor our Company and neither the Global Coordinator and Book Runner nor our Company will be liable for your decision to accept an invitation to participate in this Issue based on any other information, representation, warranty or statement;

• all statements other than statements of historical fact included in the Placement Document, including, without limitation, those regarding our Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our Company's products), are forward-looking statements; such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements; such forward-looking statements are based on numerous assumptions regarding our Company's present and future business strategies and the environment in which our Company will operate in the future; you should not place undue reliance on forward-looking statements, which speak only as at the date of the Placement Document; the Company assumes no responsibility to update any of the forward-looking statements contained in the Placement Document;

• that you are eligible to invest in India under applicable law, including the Foreign Exchange Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended from time to time, and have not been prohibited by the SEBI from buying, selling or dealing in securities;

• you agree to indemnify and hold our Company and the Global Coordinator and Book Runner harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of your representations and warranties as contained herein; you agree that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares including by or on behalf of the managed accounts; and

• that our Company, the Global Coordinator and Book Runner and others will rely upon the truth and accuracy of your foregoing representations, warranties, acknowledgements and undertakings, each of which is given to the Global Coordinator and Book Runner on your own behalf and on behalf of our Company, and each of which is irrevocable.

P-NOTES

Under Regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors) Regulation, 1995, as amended, foreign institutional investors as defined under SEBI Guidelines, or their sub-accounts (together referred to as “FIIs”), including FII affiliates of the Global Coordinator and Book Runner may issue, deal in or hold, off-shore derivative instruments such as participatory notes, equity linked notes or any other similar instruments against Equity Shares allocated in this Issue (all such off-shore derivative instruments referred to herein as “P-Notes”), for which they may receive compensation from purchasers of such instruments. P- Notes have not been and are not being offered or sold pursuant to this Placement Document. Neither this document nor the Placement Document contains or will contain any information concerning P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information regarding any risk factors relating thereto.

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Any P-Notes that may be issued are not securities of the Company and do not constitute any obligations of, claim on, or interests in the Company. The Company has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any P-Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to the Company. The Company and its affiliates do not make any recommendation as to any investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes.

Any P-Notes that may be issued are not securities of the Global Coordinator and Book Runner and do not constitute any obligations of, or claim on the Global Coordinator and Book Runner.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosure as to the issuer(s) of any P-Notes and the terms and conditions of any such P-Notes from the issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult with their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.

NOTICE FOR NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A

LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED

STATUTES (“RSA 421-B”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A

SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW

HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE

THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.

NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS

AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE

HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED

OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO

MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT

ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

As required, a copy of the Preliminary Placement Document has been submitted to the Stock Exchanges. The Stock Exchanges do not in any manner:

• warrant, certify or endorse the correctness or completeness of any of the contents of the Preliminary Placement Document;

• warrant that our Company’s Equity Shares will be listed or will continue to be listed on the Stock Exchange; or

• take any responsibility for the financial or other soundness of our Company, its Promoters, its management or any scheme or project of our Company;

and it should not for any reason be deemed or construed to mean that the Preliminary Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire any securities of our Company may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription or acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.

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PRESENTATION OF FINANCIAL DATA

The financial statements included in this Placement Document are in accordance with Indian GAAP. Indian GAAP differs significantly in certain respects from IFRS and U.S. GAAP. We do not provide a reconciliation of our financial statements to IFRS or U.S. GAAP financial statements or a summary of the principal differences between Indian GAAP, IFRS and U.S. GAAP relevant to our business. See “Risk Factors – Risks Associated with India and this Issue – Significant differences exist between Indian GAAP and other accounting principles with which investors may be more familiar”. All discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding off.

In this Placement Document, unless otherwise indicated or the context otherwise requires, all references to “Godrej Industries Limited,” “GIL”, “our Company” are to Godrej Industries Limited, references to “we,” “our,” “us” are to Godrej Industries Limited and its subsidiaries, associates and joint ventures on a consolidated basis and references to “you” are to the prospective investors in the Equity Shares. References in this Placement Document to “India” are to the Republic of India and the “Government” are to the Governments of India, central or state, as applicable.

INDUSTRY AND MARKET DATA

Information regarding market position, growth rates and other industry data pertaining to our business contained in this Placement Document consists of estimates based on data reports compiled by professional organizations and analysts, data from other external sources and our knowledge of markets in which we compete. The statistical information included in this Placement Document has been reproduced from various trade, industry and government publications and websites. This data is subject to change and cannot be verified with complete certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. In many cases, there is no readily available external information (whether from trade or industry associations, government bodies or other organizations) to validate market-related analyses and estimates, so we rely on internally developed estimates. While we have compiled, extracted and reproduced this data from external sources, including third parties, trade, industry or general publications, we do not accept responsibility for accurately reproducing such data. However, neither we nor the Global Coordinator and Book Runner have independently verified this data and neither we nor the Global Coordinator and Book Runner make any representation regarding the accuracy of such data. Similarly, while we believe our internal estimates to be reasonable, such estimates have not been verified by any independent sources and neither we nor the Global Coordinator and Book Runner can assure potential investors as to their accuracy.

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FORWARD-LOOKING STATEMENTS

All statements contained in this Placement Document that are not statements of historical fact constitute “forward-looking statements.” Investors can generally identify forward-looking statements by terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “objective”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would”, or other words or phrases of similar import. All statements regarding our expected financial condition and results of operations and business plans and prospects are forward-looking statements. These forward-looking statements include statements as to our business strategy, our revenue and profitability, planned projects and other matters discussed in this Placement Document that are not historical facts. These forward-looking statements and any other projections contained in this Placement Document (whether made by us or any third party) are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others:

• General political, economic and business conditions in India and other countries;

• Our ability to successfully implement our strategy, our growth and expansion plans and technological changes;

• Costs and availability of raw material and fuel;

• Compliance with environmental, health and safety laws and regulations;

• Cost overruns, delays and disruptions in real estate projects;

• Performance of sectors in which we operate in and outside India;

• Potential mergers, acquisitions or joint ventures involving us;

• Performance of the Indian debt and equity markets;

• Occurrence of natural calamities or natural disasters affecting the areas in which we have operations;

• Changes in laws and regulations that apply to companies in India;

• Changes in the foreign exchange control regulations in India. For a further discussion of the factors that could cause actual results to differ, see “Risk Factors”. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results, performance or achievements to differ materially from those contemplated by the relevant statement. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Industry” and “Business”. The forward-looking statements contained in this Placement Document are based on the beliefs of management, as well as the assumptions made by and information currently available to management. Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time, we cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties materialize, or if any of our underlying assumptions prove to be incorrect, our actual results of operations or financial condition could differ materially from that described herein as anticipated, believed,

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estimated or expected. All subsequent forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.

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ENFORCEMENT OF CIVIL LIABILITIES

GIL is a limited liability company incorporated under the laws of India. All or substantially all of GIL’s Directors and senior management are residents of India and all or substantially all of its assets and the assets of GIL’s Directors and senior management are located in India. As a result, it may not be possible for investors to effect service of process upon GIL or such persons outside India, or to enforce judgments obtained against such parties outside India. Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of Civil Procedure, 1908, of India (“Civil Code”) on a statutory basis. Section 13 of the Civil Code provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except:

• where the judgment has not been pronounced by a court of competent jurisdiction;

• where the judgment has not been given on the merits of the case;

• where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases to which such law is applicable;

• where the proceedings in which the judgment was obtained were opposed to natural justice;

• where the judgment has been obtained by fraud; and

• where the judgment sustains a claim founded on a breach of any law then in force in India. Under the Civil Code, a court in India shall, upon the production of any document purporting to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court, within the meaning of such Section, in any country or territory outside India which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being of the same nature as amounts payable in respect of taxes, other charges of a like nature or of a fine or other penalties. The United Kingdom, Singapore and Hong Kong have been declared by the Central Government to be reciprocating territories for the purposes of Section 44A, but the United States has not been so declared. A judgment of a court of a country, which is not a reciprocating territory, may be enforced only by a suit upon the judgment and not by proceedings in execution. Such a suit has to be filed in India within two years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Execution of a judgment or repatriation outside India of any amounts received is subject to the approval of the RBI. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action was brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if that court were of the view that the amount of damages awarded was excessive or inconsistent with public policy. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any amount recovered pursuant to the execution of such a judgment.

10

DEFINITIONS AND ABBREVIATIONS

Definitions of certain capitalized terms used in this Placement Document.

Term Description

“GIL” or “our Company”

Godrej Industries Limited, a public limited company incorporated under the Companies Act, 1956, with its registered office at Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079

“our” or “we” or “us” Godrej Industries Limited and its subsidiaries, associates and joint ventures on a consolidated basis

AGM Annual General Meeting Allocated, Allocation The determination of QIBs for the purposes of allocation of Equity Shares, done in

consultation with the Global Coordinator and Book Runner, and in compliance with Chapter XIII-A of the SEBI Guidelines

Allotment

Unless the context otherwise requires, the allotment of Equity Shares pursuant to the Issue

Articles/Articles of Association

Articles of Association of our Company

AS Accounting Standards issued by the Institute of Chartered Accountants of India Auditors The statutory auditors of the Company, Kalyaniwalla & Mistry, Chartered

Accountants. Bid An indication of QIBs’ interest, including all revisions and modifications of

interest, as provided in the Bid cum Application Form to subscribe for Equity Shares of our Company under this Issue

Bid Closing Date November 15, 2007

Bid Form The form pursuant to which a QIB shall submit a Bid Bid Opening Date November 15, 2007 Board of Directors/Board

The board of directors of our Company or a committee constituted thereof.

BOLT BSE On-Line Trading BSE Bombay Stock Exchange Limited earlier known as The Stock Exchange, Mumbai CAN Confirmation of Allocation Note CAN/Confirmation of Allocation Note

Note or advice or intimation to QIBs for Allotment of Equity Shares after discovery of the Issue Price

CDSL Central Depository Services Limited CEO Chief Executive Officer CFO Chief Financial Officer

Companies Act The Companies Act, 1956 as amended from time to time Cut-off Price The Issue Price which shall be finalized by the Company in consultation with the

Global Coordinator and Book Runner Depositories Act The Depositories Act, 1996, as amended from time to time Depository A depository registered with SEBI under the SEBI (Depositories and Participant)

Regulations, 1996, as amended from time to time Depository Participant A depository participant as defined under the Depositories Act Developable Area Total area which we develop in each property, and includes carpet area, common

area, service and storage area, as well as other open area, including car parking Director(s) Director(s) of our Company, unless otherwise specified DP Depository Participant EGM Extra-Ordinary General Meeting EPS Earnings Per Share

Equity Shares Equity shares of our Company of face value of Rs. 1 each ESOP Employee Stock Option Plan FDI Foreign Direct Investment FEMA The Foreign Exchange Management Act, 1999, as amended from time to time, and

the regulations framed thereunder

11

Term Description

FII Foreign Institutional Investor (as defined under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995) registered with SEBI under applicable laws in India

FIPB Foreign Investment Promotion Board, Ministry of Finance, GoI Floor Price Rs. 197 which has been calculated in accordance with clause 13A.3 of the SEBI

Guidelines FVCI Foreign Venture Capital Investors (as defined under the Securities and Exchange

Board of India (Foreign Venture Capital Investors) Regulations, 2000) registered with SEBI under applicable laws in India

GAAP Generally Accepted Accounting Principles GGICL Gujarat-Godrej Innovative Chemicals Limited Global Coordinator and Book Runner

Kotak Mahindra Capital Company Limited

GoI Government of India HUF Hindu Undivided Family ICAI Institute of Chartered Accountants of India I T Act The Income Tax Act, 1961, as amended from time to time

IFRS International Financial Reporting Standards ISO International Standards Organisation Issue The offer and sale of Equity Shares to Qualified Institutional Buyers, pursuant to

Chapter XIII-A of the SEBI Guidelines. The Equity Shares are being offered and sold (a) in the United States only to persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act) pursuant to Section 4(2) of the Securities Act and (b) outside the United States in reliance on Regulation S

Issue Price A price per Equity Share of Rs. 215

Issue Size The Issue of 27,906,950 Equity Shares aggregating to Rs. 6000 million IT Information Technology Land Reserves The total amount of saleable area expressed in acres or million square feet to be

developed through ongoing and forthcoming projects by Godrej Properties Limited MAT Minimum Alternate Tax Memorandum/ Memorandum of Association

The Memorandum of Association of our Company

MF Mutual Funds

MoU Memorandum of Understanding Mutual Fund A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations,

1996

NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited p.a Per annum PAN Permanent Account Number under the I T Act Pay-in Date Bid/Issue Closing Date or the last date specified in the CAN sent to the Bidders, as

applicable Placement Document This Placement Document dated November 15, 2007, issued in accordance with

Chapter XIII-A of the SEBI Guidelines Promoter and Protomer Group

As provided in the table on shareholding of persons belonging to the category “Promoter and promoter group” on page 110.

QIBs or Qualified Institutional Buyers

A Qualified Institutional Buyer as defined under clause 2.2.2B (v) of the SEBI Guidelines or if the context may require a qualified institutional buyer as defined in Rule 144A under the Securities Act

RBI Reserve Bank of India Registrar of Companies/RoC

Registrar of Companies, Mumbai, Maharashtra

Regulation S Regulation S under the Securities Act Relevant Date

August 11, 2007 (i.e., the date which is thirty days prior to the date on which the result of the postal ballot was announced by the Chairman, in terms of sub-section

12

Term Description

(1A) of Section 81 of the Companies Act) Rs./Rupees/INR Indian Rupees Saleable Area That part of the Developable Area relating to our economic interests SEBI Securities and Exchange Board of India SEBI Act The Securities and Exchange Board of India Act, 1992, as amended from time to

time SEBI Guidelines

The SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI, as amended, including instructions and clarifications issued by SEBI from time to time

Securities Act U.S. Securities Act of 1933, as amended Stock Exchanges BSE and NSE Takeover Code SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

13

SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and the financial statements that appear elsewhere in this Placement Document. In addition, you should carefully consider the risks discussed under “Risk Factors” for an understanding of the risks associated with the purchase of our Equity Shares. Overview

We are one of the leading business groups in India with a market capitalisation of Rs. 61,580.77million as of October 31, 2007, operating in a diverse range of businesses, such as the production and sale of oleochemicals and surfactants, animal feeds, confectionery products, beverages and foods, household insecticides as well as in the business of developing property. We have been listed on the BSE since 1990 and the NSE since 1995. We are the listed flagship company of the Godrej group of companies, which is one of the oldest prominent corporate houses in India. The Godrej group was established in 1897 and has since grown into a conglomerate with combined turnover of Rs. 75 billion. The Godrej group was awarded the “Corporate Citizen of the Year” award by the Economic Times in 2003. Additionally, according to a survey undertaken by the Boston Consultancy Group published by Businessworld in June 2007, we ranked fourth highest in India for delivering total shareholder returns of 146% per annum for the period 2002-2007. Our total income was Rs. 7,061.30 million for the three months ended June 30, 2007 and Rs. 24,656.97 million for the fiscal year 2007, as compared to Rs. 21,061.69 million for the fiscal year 2006, representing an increase of 17.07%. Our net profit was Rs. 312.06 million for the three months ended June 30, 2007 and Rs. 588.81 million for the fiscal year 2007, as compared to Rs. 489.98 million for the fiscal year 2006, representing an increase of 20.17%. We currently operate in diversified business segments on our own and through our subsidiaries, joint ventures and associates including: � Chemicals business, which includes the production and sale of oleochemicals and surfactants, such as

fatty acids, fatty alcohols, refined glycerine, alpha olefin sulphonates, sodium lauryl sulphate and sodium lauryl ether sulphate.

� Estate and property development business, which includes the development and sale of real estate and

leasing and leave and licensing (short term rentals) of properties. � Animal feeds business, which includes the production and sale of compound feed for cattle, poultry,

shrimp and fish. � Beverages and foods business, which includes the business of processing, production and sale of fruit

pulp, tomato puree, fruit juices, nectars and drinks, other beverages and confectionary products and sale of refined vegetable oils and vanaspati (hydrogenated vegetable oil).

� Vegetable oils business, which includes the processing and bulk trading of refined vegetable oils and

vanaspati. � Household insecticides services business, which includes the production and sale of household

insecticides and commercial pest management services. � Finance and investments business, which includes our investments in associates and other companies

such as Godrej Consumer Products Limited, CBaySystems Holdings Limited, Avestha Gengraine Technologies Limited and Verseon LLC.

� Other businesses, which includes (a) our rural based business comprising rural retailing, integrated

poultry business, oil palm plantation, agricultural inputs and tissue culture and (b) our other businesses comprising international vegetable oil trading, the distribution of medical diagnostics equipment, the generation of wind energy, the business process outsourcing business for healthcare, finance and accounting sectors and urban retailing.

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Our Strengths

We believe that the following strengths enable us to compete effectively: � Established brand name and market leader in many of our businesses; � A diversified business model; � Ability to identify new business opportunities; � Widespread sales and distribution networks; and � Qualified and skilled employee base and experienced management team.

Our Business Strategies

We intend to pursue the following principal strategies to exploit our competitive strengths and grow our business:

� Continue to operate across diversified businesses; � Focus on the estate and property development business; � Expand current product and service offerings in existing and new businesses; � Continue to upgrade, modernise and optimise our plants and facilities; � Enhance and leverage the Godrej brand; and � Focus on growing rural business opportunities.

Recent Developments

The selected standalone interim financial information presented below is unaudited and is prepared in accordance with Indian GAAP.

(Rs. in millions, except share and per share data) Half Year

Ended

September 30

(Unaudited)

Half Year

ended

September 30

(Unaudited)

2007 2006

2007 2006

3,712.8 307.2

3,670.3 304.7

Sales / Income from operations (Including Excise Duty) Less: Excise Duty Sales / Income from operations (net of Excise Duty) Other Income

3,405.6 117.8

3,365.6 396.7

Total Income 3,523.4 3,762.3

(3.2)

(177.8)

1,952.4 1,901.5

35.1 515.0

372.6 317.3

753.4 702.3

Expenditure

a) (Increase) /decrease in stock in trade & work in progress b) Consumption of raw material c) Purchase of traded goods d) Employees cost e) Other Expenses Total Expenditure 3,110.3 3,258.3

Segment Revenue

Chemicals Veg Oils Estate Finance & Investments Others Total Less: Inter Segment revenue Total

3,193.3 31.7 146.7 476.7 67.6

39,16.0 -

3,916.0

2,707.6 467.0 121.5 470.2 86.0

3,852.3 -

3,852.3

413.1

504.0

124.5 117.8

151.8 186.1

Profit / (loss) before Interest,

Depreciation and Tax

Depreciation Interest and Financial charges (net) Exceptional Items (Income) / Expense1 (392.6) (90.0)

Segment Results (Profit

before Interest & tax)

Chemicals Veg Oils Estate

261.4 (24.7) 107.5

26.7 (26.8) 81.3

15

Half Year

Ended

September 30

(Unaudited)

Half Year

ended

September 30

(Unaudited)

2007 2006

2007 2006

Profit / (loss) from Ordinary Activities

Before Taxation

Tax Expense - Current Tax - MAT Credit Entitlement - Fringe Benefit Tax - Deferred Tax Profit / (loss) from Ordinary Activities

After Tax

Prior Period and Extraordinary Items (net of tax expense) Net Profit for the Period

529.4

53.5 (53.5) 2.9

(18.6)

545.1

5.7

550.8

290.1

- -

2.7 5.2

282.2

9.4

291.6

Finance & Investments Others Profit Before Interest

and Tax

Less: Interest (Net) Less: Other un-allocable expenses (net) Profit Before Tax

476.7 23.1

844.0

151.8

162.8 529.4

470.2 34.2

585.6

186.1

109.4 290.1

Paid-up Equity Share Capital (Face value-Rs.1 per share) Reserves excluding revaluation reserves Basic & Diluted EPS (Rs.) excluding extraordinary items Basic & Diluted EPS (Rs.) including extraordinary items Public shareholding Number of shares Percentage of shareholding

291.9

1.87

1.89

40,617,478 13.92

291.9

0.97

1.00

33,846,972 11.60

Segment Capital

Employed

Chemicals Veg Oils Estate Finance & Investments Others Total

3,178.9 33.7 154.2

5,340.9 304.9

9,012.6

2,962.7 8.8

237.1 5,328.0 324.1

8,860.7

1 Exceptional items include the recovery of loans written off earlier, the write back of provision for depletion of investments and profit on sale of long term investments (which includes the profits on the buy back of shares by a subsidiary company.)

Indebtedness

As of September 30, 2007, our Company's and Godrej Properties Limited's total indebtedness was Rs. 3984.14 million and Rs. 3488 million, respectively. Investments Our Company has obtained an approval from its shareholders on November 7, 2007 to further invest in Godrej Hershey Foods and Beverages Limited, under section 372A of the Companies Act, 1956, upto Rs. 520 million. Our Company has sought approval of its shareholders, which is awaited, to further invest in Godrej Consumer Products Limited, under section 372A of the Companies Act, 1956, upto Rs. 1000 million. Our Offices

Our registered office is located at Pirojshanagar, Eastern Express Highway, Vikhroli (East) Mumbai 400 079. Our manufacturing units are located at Pirojshanagar, Eastern Express Highway, Vikhroli (East) Mumbai 400 079, Burjorjinagar, Plot No.3, Village Kanerao, Valia, Bharuch, Gujarat 393 135, and L.M Nadkarni Marg, Wadala (East) Mumbai 400 037.

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SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information appearing elsewhere in this Placement Document, including under “Issue Procedure”, “Description of the Shares” and “Placement”.

Issuer Godrej Industries Limited

Issue Size 27,906,950 Equity Shares of the Company of Rs. 1 each

Issue Price Rs. 215 per Equity Share The Floor Price of the Issue on the basis of clause 13A.3 of Chapter XIII-A of the SEBI Guidelines is Rs. 197 per share.

Eligible Investors QIBs

Equity Shares issued and

outstanding immediately

prior to and after the Issue

291,851,652 Equity Shares of Rs. 1 each issued and outstanding immediately prior to the Issue. Immediately after the Issue, 319,758,602 Equity Shares will be issued and outstanding.

Listing The Company has made applications to each of the Stock Exchanges to obtain in-principle approval for the listing of the Equity Shares on the Stock Exchanges.

Transferability Restriction The Equity Shares being allotted pursuant to this Issue shall not be

sold for a period of one year from the date of Allotment except on a

recognized stock exchange in India. See “Placement” for other

transfer restrictions relating to offers and sales of the Equity Shares.

Closing The allotment of the Equity Shares offered pursuant to this Issue is expected to be made on or about November 20, 2007 (the “Closing Date”).

Ranking The Equity Shares being issued shall be subject to the provisions of our Company’s Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by our Company after the Closing Date, in compliance with the Companies Act. Shareholders may attend and vote in shareholders’ meetings on the basis of one vote for every Equity Share held.

Use of Proceeds The net proceeds of this Issue (after deduction of fees and commissions) are expected to be approximately Rs. 5894 million. We intend to use the net proceeds received from the Issue for strategic initiatives, such as strategic relationships and investments, improving our leveraging strength by repayment of loans, for general corporate purposes including acquisitions, and for capital expenditure and working capital. See “Use of Proceeds”.

Lock-up

The Company and the Promoters and certain members of the Promoter Group have undertaken that they will not for a period of 180 days from the date of the Placement Document, without the prior written consent of the Global Coordinator and Bookrunner directly or indirectly, (i) offer, pledge, issue, contract to issue, grant any option, right or warrant for the subscription to, or otherwise dispose of or transfer, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position with respect to, any Equity Shares or securities convertible into or

17

exchangeable or exercisable for any Equity Shares (including any warrants or other rights to subscribe for Equity Shares), whether now owned or hereinafter acquired, (ii) enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Equity Shares, whether any such aforementioned transaction is to be settled by allotment of the Equity Shares or such other securities, in cash or otherwise, or (iii) publicly disclose the intention to make any such offer, issuance and allotment, or to enter into any such transaction, swap, hedge or other arrangement. The foregoing sentence shall not apply to: (I) any grant by us of an option, right or warrant to purchase or acquire Equity Shares in our Company to our employees as part of the employee stock option plan in existence as of the date of the Placement Document, (II) inter-se transfers of the Equity Shares between the Promoters and the Promoter Group.

Risk Factors Prior to making an investment decision in this Issue, see “Risk Factors”.

Security Codes:

ISIN

INE233A01035

BSE Code

500164

NSE Code

GODREJIND

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RISK FACTORS

An investment in our Equity Shares involves a high degree of risk. You should carefully consider all of the information in this Placement Document, including the risks and uncertainties described below, before making an investment in our Equity Shares. Any potential investor in, and purchaser of, the Equity Shares should also pay particular attention to the fact that we are governed in India by a legal and regulatory environment which in some material respects may be different from that which prevails in the U.S. and other countries. If any of the following risks materialise, our business, financial condition and results of operations could suffer, the trading price of our Equity Shares could decline and you may lose all or part of your investment in the Equity Shares.

Risks Relating to Our Businesses

We may have difficulty in managing our future growth and profitability as a result of our diversified

businesses.

We operate in diversified business segments, on our own and through our subsidiaries, joint ventures and associates, including: � the chemicals business; � the estate and property development business; � the animal feeds business; � the beverages and foods businesses; � the vegetable oils business; � the household insecticides and pest management services business; � the finance and investments business; and � other businesses, which include (a) rural based businesses comprising rural retailing, integrated


As a result of this diversity, our management requires considerable expertise in managing our businesses. Operating in such varied businesses makes forecasting future revenue and operating results difficult, which may impair our ability to manage our businesses and your ability to assess our prospects. In addition, our cost controls, internal controls, and accounting and reporting systems must be integrated and upgraded on a continual basis to support our diversified businesses. In order to manage and integrate our diversified businesses effectively we will be required, amongst other things, to implement and continue to improve our operational, financial and management systems, to continue to develop the management skills of our managers and to continue to train, motivate and manage our employees. If we are unable to manage our growth and our diversified operations, our ability to optimise the success of our business strategy and to capitalise on future business opportunities could be affected.

Increased cost of raw materials and interruption in their availability may affect our operating costs,

business and results of operations.

Our businesses, such as chemicals, animal feeds, vegetable oils, household insecticides, beverages and foods and agricultural inputs are significantly affected by the availability, supply, cost and quality of the materials which expose us to market demand and supply fluctuations. Our principal raw materials for our: (1) chemicals business include crude palm stearin, palm kernel oil, palm fatty acid distillate, palm kernel fatty acid distillate and alpha olefin; (2) animal feeds business include maize, soya extract, rice bran extract and de-oiled rice bran; (3) vegetable oils include un-refined edible oils; (4) household insecticides include active chemicals; (5) beverages and foods business include sugar, cocoa and fruit pulp; and (6) estate and property development business include cement and steel. The prices and supply of these and other raw materials depend on factors beyond our control, including economic conditions, competition, consumer demand, production levels, transportation costs and import duties. Further, for agricultural raw materials, there are additional risks including agricultural disease, insect or animal infestation, adverse weather conditions, adverse ground conditions and natural and other disasters. We do not have any long-term supply contracts with respect to our raw material requirements across our businesses and the supply of raw materials may not adequately meet increasing demand. Any significant change in the cost structure or disruption in supply may affect the pricing

19

and supply of our products. If we are unable to increase our product prices to significantly offset increased raw material costs, or if unit volume sales are significantly reduced, it could have a negative impact on our profitability. This may affect our business and financial performance. If, for any reason, our primary suppliers of raw materials should curtail or discontinue their delivery of such materials to us in the quantities we need or at prices that are competitive or expected by us, our ability to meet our production requirements could be impaired, our production schedules could be disrupted, or our earnings and business could suffer. In addition, our chemicals business requires certain catalyst chemicals, for which we have only one reliable supplier. In the event that the supplier curtails or discontinues its delivery of the catalyst chemicals that we require, earnings from our chemicals business would be adversely affected. We typically use third-party transportation providers for the supply of most of our raw materials and for deliveries of our products to our customers. Transportation costs have been steadily increasing and may have an adverse effect on our businesses and results of operations. In addition, extreme weather conditions, strikes, inadequacies in the road infrastructure and port facilities, shipping delays or other events could impair our procurement of raw materials and our ability to supply our products to our customers. Disruptions or other problems related to transportation and deliveries of products may adversely affect our results of operations. Failure to successfully identify and conclude joint ventures or manage the integration of the new and

existing joint venture businesses or the performance of such businesses being below expectations may

cause profitability and operations to suffer.

We have entered into several strategic relationships, including relationships with Gold Coin Aqua Feed Pte. Limited for aquaculture, the Hersheys Company for beverages and foods, Infinity Infotech Parks Limited and HDFC Realty Fund for our estate and property development business, Sara Lee-Kiwi Holdings for our insecticides business and Advanced Chemical Industries Limited, Bangladesh, Polychem Hygiene Laboratories Limited and Al-Rahaba U.A.E. for our animal feeds and certain other businesses. For additional information regarding our strategic relationships, see the section entitled “Our Business”. While we intend to continue to enter into other strategic relationships in the future as a part of our business strategy, we may not be able to identify or conclude appropriate or viable strategic relations in a timely manner or at all. Further, our joint ventures may not necessarily contribute to our profitability and may divert management attention or require us to assume a high level of debt or contingent liabilities. We may also experience difficulty in integrating operations and harmonising cultures leading to a non-realisation of anticipated synergies or efficiencies from such joint ventures. In addition, if any of our joint ventures do not continue successfully and is subsequently wound up, our business may be disrupted and we may not be able to continue operating in such business segment. These difficulties could disrupt our ongoing businesses and may affect our business and financial performance.

Environmental, health, employee and safety laws and regulations may expose us to liability and result in an

increase of our costs and a decrease in our profits.

We are subject to significant national and state environmental laws and regulations in our businesses. These laws govern the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous substances and waste and the extent of employee exposure to hazardous substances that may be used in or result from our businesses. Compliance with these laws and regulations require significant capital and other expenditures that we have incurred in the past and will continue to incur in the future. In addition, we may discover currently unknown environmental problems or conditions. The environmental laws in India have been increasing in stringency and it is possible that they may become significantly more stringent in the future. Operating facilities such as ours that manufacture chemicals, animal feeds, vegetable oils and our other products entails an inherent risk of environmental damage and we may incur liabilities in the future arising from the discharge of pollutants into the environment or our waste disposal or hazardous material handling practices. If any of our facilities are shut down, we will continue to incur costs in complying with environmental regulations, appealing any decision to close our facilities, increasing production levels at our operational facilities and paying labour and other costs, while not generating any revenues or products from such facilities. As a result, our overall operational expenses will increase and our profits will decrease. We are also subject to laws and regulations governing relationships with employees for minimum wage and maximum working hours, overtime, working conditions, hiring and terminating of employees, contract labour

20

and work permits. Furthermore, the success of our business is contingent upon, among other things, receipt of all required licenses, permits and authorisations, including local land use permits, building and zoning permits and environmental, health and safety permits. Changes or concessions required by regulatory authorities could also involve significant costs and delay or prevent completion of the construction or opening or operations of a plant or research centre or could result in the loss of an existing license. Our operations are hazardous and could expose us to the risk of liabilities, lost revenues and increased

expenses.

Our operations are subject to various hazards associated with the production of chemical and other products, such as the use, handling, processing, storage and transportation of hazardous materials, as well as accidents such as leakage or spillages of chemicals. Any mishandling of hazardous chemical and poisonous substances could also lead to fatal accidents. In addition, our employees operate heavy machinery at our manufacturing facilities and accidents may occur while operating such machinery. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, environmental damage and may result in the suspension of operations and the imposition of civil and criminal liabilities. As a result of past or future operations, claims of injury by employees or members of the public due to exposure, or alleged exposure, to the hazardous materials involved in our business may arise. In addition, we may be subject to claims of injury from indirect exposure to hazardous materials that are incorporated into our products. Liabilities incurred as a result of these events have the potential to adversely impact our financial position. Events like these could also adversely affect our perception with suppliers, customers, regulators, employees and the public, which could in turn affect our financial condition and business performance. While we maintain general insurance against these liabilities, insurance proceeds may not be adequate to fully cover the substantial liabilities, lost revenues or increased expenses that we might incur. Our operations and our expansion plans have significant fuel requirements and we may not be able to

ensure that adequate fuel will be available to meet our power generation requirements.

We require a substantial amount of energy to operate our businesses. While we purchase some of our electricity needs from the state electricity boards, we also generate electricity through our steam turbine generators and wind mills. We have recently converted our medium pressure boilers to run on natural gas as opposed to liquid fuel and as a result we are substantially dependent on the supply of natural gas and our supplier of natural gas, Mahanagar Gas Limited. If our fuel supplier fails or is unable to deliver fuel to us as expected or scheduled, or if the fuel supply to one or more of our manufacturing facilities is otherwise disrupted, we may not be able to make alternative arrangements in a timely manner, if at all, and any such alternative arrangements may be on terms that are more costly to us. Accordingly, any delay or failure by the fuel supplier to fulfil its obligations under its fuel supply agreement with us or any other disruption of our fuel supplies would disrupt the normal operations of the affected manufacturing facility, reduce the economies of scale which we currently enjoy and would have an adverse effect on our business and results of operations. The success of our operations, will be dependent on, among other things, our ability to ensure availability of fuel at competitive prices during the life-cycle of our manufacturing facilities. Further, gas allocations and gas prices are currently significantly influenced by the policies of the Government of India. We cannot assure you that we will be able to obtain natural gas at competitive prices, or in the required quantities.

We may be subject to losses that might not be covered in whole or in part by existing insurance coverage.

These uninsured losses could result in substantial liabilities to us that could negatively impact our financial

condition.

We maintain insurance for a variety of risks, including, among others, for risks relating to public liability, fire, burglary and certain other losses and damages and employee related risks. We also carry director and officer liability insurance. There are various types of risks and losses for which we are not insured or may be inadequately insured, such as loss of business and environmental liabilities because they are either uninsurable or not insurable at

21

commercially acceptable terms. While we believe that the insurance coverage which we maintain directly or through our contractors for our estate and property development business, would be reasonably adequate to cover the normal risks associated with the operation of such business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time, nor that we have taken out sufficient insurance to cover all material losses. Should an uninsured loss or a loss in excess of insured limits occur, we could incur liabilities or losses, lose capital invested in that property or lose the anticipated future income derived from the manufacturing activities conducted at a facility or development, while remaining obligated for any indebtedness or other financial obligations related to our business. Any such loss could result in substantial liabilities to us or adversely affect our ability to replace property or capital equipment that is destroyed or damaged, and our productive capacity may diminish.

Changes in technology may render the current technologies obsolete or require us to make substantial

capital investments.

Our businesses largely depend upon the technology adopted by us. The manufacturing and processing operations of our businesses are prone to technological and process changes and may render our current processes obsolete. We may be required to invest substantial sums to adopt advanced technologies and processes which may increase our costs and expenses.

Our established brand name may be adversely affected by events beyond our control.

We believe the “Godrej” brand commands a strong resonance among the populace in India due to its long presence in the Indian market and the diversified businesses in which the group operates. However, there can be no assurance that this established brand name will not be adversely affected in the future by events such as actions that are beyond our control, including customer complaints or adverse publicity from any other source. Any damage to this brand name, if not immediately and sufficiently remedied, could have an adverse effect on our business, financial condition and results of operations.

Adverse costs and publicity associated with product contamination, product warranty claims, recall and

product liability, due to defects in our products, could adversely affect our business, results of operations

and financial condition.

Despite safety measures taken by us, our products such as oleochemicals, vegetable oils, animal feeds, and our beverages and foods products could become contaminated, be defective or not meet quality safety standards. Contamination and defects, if any, in our products would require us to replace the products affected. This could require us to expend considerable resources in correcting problems and could adversely affect the demand for our products. We use many ingredients in manufacturing our chemicals, animal feeds, vegetable oils, beverages and foods, household insecticides and other products and in our integrated poultry business which increases the risk of either accidental or malicious contamination. In addition, defects in our products that arise from defective raw materials supplied by external suppliers may or may not be covered under warranties provided by them. An unusual number or amount of warranty or other claims against a supplier could adversely affect us as, in certain businesses, we depend on a limited number of suppliers for raw materials. If a supplier fails to meet quality standards, it could expose us to the risk of product liability claims, which could hurt our financial position, as we do not maintain product liability insurance. We may be required to pay for losses or injuries purportedly caused by our products. To date, we have not been subject to any product liability lawsuits. We may, however, become subject to such suits in the future. Any such product liability claim may result in substantial expense and negative publicity that may adversely affect our total income and significant management resources could be diverted away from the business towards defending such claims. As a result, our business, results of operations and financial condition could suffer. We operate in highly competitive markets in which our performance could be affected if we were unable to

respond to rapid changes in the market, consumer preferences or other competitive factors.

We are a diversified conglomerate with diversified business interests. In each of these business segments we face substantial competition from various players. Some of our competitors are larger than us and may have greater financial resources. They may also benefit from greater economies of scale and operating efficiencies.

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The various markets in which we operate are characterised by rapid change and frequent new product introductions. Maintaining or increasing our market share will depend on effective marketing initiatives including advertising spend and our ability to anticipate and respond to various competitive factors affecting the various businesses, including our ability to improve our manufacturing process, protect our manufacturing technique, introduce new products and respond to pricing strategies by competitors, changes in technology and changes in customer preferences. Failure by us to compete effectively including any delay in our reactions to changes in market conditions may affect the competitiveness of our products, thereby reducing our market share, which would result in a decline in our revenues. We expect competition to continue to be intense as our existing competitors expand their operations and provide new products.

If we are not able to manage our growth, our business and financial results could be adversely affected.

We are embarking on a growth strategy which involves a substantial expansion and diversification of our current businesses. Such a growth strategy will place significant demands on our management as well as our financial, accounting and operating systems. Further, as we expand the scope of and diversify our operations, we may be unable to manage our business efficiently, which could result in delays, increased costs and affect the quality of our products, and may adversely affect our reputation. Such expansion also increases the challenges involved in preserving a uniform culture, set of values and work environment across our businesses, developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, internal control and other internal systems, recruiting, training and retaining management, technical and marketing personnel, maintaining high levels of client satisfaction, and adhering to health, safety, and environmental standards. Our failure to manage our growth could have an adverse effect on our business, financial condition and results of operations. We may not control all of the ventures in which we invest and their value may decline.

We make, and intend to continue to make, investments in ventures undertaken by our group companies and third parties in which our equity partners and other investors own substantial equity interest. We may not enter into shareholders’ agreements with the other equity partners and investors that would provide for our control of such companies through board directorships or otherwise. In such cases, the equity partners and other investors will have significant control over the ventures, which may limit our flexibility to make decisions relating to the ventures. Such investments may exhibit losses due to decisions or business processes that we have no control over or due to our lack of adequate powers to initiate remedial actions. In addition, if the share price of any of these ventures declines, the value of our investment could be adversely affected.

We depend on our Promoters, our senior management, directors and key personnel and our ability to retain

them and attract new key personnel when necessary is an important part of our success.

Our Promoters, our directors and our key management personnel collectively have many years of experience in managing our various businesses and are difficult to replace. They provide expertise which enables us to make well informed decisions in relation to our businesses and our future prospects. We cannot assure you that we will continue to retain any or all of the key members of our management. The loss of the services of any such key members of our management team could have an adverse effect on our business and the results of our operations. We do not maintain “key man” insurance for any of our promoters, senior or other key management personnel. Any loss of our promoters, senior managers or other key personnel or the inability to recruit further senior managers or other key personnel could impair our future by impairing our day-to-day operations, hindering our development of new products and harming our ability to maintain or expand our operations. We will be controlled by our Promoters and potential conflicts of interest may exist or arise as a result.

After the completion of the Issue, our Promoters will control, directly or indirectly, in excess of 78% of our outstanding Equity Shares. As a result, our Promoters will continue to exercise significant influence over all matters requiring shareholder approval, including the composition of our Board of Directors, and will also have effective veto power with respect to any shareholder action or approval requiring majority voting. Our Promoters may take or block actions with respect to our businesses, which may conflict with our interests or the interests of our minority shareholders, such as actions with respect to future capital raising or acquisitions. We cannot assure you that our Promoters will always act in your best interests.

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Our businesses and our growth prospects require us to invest additional capital, which may not be available

on terms acceptable to us or at all.

Our businesses are capital intensive and require significant expenditure for land acquisition and development and purchase of manufacturing equipment and machinery. In the fiscal year 2007, we incurred finance charges of Rs. 650.07 million. As of June 30, 2007, we had outstanding borrowings (including secured and unsecured) of Rs. 8,730.16 million. As we intend to pursue a strategy of continued investment in our manufacturing and property development activities, we may incur significant additional expenditure in the current and future fiscal years. We propose to fund such expenditure through a combination of debt, equity and internal accruals. Our ability to borrow and the terms of our borrowings will depend on our financial condition, the stability of our cash flows and our capacity to service debt in a rising interest rate environment. We may not be successful in obtaining these additional funds in a timely manner, or on favourable terms, or at all. Moreover, certain of our loan documents contain provisions that may limit our ability to incur future debt. If we do not have access to additional capital, we may be required to delay, postpone or abandon some or all of our development projects or reduce capital expenditures and the size of our operations, any of which could adversely affect our results of operations. We are subject to restrictive covenants in certain debt facilities provided to us.

There are certain restrictive covenants in the arrangements we have entered into with the banks for secured loans. As per the terms of these agreements, we are prohibited from creating, assuming or incurring any additional long-term indebtedness without the prior consent of our lenders. Additional restrictive covenants require us, among other things, to maintain in favour of the bank a margin between the value of mortgaged property and the balance due to the bank, as the bank may stipulate from time to time, and to keep the mortgaged properties insured for full market value against certain risks. We also require prior consent of our lenders for effecting any change in our ownership, control and management as well as for making any amendments to the Memorandum and Articles. Further, the loan agreements provide that we cannot create any further charges or encumbrances over mortgaged property and that we may not part with hypothecated property or any part thereof without the prior written consent of the lending bank. Additionally, we are permitted to use the funds only for the purpose for which they have been borrowed and thus any transfer of funds to our associate/group companies may require the prior consent of the banks. Furthermore, our arrangements with the lending banks permit the bank to withdraw or recall their loans or debit the instalments or interest payable from any of our accounts maintained with the bank, at the bank’s absolute discretion, without any prior notice to us and the bank may impose overdue interest at the specified rates in the event of any default or may vary the interest rates, without giving prior notice to us. Any additional financing that we require to fund our capital expenditures, if met by way of additional debt financing, may place restrictions on us which may, among other things, increase our vulnerability to general adverse economic and industry conditions, limit our ability to pursue our growth plans, require us to dedicate a substantial portion of our cash flow from operations to make payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, meet working capital requirements and use for other general corporate purposes, and limit our flexibility in planning for, or reacting to changes in our business and our industry, either through the imposition of restrictive financial or operational covenants or otherwise. Because we generate our income and incur expenses in multiple currencies, exchange rate movement may

cause us to incur losses when hedging on our exchange exposure is not sufficient.

Changes in currency exchange rates influence our results of operations. We report our financial results in Indian rupees, while portions of our total income and expenses are denominated, generated or incurred in currencies other than Indian rupees. We incur expenditures and also procure materials in a number of currencies, such as US Dollar and Euro. As of June 30, 2007, we had forward exchange purchase contracts for US$9.85 million and sale contracts for US$3.70 million and €2.14 million. Our uncovered foreign exchange exposure as of June 30, 2007 was US$15.79 million. To the extent that our income and expenditures are not denominated in Indian rupees, despite us entering into foreign exchange hedging contracts from time to time, exchange rate fluctuations could affect the amount of income and expenditure we recognize.

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Further, our future capital expenditures, including any imported equipment and machinery, may be denominated in currencies other than Indian rupees. Therefore, a decline in the value of the Indian rupee against such other currencies could increase the Indian rupee cost of servicing our debt or making such capital expenditures. The exchange rate between the Indian rupee and the US Dollar and the Euro has varied substantially in recent years and may continue to fluctuate significantly in the future. Although we closely follow our exposure to foreign currencies, including on a contract-by-contract basis, and selectively enter into hedging transactions in an attempt to reduce the risks of currency fluctuations, these activities are not always sufficient to protect us against incurring losses if currencies fluctuate significantly.

We depend heavily on our channel partners, such as distributors and retailers, and failure to manage the

distribution network efficiently will adversely affect our performance.

We have developed a strong network of distributors and retailers both in India and certain overseas markets for our various businesses. We are dependent on these channel partners for the sale and distribution of our products. While relationships with them have been good, we do not have long term contracts with all of these channel partners. Most of these distributors and retailers do not provide their services exclusively to us and may be providing the same or similar services to other parties, including our competitors. We cannot assure you that we will be successful in continuing to receive uninterrupted, high quality service from these channel partners for all our current and future products. We depend on our information technology systems in managing our supply chain, production process,

logistics and other integral parts of our business.

Our information technology systems are of paramount importance to our business. We are heavily reliant on our information technology systems in connection with order booking, procurement of raw materials, accounting, production and distribution. While we are implementing SAP, a fully integrated ERP system across our businesses, any failure in our information technology systems could result in business interruption, adversely impacting our reputation and weakening of our competitive position and could have an adverse effect on our financial condition and results of operations.

We have not yet obtained registration of some of our trademarks and this may affect our business

operations.

We are heavily dependant on our brands and our brand equity. Many of our brands have been registered in India under the Trade Marks Act, 1999. However, our subsidiaries have filed applications for registration of various trademarks before the registrar of trademarks which are currently pending registration. Further, we have not yet obtained overseas trademark registration for some of our brands, under which we sell our products abroad. We may not be able to prevent infringement of our trademarks and a passing off action may not provide sufficient protection. Additionally, we may be required to litigate to protect our brands, which may adversely affect our business operations. We depend on consumer confidence and spending.

The sale of beverages and foods products, confectionery products and household insecticides correlates strongly to the level of consumer spending generally, and thus is significantly affected by the general state of the economy and the ability and willingness of consumers to spend on these items. Reduced consumer confidence and spending generally may result in reduced demand for our products and limitations on our ability to maintain or increase prices. A decline in economic conditions or general consumer spending in any of our major markets could have an adverse effect on our business, financial conditions and results of operations.

The launch of new products that prove to be unsuccessful could impact our growth plans and may

adversely impact earnings.

New product introductions in our business segments are one of our avenues for growth. Each of the elements of new product initiatives carries significant risks, as well as the possibility of unexpected consequences, including (1) acceptance by and sales of the new product initiatives to our customers may not be as high as we anticipate (2) our marketing strategies for the new products may be less effective than planned and may fail to effectively reach the targeted consumer base or engender the desired consumption; (3) we may incur costs

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exceeding our expectations as a result of the continued development and launch of the new products; (4) we may experience a decrease in sales of certain of our existing products as a result of the introduction of related new products; (5) any delays or other difficulties impacting our ability, or the ability of our third party manufacturers and suppliers, to manufacture, distribute and ship products in a timely manner in connection with launching the new product initiatives. Each of the risks referred to above could delay or impede our ability to achieve our growth objectives or we may not be successful in achieving our growth objectives at all through these means, which could have an adverse effect on our business, results of operations and financial condition. Certain manufacturing and other operations are being conducted on premises that have been taken on

lease. Our inability to seek renewal or extension of such lease terms may cause disruption in our

operations.

Certain premises on which we operate are taken on lease or leave and license agreements with various third parties. Any adverse impact on the title, ownership rights, development rights of the owners from whose premises we operate or any breach of the contractual terms of such lease and license agreements or any inability to renew the said leases and license agreements on terms acceptable to us may impede our business operations. A significant number of our employees are represented by labour unions and any labour unrest at our

manufacturing units could have an adverse effect on our financial conditions and prospects.

A significant number of our employees in India are members of labour unions. If our relationship with our employees deteriorate and there is labour unrest resulting in a work stoppage, slowdown or a strike, our production facilities may be unable to continue operations at normal levels or at all. While we believe that we maintain cordial and cooperative relationships with our employees, there can be no assurance that we will not experience future disruptions to our operations due to disputes or other problems with our work force which may adversely affect our business. Regulatory changes may adversely affect our performance or financial condition.

Regulatory changes relating to the businesses in which we operate, including tax incentives that are available to us can have a bearing on our businesses. In particular, the taxation system within India still remains complex. Each state in India has different local taxes and levies including sales tax and octroi. Further, changes in these local taxes and levies may impact our profits and profitability. Any negative changes in the regulatory conditions in India or our other geographic markets could adversely affect our business operations or financial conditions.

Our business is dependent on our manufacturing facilities and the availability of consumables and spares.

The loss or shutdown of operations at our manufacturing facilities may have an adverse effect of our

business, financial condition and results of operations.

Our facilities are subject to operational risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, unavailability of consumables and spare parts, labour disputes, natural disasters, breakout of fires, industrial accidents and the need to comply with relevant government regulations. The occurrence of any of these events could significantly affect our operating results. We may be required to carry out planned shutdowns of our plants for maintenance, statutory inspections and testing. We may also shut down our plants for capacity expansion and equipment upgrades. Although, we will take precautions to minimise the risk of any significant operational problems at our facilities, our business, financial condition and results of operations could be adversely affected by any disruption of operations at our facilities, including due to any of the factors mentioned above. Our businesses are subject to seasonal variations and as a result, our quarterly results of operations may

fluctuate.

Some of our businesses such as animal feeds, household insecticides, poultry, beverages and foods exhibit seasonality. This is due to increased consumption patterns of such products or derivatives of such products in the summer and/or monsoon seasons in India. As a result of these seasonal fluctuations, our sales and operational results in different quarters within a single fiscal year vary and sales and operational results of one

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quarter may not be relied upon as indicators of sales or operational results of other fiscal quarters or of our future performance. Research and development activities are an integral part of our business model. If our research and

development efforts are not successful, or if we are not able to attract and retain skilled scientists, our

business may be restricted. Growth of our future operations will depend upon our ability to successfully carry out research and development of new processes and produce new and better quality products from economy grade raw materials. These processes must meet regulatory standards and may require regulatory approvals. The development and commercialisation process is both time consuming and costly. Our ongoing investments in research and development for future products and processes may result in higher costs without a proportionate increase in revenues. Delays in any part of the process, our inability to obtain necessary regulatory approvals for our products or failure of a product to be successful at any stage and therefore not realised could harm our operating results. Our ability to successfully carry out research and development depends on our ability to attract and retain skilled scientists. Our failure to attract and retain skilled manpower could adversely affect our growth strategy. Our managing director has been directly overseeing our research and development activities, and we have a strong technical and production team. However, we may not be able to continuously attract or retain such personnel, or retain them on acceptable terms, given the demand for such personnel among pharmaceutical companies, universities and non-profit research institutions. Our failure to attract and retain skilled personnel could have an adverse impact on our growth. We have not entered into binding development agreements with respect to potential real estate development

projects and may not be able to access lands owned by certain of our group companies for development

Godrej Properties Limited has entered into memoranda of understanding with certain group companies under which it will be appointed to develop lands of such entities. There can be no assurance, however, that we will get access to such lands on terms satisfactory to us or at all. Development of these and other potential projects could be conditional, among other things, on us being able to finance our commitments to a particular project, satisfactory completion of due diligence, and the successful negotiation and execution of binding agreements in a form satisfactory to all the parties thereto, including us, during which time we may forego other property development opportunities. Therefore, there is no assurance that projects will be developed in a timely manner or at all, and we may incur non-reimbursable costs for projects that are not undertaken.

Our inability to identify and acquire land or development rights in locations with growth potential affects

our estate and property development business.

Our ability to identify suitable parcels of land for development and subsequent sale forms an integral part of our business. Our strategy includes acquiring land and/or land development rights either through joint ventures or through joint development agreements, and therefore our ability to identify land in the right location is critical for a project. Our decision to acquire land or development rights over appropriate land involves taking into account the size and location of the land, tastes of potential residential customers, requirements of potential commercial clients, economic potential of the region, the proximity of the land to civic amenities and urban infrastructure, the availability and competence of third parties such as architects, surveyors, engineers and contractors, the willingness of landowners to sell the land to us or enter into joint development agreements with us on terms which are favourable to us, the ability to enter into an agreement to buy land from multiple owners, the availability and cost of financing such acquisitions, encumbrances on targeted land, government directives on land use and obtaining permits and approvals for land acquisition and development. While we have successfully identified suitable projects in the past, we may not be as successful in identifying suitable projects that meet market demand in the future. Any failure to identify and acquire suitable parcels of land for development in a timely manner may reduce the number of development projects that can be undertaken by us and thereby affect our business prospects, financial condition and results of operations.

Our estate and property development business is dependent on the performance of, and the conditions

affecting, the real estate market in India.

Our business is heavily dependent on the performance of the real estate market in India, particularly in the regions in which we operate, and could be adversely affected if market conditions deteriorate. Further, the real

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estate market, both for land and developed properties, is relatively illiquid, which may limit our ability to respond promptly to market events. The real estate market may, in the locations in which we operate, perform differently from, and be subject to market and regulatory developments different from, real estate markets in other parts of India. We cannot assure you that the demand for our projects will grow, or will not decrease, in the future. Real estate projects take a substantial amount of time to develop and we could incur losses if we purchase land during periods when land prices are high, and we have to sell or lease our developed projects when land prices are relatively lower. The real estate market may be affected by various factors beyond our control, including prevailing economic conditions, changes in supply and demand for properties comparable to those we develop, and changes in applicable governmental schemes. These and other factors may negatively contribute to changes in real estate prices or the demand for and valuation of our ongoing and upcoming projects, may restrict the availability of land, and may adversely affect our business, financial condition and results of operations. Our business is heavily dependent on the availability of real estate financing in India.

The real estate market is significantly affected by changes in economic conditions, government policies, interest rates, income levels, demographic trends and employment, among other factors. These factors can negatively affect the demand for and valuation of our projects under development and our planned projects. For example, lower interest rates may assist us in procuring borrowings at attractive terms for the purchase of land or development of our projects. Rising interest rates could discourage our customers from borrowing to finance real estate purchases as well as companies, such as us, from incurring indebtedness to purchase or develop land. As such, our business could be adversely affected if the demand for, or supply of, real estate financing at attractive rates and other terms were to be adversely affected. Additionally, stricter provisioning and risk weightage norms imposed by the RBI in relation to real estate loans by banks and finance companies could reduce the attractiveness of property or developer financing and the RBI or the GoI may take further measures designed to reduce or having the effect of reducing credit to the real estate sector. In the event of any change in fiscal, monetary or other policy of the GoI and a consequent withdrawal of income tax benefits, our business and results of operations may be adversely affected. A large number of our customers, especially buyers of residential properties, finance their purchases by raising loans from various banks and other means. The availing of home loans for residential properties has become particularly attractive due to income tax benefits and high disposable incomes. The availability of home loans may however, be affected if such income tax benefits are withdrawn or the interest rates on such loans continue to increase or there is decrease in the availability of home loans. This may affect the ability of our customers to finance the purchase of their residential properties and may consequently affect the demand for our properties.

Our Land Reserves and projects portfolio are relatively concentrated in and around Kolkata and

Hyderabad.

Our Land Reserves and projects portfolios are concentrated in and around Kolkata and Hyderabad. We have Land Reserves of approximately 14.33 million sq. ft. of Saleable Area in and around Kolkata and Hyderabad, which constitutes approximately 79.20% of our total Land Reserves. In the event of a regional slowdown in construction activity in and around these cities, or any developments that make projects in these cities less economically beneficial, our business, financial condition and results of operations could be adversely affected.

We may undertake only a few large projects at one time and a therefore significant amount of our

resources may be devoted to such large projects.

We expect to undertake only a few large projects at one time. For example, our proposed Saleable Area of 9.60 million sq. ft. for a commercial project at Pattancheru in Hyderabad constitutes approximately 53.00% of the aggregate proposed square footage of our forthcoming projects. Hyderabad’s economic vitality is dependent significantly upon the success of the Indian telecommunications, IT and ITES sectors and their ancillary businesses. Any significant slowdown in these key sectors or in their rate of growth, which has been substantial in recent years, could adversely affect demand for our Hyderabad project. If one or more of the large projects in which we have concentrated a significant portion of our resources proves ultimately to be unprofitable, it could have an adverse affect on our financial condition or result of operations.

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Our growth strategy may be affected by an economic slowdown in the regions where we propose to develop

our projects.

Our business strategy is to acquire low cost land for development in areas experiencing significant growth in economic activity. The principal cities in which we have ongoing and forthcoming projects are Hyderabad, Kolkata, Pune, Bangalore and Mumbai. If the growth slows in telecommunications, manufacturing, IT and ITES businesses or generally in the regions in which we are developing or may propose to develop our projects, it could adversely affect the sales and prospects of our projects. Any resulting decline in returns could have an adverse affect on our financial condition or result of operations. As the demand for land increases, it also results in an increase in the competition for and prices of land.

Further, changes in any of the regulations applicable are likely to have an effect on prices of land.

As the demand for land for development of residential and commercial properties increases, it also results in an increase in competition to acquire land. In addition, the unavailability or shortage of suitable land for development also leads to escalations in land prices. Further, the availability of land and its use and development are subject to regulation by various local authorities. For example, if a specific parcel of land has been delineated as agricultural land, no commercial or residential development is permitted without the prior approval of the local authorities. Obtaining such a change in status may affect the price of the specific parcel of land, as well as the land surrounding it. Any escalation in prices for land could prevent us from acquiring particular land parcels, which could adversely affect our business, prospects, financial condition and results of operations.

We face uncertainty of title to our lands.

The difficulty of obtaining title guarantees in India means that title records provide only for presumptive rather than guaranteed title. The original title to lands may often be fragmented, and land may have multiple owners. Certain lands may have irregularities of title, such as non-execution or non-registration of conveyance deeds and inadequate stamping and may be subject to encumbrances of which we may not be aware. Additionally, some of our projects are being executed through joint ventures in collaboration with third parties. In some of these projects, the title to the land may be owned by one or more of such third parties, and as such we cannot assure you that the persons with whom we enter into joint ventures or collaboration agreements have clear title to such lands. While we conduct due diligence and assessment exercises prior to acquiring land or entering into joint development agreements with land owners and undertaking a project, we may not be able to assess or identify all risks and liabilities associated with the land, such as faulty or disputed title, unregistered encumbrances or adverse possession rights, improperly executed, unregistered or insufficiently stamped conveyance instruments in the property’s chain of title, ownership claims of family members of prior owners, or other defects that we may not be aware of. This is because of the various practical difficulties in verifying the title of a prospective seller or lessor of property, or a joint development partner. Multiple property registries exist in India, which makes verification of title difficult. Indian law recognises the ability of persons to effectuate a valid mortgage on an unregistered basis by the physical delivery of original title documents to a lender. Adverse possession under Indian law also arises upon 12 years of occupation to valid ownership rights as against all parties, including government entities that are landowners, without the requirement of registration of ownership rights by the adverse possessor. In addition, Indian law recognises the concept of a Hindu undivided family, whereby all family members jointly own land and must consent to its transfer, including minor children, without whose consent a land transfer may be challenged by such non-consenting family member. Our title to land may be defective as a result of a failure on our part, or on the part of a prior transferee, to obtain the consent of all such persons. As each transfer in a chain of title may be subject to these and other various defects, our title and development rights over land may be subject to various defects of which we are not aware. As a result, any acquisition or joint development decision made by us in reliance on our assessment of such information, or the assessment of such information by a third party, is subject to risks and potential liabilities arising from the inaccuracy of such information. If such information later proves to be inaccurate, any defects or irregularities of title may result in the loss of title or development rights over land, and the cancellation of our development plans in respect of such land. The uncertainty of title to land makes the acquisition and

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development process more complicated, may impede the transfer of title, expose us to legal disputes and adversely affect our land valuations. Legal disputes in respect of land title can take several years and considerable expense to resolve if they become the subject of court proceedings and their outcome can be uncertain. Under Indian law, a title document is generally not effective, nor may be admitted as evidence in court, unless it has been registered with the applicable land registry and applicable stamp duty has been paid in respect of such title document. The failure of prior landowners to comply with such requirements may result in our failing to have acquired valid title or development rights with respect to that land. If we or the owners of the land which is the subject of our development agreements are unable to resolve such disputes with these claimants, we may lose our interest in the land, being our right to own or develop the land, and we may have to make payments to these claimants as compensation. The failure to obtain good title to a particular plot of land and the abandoning of the property as a result may materially prejudice the success of a development for which that plot is a critical part and may require us to write off expenditures in respect of the development. In addition, land for which we, or entities which have granted us development rights, have entered into agreements to acquire but have not yet acquired, form a significant part of our growth strategy and the failure to obtain good title to this land could adversely impact our property valuations and prospects.

Our inability to acquire large contiguous parcels of land may affect our future development activities.

Certain of our projects are being built on large parcels of land. For example, our project at Pattancheru, Hyderabad has an estimated Saleable Area of approximately 9.60 million sq. ft. Although in the past we have not experienced difficulties in acquiring such large parcels of land, we cannot assure you that we will be able to continue to acquire such large parcels of land on terms that are acceptable to us or at all. This may prohibit us from developing additional large projects or may cause delays or force us to modify the development of the land at a particular location, which in turn may result in failure to maximise our return from such parcels of land. Accordingly, our inability to acquire contiguous parcels of land may adversely affect our business prospects, financial condition and results of operations. We may also be forced to pay premium amounts for acquiring certain large parcels of land. Paying premium amounts for land may limit our ability to fund other projects and may adversely affect our business, financial condition and results of operations. We are dependent upon third party companies for the sourcing of land, market research and development

and sale of our properties.

We enter into agreements with third party companies to source land, for market research, for design, construction and marketing of our properties in accordance with our specifications and quality standards and under the time frames provided by us. If such contractors are unable to perform their contracts, including completing our developments within the specifications, quality standards or time frames specified by us, or at all, our business, reputation and results of operations could be adversely affected. For example, in certain of our developments, we commit to our customers to complete the developments within specified time frames, failing which we are required to compensate them at specified rates for the delay. In addition, we generally provide warranties for a period of 12 months for construction defects and may be held liable for such defects. Even though our contractors provide us with back-to-back warranties, such warranties may not be sufficient to cover our losses, or our contractors could claim defences not available to us against our customers, which could adversely affect our financial condition and results of operations. The amount of property development in India has been significant in the recent past. As a result, our contractors and other construction companies have had significant projects to complete and a substantial backlog. If the services of these or other contractors do not continue to be available on terms acceptable to us or at all, our business and results of operations could likely be adversely affected. Additionally, our operations may be affected by circumstances beyond our control such as work stoppages, labour disputes, shortage of qualified skilled labour or lack of availability of adequate infrastructure.

There could be unscheduled delays and cost overruns in relation to our forthcoming projects.

There could be unscheduled delays and cost overruns in relation to upcoming projects. We cannot assure you that we will be able to complete our ongoing projects, including those that may be undertaken in future, within the stipulated budgets and time schedules. While we provide for penalties against our third party contractors

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for delays in handing over the project, there can be no assurance that these contractors will pay us those penalties in time or at all and we may incur the cost of delays of the project which could adversely affect our results of operations and financial condition. Further, delays and cost overruns may occur for reasons not involving the fault of our contractors and for which they therefore do not bear any responsibility to us. We have entered into agreements with various third parties to acquire land or development rights which

may expire or may be invalid which may lead to our inability to acquire these lands.

As part of our land acquisition process, either for ownership rights or for development rights, we enter into purchase agreements, memoranda of understanding or joint development agreements with third parties including power of attorney holders prior to the development of the particular parcel of land. Power of attorney holders are persons who are authorised to transfer lands on behalf of the owners of the land. There can be no assurance that the power of attorney that has been granted is valid or entitles such power of attorney holder to exercise the right to transfer such land. We enter into these agreements after making certain advance payments to ensure that the sellers of the land satisfy certain conditions within the time frames stipulated under these agreements. There can be no assurance that these sellers will be able to satisfy their conditions within the time frames stipulated or at all. In the event that we are not able to acquire land in accordance with our preferences, we may not be able to recover all or part of the advance monies paid by us to these third parties. Further, in the event that these agreements are either invalid or have expired, we may lose the right to acquire these lands and also may not be able to recover the advance payments made in relation to the land. Also any indecisiveness or delay on our part to perform our obligations under these agreements, may lead to our inability to acquire these lands as the agreements may also expire. Any failure to complete the purchases of land, renew these agreements on terms acceptable to us or recover the advance monies from the relevant counterparties could adversely affect our business, financial condition and results of operations. The success of our property development business is dependent on our ability to anticipate and respond to

consumer requirements, both in terms of the type and location of our projects.

The growing disposable income of India’s middle and upper income classes, together with changes in lifestyles, has resulted in a substantial change in the nature of these consumers’ demands. Increasingly, consumers are seeking better housing and better amenities in new residential developments. Our focus on the development of high quality luxury and comfort residential accommodation requires us to satisfy these demanding consumer expectations. The range of amenities now demanded by consumers include those that have historically been uncommon in India’s residential real estate market such as 24-hour electricity, gardens, community space, security systems, playgrounds, swimming pools, fitness centres, tennis courts, squash courts and golf courses. If we fail to anticipate and respond to consumer requirements, we could lose current or potential clients to competitors, which in turn could adversely affect our business and prospects.

The growth of the Indian economy has also led to changes in the way businesses operate in India resulting in a substantial change in the nature of these consumers’ demands. The growth and success of our commercial business depends on the provision of high quality office space to attract and retain clients who are willing and able to pay rent or purchase price at suitable levels, and on our ability to anticipate the future needs and expansion plans of these clients. Therefore our ability to anticipate and understand the demands of the prospective customers is critical to the success of our property development business.

We believe that one of our key strengths is our ability to acquire land in new areas and the ability to develop projects in these areas in anticipation of consumer demand and deliver residential projects at very competitive margins. We may face the risk that our competitors may be better known in the markets that are new to us and gain early access to information regarding attractive parcels of land and be better placed to acquire such land. The statements contained herein with regard to planned and ongoing property development projects, the

area and make-up of our Land Reserves, Developable Area and Saleable Area are based on management

estimates, current development plans and existing real estate regulations.

The square footage data presented herein with regards to upcoming projects and ongoing projects, and the area and make-up of our Land Reserves, Developable Area and Saleable Area are based on management estimates, current development plans and real estate regulations. The square footage that we may in the future develop with regards to a particular project may differ from the amounts presented herein based on various factors such

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as market conditions, title defects and any inability to obtain required regulatory approvals. Moreover, title defects may prevent us from having valid rights enforceable against all third parties to lands over which we believe we hold interests or development rights, rendering our management's estimates of the area and make-up of our Land Reserves and developable land incorrect and subject to uncertainty. Additionally, any change in existing real estate regulations or plans may lead to changes in the estimated saleable area, including a reduction in such area, which could adversely affect our business and results of operations. Our estimates with respect to such saleable area necessarily contain assumptions that may not prove to be correct.

We may undertake projects jointly with third parties, which entails certain risks.

Certain of our projects consist of joint ventures or may be undertaken in collaboration with third parties. In these projects, the title to the land may be owned by one or more of these third parties and we, by virtue of the development agreements, acquire development rights to the land. Most of these joint development agreements confer rights on us to construct, develop, market and eventually sell the Developable Area to third party buyers. Such agreements do not convey any interest in the immovable property to us and only the development right is transferred to us. Investments through joint ventures also involve risks, including the possibility that our joint venture partners may fail to meet their financial obligations, causing the whole project to suffer. We cannot assure you that projects that involve collaboration with third parties will be completed as scheduled, or at all, or that our ventures with these parties will be successful. Further, our joint venture partners may have business interests or goals that are inconsistent with our business interests or goals. Disputes that may arise between us and our joint venture partners may cause delay in completion, suspension or complete abandonment of that project. This may adversely affect our business prospects, financial condition or results of operations. We are required to make certain payments when we enter into joint development agreements.

We enter into joint development agreements with various third parties in relation to some of our projects. Under these agreements, we are required to provide the owners of the land with a deposit which is expected to be refunded upon the completion of the project or credited against payments made to the owners of land. Under these joint development agreements, in the event of any delay in the completion of the development within the time frame specified, we are required to indemnify the other parties to the joint development agreements and pay certain penalties or liquidated damages that are capped as specified in these agreements. If we are required to pay penalties or liquidated damages pursuant to such agreements, and we decline to do so, we may not be able to recover the deposits made by us to the owners of the land. In addition, if for any reason, the joint development agreement is terminated or the development is delayed or cancelled, we may not be able to recover such deposits. This could have an adverse effect on our business prospects, financial condition or results of operations.

Some of our agreements with our customers require us to pay a penalty in case of delay of handover to our

customers.

We enter into agreements with our customers which require us to complete construction by a certain date. Some of these agreements include penalty clauses for any delay in the completion of the project. We cannot assure you that we will always complete the construction or development of our projects in accordance with the timelines specified in such agreements and as a result we may be liable for amounts due under such agreements. Continued delays in the completion of the construction of our projects could adversely affect our reputation. Further, such penalties payable by us have an adverse effect on our financial condition and results of operations. We intend to develop or participate in the development of SEZs, which involve various risks.

As part of our property development business, we intend to develop SEZs. Our success in the development of SEZs depends on, among other things, our ability to obtain approvals and attract manufacturing, industrial or IT units that conduct business within the SEZs as well as on the continued availability of fiscal incentives under the SEZ regime. We cannot assure you that we will be able to get the approval for Godrej Genesis, Hyderabad or other manufacturing, industrial or IT SEZs in the future. Also, the possibility of withdrawal of the applicable benefits and concessions in the future may adversely affect the attractiveness of SEZs for the manufacturing, industrial or service units, which creates a risk for our current and planned investment in SEZ developments.

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The SEZ Act has been recently enacted and the central government and several state governments have extended fiscal and other incentives to SEZ promoters and customers located within SEZs. The SEZ policy framework is evolving and there could be changes in the SEZ regulations, including changes in norms for land acquisitions and associated compensation mechanisms, land use and development. Additionally, the selection procedure for the grant of SEZ licenses is open to challenge. Changes and/or uncertainties in the central government or state government policies or regulatory frameworks may slow down and adversely affect the demand for SEZs and thereby adversely affecting our SEZ development plans and projects.

The government may exercise rights of compulsory purchase or eminent domain over our lands.

The Land Acquisition Act, 1894 allows the central and state governments to exercise rights of compulsory purchase which, if used in respect of our land, could require us to mandatorily relinquish land without judicial recourse and with minimal compensation. The likelihood of such actions may increase as the central and state governments seek to acquire land for the development of infrastructure projects such as roads, airports and railways. Any such action in respect of one or more of our current or proposed developments could adversely affect our business. A decline in the financial stability of our retail and commercial tenants as well as our prospective tenants

may adversely affect our business and financial results, and our increased focus on commercial projects

poses new risks.

We own and lease and let out residential, retail and commercial properties. General economic conditions and other factors may affect the financial stability and business prospects of our tenants and prospective tenants and/or the demand for our retail and commercial real estate. In the event of a default or termination of the lease or leave and license by the tenant prior to its expiry, we will suffer a rental shortfall and incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. If we are unable to re-let or renew lease or leave and license contracts promptly, if the rentals upon such renewals, re-leasing or re-licensing are lower than the expected value or reserves, if any, for these purposes prove inadequate, our results of operations, financial condition and the value of our real estate could be adversely affected. In addition, our increased focus on commercial projects poses new risks. For example, we have completed only 0.99 million sq. ft. of commercial projects to date. We propose to develop commercial projects on over 67.00% of our land reserves of 17.99 million sq. ft. Success of such large projects depends on the ability to attract large multinational companies to lease significant portion of space and securing anchor tenants. If large IT companies elect to build their campuses, the financial viability of a project in that area could be adversely affected and we may not be able to fully recover our investment in such a project. The availability of spurious, look-alikes, counterfeit products primarily in our domestic market, could lead

to losses in revenues and harm the reputation of our products.

We are exposed to the risk that entities in India and elsewhere could pass off their products as ours, including spurious or pirated products. For example, certain entities could imitate our brand name, packaging material or attempt to create look-alike products. This would not only reduce our market share due to replacement of demand for our products, whereby we may not be able to recover our initial development costs or experience loss in revenues, but could also harm the reputation of our brands. The proliferation of unauthorised copies of our products, and the time lost in defending claims and complaints about spurious products could decrease the revenue we receive from our products and have an adverse effect on our reputation, business, financial condition and results of operations. Growing penetration of emerging retail formats such as supermarkets/hypermarkets in India may adversely

impact our margins.

India has witnessed the emergence of new supermarket and hypermarket chains in the recent past. While the current share of our revenues through these chains is not significant, it is expected that this may rise significantly in the next few years, especially in the larger cities. In general, the trade margins and discounts expected by supermarket chains is higher than traditional retail outlets. With the growth in these retail formats in India, we will have to increase the marketing of our products through this channel and possibly at lower margins, which may adversely impact our margins.

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The pesticides industry in India is highly regulated and our failure to obtain and renew regulatory

approvals and our inability to meet with the quality norms prescribed by the Government may be

detrimental for our agri-inputs and household insecticides business.

The pesticides industry is highly regulated. The quality of pesticides products manufactured are independently verified by government agencies by carrying out surprise sample checks of our products. In the event that the contents of the samples do not comply with the prescribed quality norms, it could lead to the initiation of proceedings against us. Any deficiencies in quality could lead to suspension of sales of those batches and/or product in that particular state or our products being banned for sales across the country. In the past we have not faced any suspension or ban on sale of any products. However there can be no assurance that we will not be subject to suspensions or proceedings in the future. Any such events are likely to impact our business and results of operations for our household insecticides business. In addition, we are required to maintain licenses and approvals for the manufacture of our insecticide products that are required to be periodically renewed. These renewals are required in the ordinary course of business and are subject to our compliances with certain stipulated conditions. In the event that we are unable to get our licenses and approvals renewed on a timely basis, our productions may be hampered, which could affect our results of operations and financials.

Our ability to introduce new products is dependent on obtaining approvals for manufacturing and selling

these new products under the Insecticides Act.

Under the Insecticides Act, persons importing or manufacturing any new insecticide product are required to apply to a registration committee for registration of such new insecticide products and each of these new products will require separate registration. Though we have been successful in obtaining registrations for new products we have released in the markets, there can be no assurance that we will be able to obtain these registrations in a timely manner in the future, or at all.

Our insecticide products may not continue to be effective in the long term.

Tests and data have indicated that over a period of time insects and pests develop immunity to the chemicals and the products that are constantly used to counter insect proliferation. Therefore, we are required to develop new, improved and additional products on a regular basis in order to keep our products effective in the market. This constant development and modification of our existing and new products incurs significant capital expenditure, time and effort and expenses towards marketing the products. There can be no assurance that these new products will be effective or well received in the market, which may adversely affect our business operations and our reputation.

Farmers in our command area are not required to grow palm oil and may cultivate other crops.

In India, every palm oil manufacturer is assigned a “command area” by the state governments. We have the right and obligation to buy all the palm fruits from the command area assigned to us at government regulated prices. However, the farmers within our command areas are not under any legal or contractual obligation to cultivate palm and may instead grow other crops. If the farmers within our command area cultivate crops other than palm, we could have a shortage of palm fruit and as a result, our business and results of operations may be adversely affected. Adverse weather conditions and crop disease may adversely affect palm oil crop yields.

Our production of palm oil depends on the quantity of the palm fruit that is supplied to us. Crop yields depend primarily on the presence of any crop disease and weather conditions such as adequate rainfall and temperature, which vary from one season to the next. Adverse weather conditions have in the past caused crop failures and reduced harvests and resulted in volatility in the results of operations of palm oil companies, including us. We cannot assure you that future weather patterns and potential crop disease will not result in a reduction in the quantity of palm fruit grown during a given harvest season. Any such reduction in our supply of palm fruit could have an adverse effect on our financial condition and results of operations. The perishability of our products, especially our integrated poultry products may have an adverse impact on

our business.

We are significantly reliant on unbroken and reliable cold chain networks for the supply and distribution of our integrated poultry products. The cold chain availability in the Indian markets is unreliable and not as

34

advanced as other more developed markets. Due to this unavailability and the perishability of our integrated poultry products, there are inherent limitations on the extent and reach to which we may expand our integrated poultry operations. While we are currently looking at expanding these operations to different geographic regions, there can be no assurance that we will be successful in this expansion, maintaining unbroken cold chain networks and in increasing our market for our integrated poultry products, which may have an adverse impact on our future results of operations. Outbreaks of poultry diseases, including avian influenza, can significantly affect our ability to conduct our

operations and demand for our poultry products.

We take reasonable precautions to ensure that our flocks are healthy and that our processing plants and other facilities operate in a sanitary and environmentally-sound manner. However, events beyond our control, such as the outbreaks of disease, either in our own flocks or elsewhere, could significantly affect demand for our products or our ability to conduct our operations. Furthermore, an outbreak of disease could result in governmental restrictions on the import and export of our poultry products to or from our suppliers, facilities or customers, or require us to destroy one or more of our flocks. This could also result in the cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on our ability to market our products successfully and on our business, reputation and prospects. There has been substantial publicity regarding a highly pathogenic strain of avian influenza, known as H5N1, which has been affecting Asia since 2002 and which has recently been found in Eastern Europe. It is widely believed that H5N1 is being spread by migratory birds, such as ducks and geese. There have also been some cases where H5N1 is believed to have passed from birds to humans as humans came into contact with live birds that were infected with the disease. The highly pathogenic H5N1 was identified in February 2006 in India's western Maharashtra state and the neighbouring state of Madhya Pradesh and again in July 2007 in the remote north-eastern state of Manipur. Although India has reported no human H5N1 cases, there can be no assurance that avian influenza will not adversely affect demand for poultry internationally and/or domestically, and there can be no assurance that it would not significantly affect our ability to conduct our operations and demand for our products, in each case, in a manner having an adverse effect on our business, reputation and prospects. We are subject to the Prevention of Food Adulteration Act, 1954.

In order to sell food products in India, we are required to comply with the Prevention of Food Adulteration Act, 1954 (the “PFA”). The PFA is considered to be a consumer protection legislation, which has been designed to prevent, curb and check the adulteration of food products and to adequately punish offenders. It covers various aspects of food processing such as food colour, preservatives, pesticide residues, packaging and labelling and regulation of sales. In the past we have not faced any suspension or ban on sale of any of our products under the PFA. However there can be no assurance that we will not be subject to suspensions or proceedings in the future. Any such events are likely to impact our business and results of operations for our beverages and foods and confectionary businesses.

We have entered into, and will continue to enter into, transactions with related parties.

From time to time, we have entered into transactions with affiliates or related parties that include our Promoters and companies forming part of our Promoter Group. Such transactions are made on an arm’s length basis on no less favourable terms than if such transactions were carried out with unaffiliated third parties. Furthermore, our Promoters may have interests in other businesses which are in the same industry as us. Also, some of the companies of our Promoter Group continue to carry on the same business as us, including the estate and property development business. These transactions and interests in the present and future may potentially involve a conflict of interest which may adversely affect our business or harm our reputation. For details of related party transactions, please refer to the notes to our audited consolidated financial statements included in this Placement Document.

There is outstanding litigation against us and our Directors. We and our Directors are defendants in legal proceedings incidental to our businesses and operations. These legal proceedings are pending at different levels of adjudication before various courts, tribunals and statutory authorities.

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Should any new developments arise, such as a change in Indian law or rulings against us by courts or tribunals, we may need to make provisions in our financial statements, which could increase our expenses and our current liabilities. Furthermore, if significant claims are determined against us and we are required to pay all or a portion of the disputed amounts, it could have an adverse effect on our business and profitability. For further details, see the section titled “Legal Proceedings”. Our employee stock option plan entails us loaning funds to a trust in order for it to purchase our equity

shares from the market. There can be no assurance that these loaned funds will be repaid by the trust in a

timely manner or at all.

Our Company instituted an employee stock option plan which provides for the allotment of options, exercisable into equity shares of our Company, to eligible employees of our Company and its subsidiaries. The plan is administered by an independent employee stock option trust which purchases our equity shares from the market, in a number equal to the number of equity shares issuable upon the exercise of the granted options. The Company and its participating subsidiaries lend funds to the trust for the purchase of our Company’s equity shares. As of September 30, 2007, our Company, Agrovet, Godrej Properties Limited, Godrej Hicare Limited and Ensemble Holdings & Finance Limited have loaned Rs. 293.53 million, Rs. 136.93 million, Rs. 77.42 million, Rs. 64.30 million and Rs. 18.80 million, respectively, to the trust. In the event that the trust is unable to repay these loaned funds in a timely manner or at all, our write offs would increase and our profitability would be adversely effected.

Risks Relating to India

A slowdown in economic growth in India could cause our business to suffer.

Our performance and growth are dependent on the health of the Indian economy. The economy could be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalisation policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the Indian economy may adversely impact our business and financial performance and the price of our Equity Shares.

Any downgrading of India’s debt rating by an independent agency may harm our ability to raise financing.

Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely affect our ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our capital expenditure plans, business and financial performance and the price of our Equity Shares.

Force majeure events, terrorist attacks and other acts of violence or war involving India, the United States

or other countries could adversely affect the financial markets, result in a loss of investor confidence and

adversely affect our business, results of operations, financial condition and cash flows.

Certain events that are beyond our control, such as:

• force majeure events, including earthquakes, cyclones, floods and other natural disasters, such as the tsunami which affected several parts of South and South East Asia, including India and Sri Lanka on December 26, 2004;

• terrorist attacks, such as those that occurred in New York and Washington, D.C., on September 11, 2001 and New Delhi on December 13, 2001; and

• other acts of violence or war (including civil unrest, military activity and hostilities among neighbouring countries), which may involve India, the United States or other countries.

Any such event could happen at or otherwise affect one or more of our businesses, which would adversely affect our business, results of operations and financial condition. Moreover, these and other similar events may adversely affect worldwide financial markets and could lead to global economic recession. Such events may also result in a loss of business confidence or have other consequences that could adversely affect our business, results of operations and financial condition. Any of such events could lower confidence in India, as

36

well. The occurrence of any of the foregoing could therefore adversely affect our financial performance or the market price of the Equity Shares, even if unrelated to our business.

An outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere could

have an adverse effect on our business and results of operations.

The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concerns could have a negative impact on the economies, financial markets and business activities in the countries in which our end markets are located, which could have an adverse effect on our business. The outbreak in 2003 of Severe Acute Respiratory Syndrome in Asia and the outbreak of avian influenza, or bird flu, across Asia and Europe, have adversely affected a number of countries and companies including us for our animal feeds business and our integrated poultry business. We can give no assurance that a future outbreak of an infectious disease among humans or animals or any other serious public health concerns will not have an adverse effect on our business.

We are subject to regulatory, economic and political uncertainties in India.

In the early 1990s, India experienced significant inflation, low growth in gross domestic product and shortages of foreign currency reserves. The Indian government provided significant tax incentives and relaxed certain regulatory restrictions in order to encourage foreign investment in specified industries of the economy. We cannot assure you that liberalisation policies will continue. Furthermore, the rate of economic liberalisation could change, and specific laws and policies affecting technology companies, foreign investment, currency exchange rates and other matters affecting investment in our Equity Shares could also change. Since 1996, the government of India has changed six times and the current Indian government is a coalition of many parties, some of which are communist and other far left parties in India. Various factors, including a collapse of the present coalition government due to the withdrawal of support of coalition members, could trigger significant changes in India’s economic liberalisation and deregulation policies, disrupt business and economic conditions in India generally and our business in particular. Our financial performance and the market price of our shares may be adversely affected by changes in inflation, exchange rates and controls, interest rates, government of India policies, social stability or other political, economic or diplomatic developments affecting India in the future.

Significant differences exist between Indian GAAP and other accounting principles with which investors

may be more familiar.

Financial statements included in this Placement Document are prepared in conformity with Indian GAAP. Indian GAAP differs in certain significant respects from IFRS, U.S. GAAP and other accounting principles and auditing standards with which prospective investors may be familiar with in other countries. we do not provide a reconciliation of our financial statements to IFRS or U.S. GAAP. Furthermore, we have not quantified or identified the differences or the impact of the differences between Indian GAAP and IFRS or between Indian GAAP and U.S. GAAP as applied to these financial statements. As there are significant differences between Indian GAAP and IFRS and between Indian GAAP and U.S. GAAP, there may be substantial differences in the results of operations, cash flows and financial positions discussed in this Placement Document if the relevant financial statements were prepared in accordance with IFRS or U.S. GAAP instead of Indian GAAP. The significant accounting policies applied in the preparation of these financial statements are as set forth in notes to the audited financial statements included in this Placement Document. Prospective investors are advised to review the accounting policies applied in the preparation of these financial statements and consult their own professional advisors for an understanding of the differences between Indian GAAP and IFRS and between Indian GAAP and U.S. GAAP and how they might affect the financial information contained in this Placement Document.

Risks Relating to this Issue

There may not be an active or liquid market for our Equity Shares, which may cause the price of the Equity

Shares to fall and may limit your ability to sell the Equity Shares.

The offer price of the Equity Shares being issued in this Issue will be determined by us in consultation with the Book Runners and Global Coordinators based on the Bids received in compliance with Chapter XIII-A of the SEBI Guidelines, and it may not necessarily be indicative of the market price of the Equity Shares after this Issue is complete. You may be unable to resell your Equity Shares at or above the offer price and, as a

37

result, you may lose all or part of your investment. The price at which the Equity Shares will trade after this Issue will be determined by the marketplace and may be influenced by many factors, including:

• our financial results and the financial results of the companies in the businesses we operate in;

• the history of, and the prospects for, our business and the sectors and industries in which we compete;

• an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues and cost structures;

• the present state of our development; and

• the valuation of publicly traded companies that are engaged in business activities similar to ours.

In addition, the Indian stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities of Indian companies. As a result, investors in the Equity Shares may experience a decrease in the value of the Equity Shares regardless of our operating performance or prospects.

There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a

shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

We are subject to a daily “circuit breaker” imposed by all stock exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The maximum movement allowed in the price of the Equity Shares before the circuit breaker is triggered is determined by the Stock Exchanges based on the historical volatility in the price and trading volume of the Equity Shares.

The Stock Exchanges do not inform us of the triggering point of the circuit breaker in effect from time to time, and may change it without our knowledge. This circuit breaker limits the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance may be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time.

There is no guarantee that the Equity Shares being issued in this Issue will be available for trading on the

Stock Exchanges in a timely manner or at all, and any trading closure at the Stock Exchanges may

adversely affect the trading price of our Equity Shares.

Pursuant to Indian regulations, certain actions must be completed before the Equity Shares being issued in this Issue can be listed and trading may commence. In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted until those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorising the issuance of Equity Shares to be submitted. There could be a delay or failure in listing the Equity Shares in the Stock Exchanges. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares.

The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in Europe and the U.S. The BSE and the NSE have in the past experienced problems, including temporary exchange closures, broker defaults, settlements delays and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market price and liquidity of the securities of Indian companies, including the Equity Shares, in both domestic and international markets. A closure of, or trading stoppage on, the BSE or the NSE could adversely affect the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future.

Our stock price may be volatile, and you may be unable to resell your shares at or above the Issue price or

at all.

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The market price of our Equity Shares after this Issue will be subject to significant fluctuations in response to, among other factors:

• variations in our operating results and the performance of our business;

• adverse media reports about us or the industry;

• regulatory developments in our target markets affecting us, our clients or our competitors;

• changes in financial estimates by securities research analysts;

• loss of one or more significant clients;

• the performance of the Indian and global economy;

• significant developments in India’s economic liberalisation and deregulation policies and the fiscal regime; and

• volatility in the Indian and global securities markets.

Many of these factors are beyond our control. There has been recent volatility in the Indian stock markets and our share price could fluctuate significantly as a result of such volatility in the future.

Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.

The Indian securities markets are smaller than securities markets in more developed economies. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. Further, the Indian stock exchanges have experienced recent volatility, with the BSE index declining by almost 25.00% in the summer of 2006 before recovering and since the beginning of 2007, an appreciation of more than 6.95% in the BSE and NSE indices. The Indian stock exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and restricted margin requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of the Equity Shares could be adversely affected.

An investor will not be able to sell any of the Equity Shares purchased in this Issue other than across a

recognised Indian stock exchange for a period of 12 months from the date of the allotment of the Equity

Shares.

As provided in the SEBI Regulations, QIBs purchasing Equity Shares in the Issue may only sell such Equity Shares on the Stock Exchanges and may not enter into any off-market trading in respect of these shares for a period of 12 months from the date of the issue of the Equity Shares in the Issue. We cannot assure you that this restriction will not have an effect on the selling price of the Equity Shares issued in this Issue.

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MARKET PRICE INFORMATION

On September 1, 2006 each Equity Share of the Company of Rs 6 each has been sub divided into 6 Equity Shares of Rs 1 each. As of October 31, 2007, 291,851,652 of our Equity Shares were issued and outstanding. Our Equity Shares are listed on the BSE and NSE. As Equity Shares are actively traded on the BSE and NSE, our stock market data has been given separately for each of these Stock Exchanges. Our Equity Shares have been listed on the Stock Exchanges since March 14, 1990 on the BSE and May 10, 1995 on the NSE, as a result the data given below is for the periods subsequent to such date. The table set forth below is for the periods that indicate the high and low prices of our Company’s Equity Shares and also the volume of trading activity. On October 31, 2007 the closing price of our Company’s Equity Shares on BSE was Rs. 211 per share and on NSE was Rs. 210.45 per share (equity share of face value Rs. 1 per share). The high, low and average market prices of the Equity Shares of our Company during the preceding three years:

BSE

Year

ending

March

31

High

(Rs.)

Date of High Volume on

date of

High

(No. of

Equity

Shares)

Low

(Rs.)

Date of Low Volume

on Date

of low

(No. of

Equity

Shares)

Average (Rs.)

2005 22.18 December 16, 2004 292,688 6.88 May 17, 2004 8,872 12.64 2006 107.55 March 21, 2006 143,469 17.81 April 19, 2005 5,647 47.52

2007 192.20 November 27, 2006 1,078,429 64.16 June 14, 2006 9,967 126.60

(Source: www.bseindia.com)

NSE

Year

ending

March

31

High

(Rs.)

Date of High Volume on

date of

High

(No. of

Equity

Shares)

Low

(Rs.)

Date of Low Volume

on Date

of low

(No. of

Equity

Shares)

Average (Rs.)

2005 22.25 December 20, 2004 223,605 7.02 May 17, 2004 6,723 12.66

2006 107.18 March 21, 2006 251,513 17.77 April 19, 2005 10,996 47.56

2007 192 November 27, 2006 1,307,631 64.42 June 14, 2006 15,767 126.67

(Source: www.nseindia.com)

Notes

• High, low and average prices are of the daily closing prices.

• In case of two days with the same closing price, the date with higher volume has been considered.

Monthly high and low prices on the Stock Exchanges for the six months preceding the date of filing of this Placement Document:

BSE

Month High

(Rs.) Date of High Volume

(No. of

Equity

shares)

Low

(Rs.)

Date of Low Volume

(No. of

Equity

Shares)

Average

(Rs.)

May 2007 187.10 May 29, 2007 234,079 148.60 May 9, 2007 34,801 162.73 June 2007 210.85 June 26, 2007 419,897 168.30 June 8, 2007 75,528 186.75

40

BSE

Month High

(Rs.) Date of High Volume

(No. of

Equity

shares)

Low

(Rs.)

Date of Low Volume

(No. of

Equity

Shares)

Average

(Rs.)

July 2007 220.50 July 12, 2007 135,809 190.20 July 25, 2007 47,664 205.20 August 2007 203.10 August 6, 2007 21,524 161.00 August 23, 2007 44,625 183.48 September 2007

189.00 September 3,

2007 43,152 170.40 September 17,

2007 52,781 177.39 October 2007

212.95 October 30, 2007 472,496 160.7 October 8, 2007 49,724 174.59

(Source: www.bseindia.com)

NSE

Month High

(Rs.)

Date of High Volume

(No. of

Equity

shares)

Low

(Rs.)

Date of Low Volume

(No. of

Equity

Shares)

Average

(Rs.)

May 2007 186.4 May 29, 2007 245,312 148.25 May 9, 2007 42,776 162.50 June 2007 211.1 June 26, 2007 417,891 168.15 June 8, 2007 54,754 186.65 July 2007 220.55 July 12, 2007 199,066 190.75 July 25, 2007 47,550 205.48 August 2007 203.2 August 6, 2007 29,450 161.15 August 23, 2007 67,921 183.62 September 2007

189.25 September 3,

2007 78,993 171.85 September 17,

2007 146,566 177.54 October 2007

213.35 October 30, 2007 441,082 161.05 October 8, 2007 64,962 174.73

(Source : www.nseindia.com)

Notes

• High, low and average prices are of the daily closing prices.

• In case of two days with the same closing price, the date with higher volume has been considered.

Market price on July 30, 2007, the first working day following the Board Meeting approving the Qualified Institutional Placement:

Date BSE NSE

Open High Low Close Open High Low Close

196.90 203.30 191.00 203.05 193.05 204.05 191.10 202.85

Volume on the Date 50,228 82,955

(Source : www.bseindia.com, www.nseindia.com)

Details of the volume of business transacted during the last six months on the Stock Exchanges:

Period BSE NSE

May 2007 1,766,833 2,066,125

June 2007 3,922,597 3,657,531

July 2007 1,328,910 1,724,300

August 2007 912,101 935,384

September 2007 1,340,481 1,281,671

October 2007 2,284,220 2,464,149

(Source : www.nseindia.com, www.bseindia.com)

41

USE OF PROCEEDS

The total proceeds of the Issue will be approximately Rs. 6000 million. After deducting the issue expenses of approximately Rs. 106 million, the net proceeds of the Issue will be approximately Rs. 5894 million.

Purpose of Issue

Subject to compliance with applicable laws and regulations, we intend to use the net proceeds received from the Issue for strategic initiatives, such as strategic relationships and investments improving our leveraging strength by repayment of loans, for general corporate purposes including acquisitions, and for capital expenditure and working capital. As of the date of this Placement Document, we have not entered into any definitive commitment or binding agreement for any material acquisition or strategic relationship.

In accordance with the policies instituted by our Board, our management will have flexibility in deploying the proceeds received by us from the Issue. Pending utilization for the purpose described above, we intend to temporarily invest funds in creditworthy instruments, including money market mutual funds and deposits with banks. Such investments would be in accordance with the investment policies as approved by the Board from time to time.

42

CAPITALISATION AND INDEBTEDNESS

The following table shows as at June 30, 2007:

• our Company’s actual capitalization;

• our Company’s capitalisation as adjusted for the Issue. This table should be read in conjunction with our Company’s unaudited consolidated financial statements as on and for the period ended June 30, 2007, the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the other financial statements and information contained elsewhere in this Placement Document.

As on June 30, 2007 Actual

As adjusted for the

Issue

(Rs. Millions) (Rs. Millions)

Loan Funds: Secured Loans 4,478.52 4,478.52 Unsecured Loans 4,251.65 4,251.65

Total Debt 8,730.17 8,730.17

Shareholders’ Funds: Equity Shares of par value Rs. 1 each, issued and outstanding٭

291.85 319.76

Reserves & surplus 4,746.68 10718.77

Total Shareholders’ Funds 5,038.53 11038.53

Total Capitalization 13,768.70 19768.70

On June 30, 2007, 291,851,652 Equity Shares were issued and outstanding. We intend to issue 27,906,950 ٭Equity Shares pursuant to the Issue, subsequent to which a total of 319,758,602 Equity Shares will be issued and outstanding as of the date of the completion of the Issue. Statement of changes in Equity Share capital up to June 30, 2007:

Date of

Allotment

Number of

Equity Shares

Issue

Price

(Rs.)

Nature of

payment of

Considerati

on

Reasons for change in

the capital

Cumulative

Paid -up Capital

(Rs.)

Cumulative

Share

Premium (Rs.

In million)

February 22, 1988

70 10 Cash Subscribers to Memorandum of Gujarat-Godrej Innovative Chemicals Ltd. (“GGICL”)

700

February 15, 1990

35,153,700 10 Cash Public issue of GGICL 351,537,700

March 31, 1991

12,075,000 10 Cash Conversion of Part B Debentures into equity shares

472,287,700

May 17, 1993

23,615,562 24 Cash Rights issue in GGICL 708,443,320 331

November 29, 1994

39,885,853 As per the Scheme of Amalgamation of Godrej Soaps Limited (GSL) (transferor company) with GGICL (transferee company), the High

398,858,530The figure shown here is the share capital of GSL i.e. the merged and name

43

Date of

Allotment

Number of

Equity Shares

Issue

Price

(Rs.)

Nature of

payment of

Considerati

on


the capital

Cumulative

Paid -up Capital

(Rs.)

Cumulative

Share

Premium (Rs.

In million)

Court of Gujarat at Ahmedabad vide its order dated November 29, 1994 approved the following: 1. That the Share

capital of GGICL be reduced from the existing face value Rs.10/- per equity share to Rs.1 per equity share.

2. Consolidation of Share Capital of GGICL (merged entity) from face value Rs. 1 per equity share to face value Rs.10/-per equity share.

3. Consequent to the merger of GSL with GGICL, the shareholders of GSL were allotted 1 equity share of Rs.10 each in GGICL for every equity of Rs.10 each held by them in GSL.

With effect from January 6, 1995 the name of GGICL (merged entity) was changed to GSL

changed company

September 16, 1995

19,942,927 10 Nil Bonus 1:2 in GSL 598,287,800

April 1, 2001

6 Nil GSL’s business of consumer products was demerged from GSL into a new Company called Godrej Consumer Products Limited and the Chemicals and other businesses of GSL were retained. The name of GSL was changed to GIL with effect from April 2,

2001

358,972,680

44

Date of

Allotment

Number of

Equity Shares

Issue

Price

(Rs.)

Nature of

payment of

Considerati

on


the capital

Cumulative

Paid -up Capital

(Rs.)

Cumulative

Share

Premium (Rs.

In million)

February 1, 2002

1,881,438 6 Nil Demerger of Foods division of Godrej Foods Ltd into GIL and issue of shares to shareholders of Godrej Foods Ltd.

370,261,308

September 12,2002

78,409,656 (purchased & cancelled)

6 Capital reduced due to purchase and cancellation of shares of GIL under the Scheme of Arrangement

291,851,652

September 1,2006

Sub-division of face value from Rs.6 per share to Rs.1 per share

291,851,652

45

DIVIDEND POLICY

Under the Companies Act, an Indian company pays dividends upon the recommendation by the Board of Directors and approval by a majority of the shareholders, who have the right to decrease but not to increase the amount of the dividend recommended by the Board of Directors. Under the Companies Act, dividends may be paid out of profits of a company in the year in which the dividend is declared or out of the undistributed profits or reserves of previous fiscal years or out of both. The dividends declared by us on our Equity Shares during the last three fiscal years have been presented below.

Fiscal Year ended March 31, Particulars

FY 2007 FY 2006 FY 2005

Face Value of Equity Shares (Rs. Per Share) 1.00 6.00 6.00 Final Dividend on Equity Shares (Rs. Per Share) 1.00 5.00 4.00

Total Dividend on Equity Shares (Rs. In millions) 291.85 243.21 194.57

Dividend Tax (Rs. In millions) 49.60 34.11 27.29 The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividend amounts, if any, in the future. Dividends are payable within 30 days of approval by shareholders at our annual general meeting. The Board may from time to time pay shareholders such interim dividend in accordance with the Board’s assessment of our Company’s earnings, cash flow, financial condition and other factors prevailing at the time. When dividends are declared, all the shareholders whose names appear in the Register of Members as on the ‘‘record date’’ or “book closure date” are entitled to be paid dividend declared by us. Any shareholder, who ceases to be a shareholder prior to the record date or becomes a shareholder after the record date, will not be entitled to the dividend declared by us. Under the current Indian tax laws, dividends are not subject to income tax in India in the hands of the recipient. However, the Company is liable to pay a dividend distribution tax, currently at the rate of 15% (plus surcharge at 10% and education cess of 3%), on the total amount distributed as dividend. The effective rate of dividend distribution tax is approximately 17%. For further details, see the section titled “Taxation”.

46

SELECTED HISTORICAL FINANCIAL INFORMATION

The selected financial information as on and for the years ended March 31, 2007, 2006 and 2005 and as on and for the three months ended June 30, 2007 set forth below have been derived from our audited and unaudited consolidated financial statements included elsewhere in this Placement Document. This selected financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited consolidated financial statements included elsewhere in this Placement Document. Our consolidated financial statements are prepared in accordance with Indian GAAP. Indian GAAP differs in certain material respects with IFRS and U.S. GAAP. See “Risk Factors – Risks Related to India – Significant differences exist between Indian GAAP and other

accounting principles with which investors may be more familiar.” For a summary of our significant accounting policies and the basis of the presentation of our financial statements, see the notes to the audited consolidated financial statements included elsewhere in this Placement Document. BALANCE SHEET As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05

Rs. Million Rs. Million Rs. Million Rs. Million

SOURCES OF FUNDS

1 Shareholders' Funds

(a) Share capital 291.85 291.85 291.85 291.26

(b) Share Application Money

- - 600.00 -

(c) Reserves & surplus 4,746.68 4,435.30 3,348.15 3,217.71

5,038.53 4,727.15 4,240.00 3,508.97

2. Minority Interest 303.56 313.96 362.54 339.10

3 Loan Funds

(a) Secured loans 4,478.52 5,071.03 2,998.25 2,797.04

(b) Unsecured loans 4,251.65 4,065.25 2,714.05 1,229.55

8,730.17 9,136.28 5,712.30 4,026.59

4. Deferred Tax Liability 489.27 511.76 387.61 240.99

TOTAL 14,561.53 14,689.15 10,702.45 8,115.65

APPLICATION OF FUNDS

5. Fixed Assets

(a) Gross block 8,880.91 8,772.99 7,765.97 6,700.52

(b) Less: Depreciation / Impairment

3,983.91 3,902.34 3,299.73 3,252.32

(c) Net block 4,897.00 4,870.65 4,466.24 3,448.20

(d) Capital work-in-progress

170.40 260.44 227.49 181.96

5,067.40 5,131.09 4,693.73 3,630.16

6. Goodwill (on consolidation)

2,639.29 2,763.12 1,127.59 1,096.80

47

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


7. Investments 1,953.32 1,937.25 2,410.09 1,747.95

AS ON

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


8. Current Assets, Loans and Advances

(a) Inventories 4,857.87 4,636.22 2,850.10 2,261.70

(b) Sundry debtors 4,943.03 4,564.00 2,305.27 2,074.48

(c) Cash and bank balances

459.23 888.16 910.66 534.32

(d) Other Current Assets 2.48 0.94 2.49 -

(e) Loans and advances 2,921.74 2,730.76 1,721.23 1,632.07

13,184.35 12,820.08 7,789.75 6,502.57

Less : Current Liabilities and Provisions

(a) Liabilities 7,779.68 7,484.98 4,927.87 4,330.22

(b) Provisions 654.46 643.63 612.80 545.56

8,434.14 8,128.61 5,540.67 4,875.78

Net Current Assets 4,750.21 4,691.47 2,249.08 1,626.79

Carried forward 14,410.22 14,522.93 10,480.50 8,101.70

Brought forward

14,410.22

14,522.93

10,480.50

8,101.70

9.

Miscellaneous Expenditure

151.31

166.22

221.95

13.95

(To the extent not written off or adjusted)

TOTAL

14,561.53

14,689.15

10,702.45

8,115.65

48

PROFIT AND LOSS ACCOUNT

Apr - Jun

07

For 2006-

07

For 2005-

06

For 2004-

05

Rs.

Million

Rs.

Million

Rs.

Million

Rs.

Million

INCOME

Turnover (gross) 6,763.30 24,386.48 20,981.63 20,099.92

Less: Excise duty 116.82 596.77 551.91 586.37

Turnover (net) 6,646.48 23,789.71 20,429.72 19,513.55

Other Income 414.82 867.26 631.97 478.18

7,061.30 24,656.97 21,061.69 19,991.73

EXPENDITURE

Materials consumed and cost of sales 5,014.71 17,778.74 15,016.44 14,223.18

Expenses 1,522.41 5,498.02 4,676.31 4,386.61

Inventory change (112.56) (458.11) (222.07) (78.42)

Interest and financial charges (net) 202.10 650.07 452.84 349.65

Depreciation 117.54 428.03 376.68 336.05

6,744.20 23,896.75 20,300.20 19,217.07

Profit Before Tax 317.10 760.22 761.49 774.66

Provision for taxation

- Current Tax 14.32 86.72 119.75 135.99

- Deferred Tax (21.47) 20.46 124.28 (71.88)

- Fringe benefit tax 19.73 19.74 11.48 -

Profit for the year after taxation 304.52 633.30 505.98 710.55

Prior Period adjustments (net) 6.88 (6.51) (1.45) 0.42

311.40 626.79 504.53 710.97

Share of profit/(Loss) in Associates (9.04) 2.45 (7.81) (13.77)

Profit before Minority Interest 302.36 629.24 496.72 697.20

Share of Minority Interest / (Loss) 9.70 (40.43) (6.74) (50.49)

Profit after Minority Interest 312.06 588.81 489.98 646.71

Surplus brought forward 2,639.13 1,822.03 1,791.38 1,531.72

Adjustment for opening profit of subsidiaries/JV (Net)

9.70 873.78 - -

Profit Available For Appropriation 2,960.89 3,284.62 2,281.36 2,178.43

APPROPRIATIONS:

49

Apr - Jun

07

For 2006-

07

For 2005-

06

For 2004-

05

Rs.

Million

Rs.

Million

Rs.

Million

Rs.

Million

Dividend on Equity Shares

- Interim - 87.36

10.60

20.90

- Final - 291.85

255.23

204.49

Tax on distributed profits - 115.48

68.33

54.71

Transfer to General Reserve 5.97 150.79

125.16

106.96

Surplus carried forward 2,954.92 2,639.14

1,822.04

1,791.37

TOTAL 2,960.89 3,284.62

2,281.36

2,178.43

Basic & Diluted Earnings per share (Face Value Rs. 1 per share)

1.07 2.02 1.68 2.01

50

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations is based upon, and should be read in conjunction with, our unaudited consolidated financial statements for the three months ended June 30, 2007 and our audited consolidated financial statements for the fiscal years 2007, 2006 and 2005, including the schedules, annexures and notes thereto and the reports thereon. Our audited consolidated financial statements are prepared in accordance with Indian GAAP. Indian GAAP differs in certain material respects with IFRS and U.S. GAAP. See “Risk Factors – Risks Related to India – Significant differences exist between Indian GAAP and other accounting principles with which investors may be more familiar.”

Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year are to the twelve month period ended March 31 of that year.

The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. For additional information regarding such risks and uncertainties, see “Forward-Looking Statements” and “Risk Factors”.

Overview

We are one of the leading business groups in India with a market capitalisation of Rs. 61,580.77 million as of October 31, 2007, operating in a diverse range of businesses, such as the production and sale of oleochemicals and surfactants, animal feeds, confectionery products, beverages and foods, household insecticides, as well as in the business of developing property. We have been listed on the BSE since 1990 and the NSE since 1995.

We are the listed flagship company of the Godrej group of companies, which is one of the oldest prominent corporate houses in India. The Godrej group was established in 1897 and has since grown into a conglomerate with combined turnover of Rs. 75 billion. The Godrej group was awarded the “Corporate Citizen of the Year” award by the Economic Times in 2003. Additionally, according to a survey undertaken by the Boston Consultancy Group published by Businessworld in June 2007, we ranked fourth highest in India for delivering total shareholder returns of 146% per annum for the period 2002-2007.

Our total income was Rs. 7,061.30 million for the three months ended June 30, 2007 and Rs. 24,656.97 million for the fiscal year 2007, as compared to Rs. 21,061.69 million for the fiscal year 2006, representing an increase of 17.07%. Our net profit was Rs. 312.06 million for the three months ended June 30, 2007 and Rs. 588.81 million for the fiscal year 2007, as compared to Rs. 489.98 million for the fiscal year 2006, representing an increase of 20.17%.

Basis of Presentation

We prepare our consolidated financial statements in accordance with the requirements of Accounting Standard 21 – Consolidated Financial Statements (“AS–21”), Accounting Standard 23 – Accounting for Investments in Associates in Consolidated Financial Statements (“AS – 21”), and Accounting Standard 27 – Financial Reporting of Interests in Joint Ventures (“AS – 27”). See Schedule 21 of our unaudited and audited consolidated financial statements for a list of companies we consolidate in our consolidated financial statements for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005, as subsidiaries, associates or joint ventures. Subsequent to June 30, 2007, (a) our equity interest in Godrej Hershey Foods & Beverages Limited decreased by 6.0% to 37.0% as a result of allotment of additional equity shares to Hershey Company, (b) our subsidiary, Godrej Properties Limited incorporated a wholly-owned subsidiary, Godrej Happy Rises Private Limited and (c) our subsidiary, Godrej International Limited sold all of its equity interest in Godrej Global Mideast FZE to Godrej Consumer Products Limited.

Godrej Tea Limited, the predecessor entity of Godrej Beverages & Foods Limited (currently Godrej Hershey Foods & Beverages Limited), purchased the foods business of our Company on March 31, 2006 for a purchase price of Rs. 700 million. This foods business, at the time of sale, included the business of processing, production and sale of refined vegetable oils and vanaspati (hydrogenated vegetable oil), fruit juices, nectars and drinks and tomato puree. As a result, currently (a) our beverages & foods segment includes the business of processing, production and sale of fruit pulp, tomato puree, fruit juices, nectars and drinks, other beverages and confectionery products and sale of refined vegetable oils and vanaspati, and (b) our vegoils segment includes the business of processing and bulk trading of refined vegetable oils and vanaspati. For the fiscal

51

years 2006 and 2005, our beverages & foods segment was known as the tea segment and comprised of our tea business and our vegoils segment was known as the foods segment and comprised of our foods business. As a result, the revenues and profit before interest, tax and exceptional items for our beverages & foods segment and our vegoils segment for the fiscal periods included here are not comparable.

Segment Information

Our financial results are prepared and presented in eight business segments, chemicals, estate & property development, animal feeds, beverages & foods, vegoils, household insecticides, finance & investments and others. The table below provides segment-wise total income for the periods indicated:

For the Three

Months Ended

June 30, 2007

(Unaudited)

For the Fiscal Year

2007

For the Fiscal Year

2006

For the Fiscal Year

2005

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

Segments: Chemicals1.................. 1,524.50 21.59 5,708.53 23.15 5,117.77 24.30 5,416.05 27.09 Estate & Property Development2

............. 424.32 6.01 1,581.95 6.42 915.12 4.34 613.89 3.07 Animal Feeds3

............. 2,283.46 32.34 7,276.78 29.51 6,760.98 32.10 6,539.97 32.71 Beverages & Foods4

.... 352.01 4.99 1,356.43 5.50 78.29 0.37 157.91 0.79 Vegoils5

....................... 13.30 0.19 508.57 2.06 2,111.50 10.03 1,919.20 9.60 Household Insecticides6

................. 279.28 3.96 1,356.45 5.50 1,117.65 5.31 1,108.75 5.55 Finance & Investments7

................ 378.78 5.36 707.88 2.87 349.63 1.66 367.46 1.84 Others8

......................... 1,805.65 25.56 6,160.38 24.99 4,610.75 21.89 3,868.50 19.35

Total

............................ 7,061.30 100.00 24,656.97 100.00 21,061.69 100.00 19,991.73 100.00

1. The chemicals segment includes the business of production and sale of oleochemicals and surfactants, such as fatty acids, fatty alcohols, refined glycerine, alpha olefin sulphonates, sodium lauryl sulphate and sodium lauryl ether sulphate.

2. The estate & property development segment includes the business of the development and sale of real estate and leasing and leave and licensing (short-term rentals), of properties.

3. The animal feeds segment includes the business of production and sale of compound feeds for cattle, poultry, shrimp and fish.

4. The beverages & foods segment includes the business of processing, production and sale of fruit pulp, tomato puree, fruit juices, nectars and drinks, other beverages and confectionary products and sale of refined vegetable oils, vanaspati and tea. See “– Basis of Presentation”. For the fiscal years 2006 and 2005, this segment also included our tea business.

5. The vegoils segment includes the business of processing and bulk trading of refined vegetable oils and vanaspati. See “Basis of Presentation”. For the fiscal years 2006 and 2005, this segment comprised our foods business.

52

6. The household insecticides segment includes the business of production and sale of household insecticides and commercial pest management services.

7. The finance & investments segment includes our investments in associates and other companies such as Godrej Consumer Products Limited, CBaySystems Holdings Limited, Avestha Gengraine Technologies Limited and Verseon LLC.

8. The others segment includes (a) our rural based businesses comprising rural retailing, integrated poultry business, oil palm plantation, agricultural inputs and tissue culture and (b) our other businesses comprising international vegetable oil trading, the distribution of medical diagnostics equipment, the generation of wind energy, the business process outsourcing business for healthcare, finance and accounting sectors and urban retailing.

The table below provides segment-wise profit before interest, tax and exceptional items (“PBIT”) for the periods indicated:

For the Three

Months Ended

June 30, 2007

(Unaudited)

For the Fiscal

Year 2007

For the Fiscal

Year 2006

For the Fiscal

Year 2005

(Rs. in

Millions)

% of

Total

PBIT

(Rs. in

Millions)

% of

Total

PBIT

(Rs. in

Millions)

% of

Total

PBIT

(Rs. in

Millions)

% of

Total

PBIT

Segments: Chemicals ................... 66.90 10.16 54.07 2.85 476.03 31.58 619.24 43.04 Estate & Property Development .............. 170.10 25.82 639.20 33.76 361.34 23.97 239.16 16.62 Animal Feeds ............... 72.92 11.07 118.15 6.24 158.62 10.52 215.74 15.00 Beverages & Foods .... (6.95) (1.06) 21.55 1.14 (74.02) (4.91) (135.36) (9.42) Vegoils ....................... (14.00) (2.13) (32.23) (1.70) (34.29) (2.27) (85.68) (5.95) Household Insecticides ................. 20.66 3.14 175.17 9.25 131.23 8.71 83.99 5.84 Finance & Investments ................ 382.70 58.10 707.88 37.40 349.64 23.20 363.67 25.28 Others ......................... (33.66) (5.10) 209.45 11.06 138.59 9.20 137.97 9.59

Total

........................... 658.67 100.00 1,893.24 100.00 1,507.16 100.00 1,438.73 100.00

Factors Affecting Our Results of Operations

Our results of operations and financial condition are affected by a number of factors, including the following, which are of particular importance:

General Economic Condition

The economic condition of India has a direct impact on our income as most of our businesses and operations are located in India and a substantial majority of our income is derived from India. We believe that the success of our business is dependant on the general economic conditions in India. Growth in the GDP and per capita income of Indians generally results in increased demand for a number of our products as well as our property developments and as such, an increase in our income.

53

The real estate development industry has shown an increase in demand in the past few years in all types of development, including housing, IT and industrial parks and shopping malls. Rising disposable incomes in the middle and higher income groups have resulted in an increase in demand for improved residential housing, as well as higher quality retail space. The growth in the Indian economy, and specifically the success of the Indian IT and other industries, has also led to increased demand for high quality space.

Costs and Availability of Raw Materials

Costs and availability of key raw materials is crucial for our operations. Any disruption in supply, or increase in the costs, of such materials could affect our ability to reach our customers with a successful value proposition and satisfy existing demand. A substantial portion of our raw materials include crops or derivatives from crops, such as palm and vegetable oils, maize, crop extracts and bran, whose availability may be seasonal and may be subject to harvests and other natural and manmade fluctuations in supply. Our materials consumed and cost of sales for property development comprised 74.36% and 74.40%, of our total expenditure for the three months ended June 30, 2007 and the fiscal year 2007, respectively.

Costs of Land and Construction in Our Property Development Business

Our operations are dependent on the availability of land at appropriate locations for our developments as well as the cost of acquisition of land and, in case of joint development, the terms of sharing of revenues or profits. Our growth is directly linked to the availability of land in areas where we can develop properties that are marketable. Any government regulations, policies or other development that restrict the acquisition of land or increase competition for land may therefore affect our operations. Land used in a specific project is assigned to such project and included in the cost of construction and development of such project. Such costs of land, together with costs of construction and development, are capitalised for projects where we retain ownership of the property and expensed for projects which we sell.

The cost of construction primarily comprise of cost of raw materials such as steel, cement, flooring products, doors and windows, bathroom fixtures, other interior fittings and other materials as well as subcontractor costs and expenses, labour costs, architects’ and consultants’ fees, power costs, rates and taxes allocable to projects and other miscellaneous construction expenses. Our costs of land and construction, provided as cost of sales in our consolidated financial statements are expected to be a significant portion of our total expenditure in the future as our property development business grows.

Government Regulations and Policies, Including Taxes and Duties

Government regulations, policies and incentives, especially in chemicals, animal feeds and food and beverages businesses in India, and overseas, directly affect our results of operations. A number of our products are subject to indirect taxes such as sales tax, value added tax, excise duty and service tax. Our current indirect tax profile is based on current tariff classifications and rates, which could change at anytime. If any such change is adverse to our business, our results of operations may be adversely affected. Government regulations, policies and incentives for property development also directly affect our results of operations.

Critical Accounting Policies

Our financial statements have been prepared under the historical cost convention method, on the accrual basis of accounting, in accordance with Indian GAAP and the accounting standards prescribed by the Institute of Chartered Accountants of India. Certain critical accounting policies that are relevant to our business and operations are described below. For a description of our significant accounting policies, see Schedule 20 of our audited consolidated financial statements.

Revenue Recognition

We account for income from sales (other than income from sales of constructed properties), when goods are supplied, and is recorded net of returns, trade discounts, rebates, sales taxes and excise duty. Income from processing operations is recognised on completion of production and dispatch of the goods, pursuant to the terms of the contract. Export incentives receivable under the duty entitlement pass book scheme and the duty drawback scheme are accounted on accrual basis.

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We account for income from sale of constructed properties based on the percentage of completion method. Under this method, revenue is recognised in proportion to the actual cost incurred to the total estimated cost of the project under execution. Determination of revenues under the percentage of completion method necessarily involves our making estimates, some of which are of technical nature, concerning where relevant the percentage of completion, the cost of completion, the expected revenues from the project or activity and the foreseeable losses.

Dividend income is recognised when the right to receive such dividend is established. Interest income is recognised on a basis proportional to the duration of the interest generating period of the investment.

Income from assets provided on operating leases is recognised on a straight line basis over the term of the lease. Such assets comprise of commercial and residential properties which are rented pursuant to leave and licence agreements with initial terms of 12 to 36 months, which are renewable by mutual consent on mutually acceptable terms.

Fixed Assets

Fixed assets are stated at cost or as revalued less accumulated depreciation. Cost includes all expenses related to acquisition and installation of the concerned assets. Exchange differences arising on account of repayment and year-end translation of foreign currency liabilities relating to acquisition of fixed assets from outside India are adjusted to the carrying cost of the respective assets up to March 31, 2007 and thereafter charged to our profit and loss account. Fixed assets acquired under finance lease are capitalised at the lower of their face value and present value of the minimum lease payments.

Intangible Assets

We have evaluated the useful lives of intangible assets, such as goodwill, trademarks, non-compete fees and acquisition value of contracts, based on the nature of business, growth rates and estimated discounted cash flows. Intangible assets are amortised over their estimated useful life as follows:

Particulars Estimated Useful Life

Goodwill .......................................... 8 – 10 years Trademarks ....................... .............. 8 – 15 years Non-compete Fees .......................... 7 – 8 years

Acquisition Costs of Contracts .... 3 years Trees Development Cost ............... 15 years Computer Software ........................ 6 years

Asset Impairment

We review the carrying values of tangible and intangible assets for any possible impairment at each balance-sheet date. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value based on appropriate discount rates.

Depreciation

Leasehold land is amortised equally over the period of the lease. Leasehold improvements are amortised over five years.

Depreciation is provided on the straight line method at the rates specified in Schedule XIV to the Companies Act, 1956, as amended, except in certain subsidiaries, where depreciation has been provided on the written down value method. The impact of the differing method of depreciation has not been ascertained but is not likely to be material.

Computer hardware is depreciated over its estimated useful life of four years. Depreciation on assets acquired during the year is provided for the full accounting year and no depreciation is charged on the assets sold/discarded during the year, except in case of major additions and deductions exceeding Rs. 10.00 million, in which case, proportionate depreciation is provided. Depreciation on revalued components is provided on the

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straight line method based on the balance useful life of the assets, as certified by valuers. Such depreciation is withdrawn from our revaluation reserve and credited to profit and loss account.

Inventories

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

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

Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated based upon period-end exchange rates. Forward exchange contracts, remaining unsettled at period-ends, backed by underlying assets or liabilities are also translated at period-end exchange rates. Premium or discount on forward exchange contract is amortised over the period of the contract and recognised as income or expense for the period. Exchange gains/losses are recognised in the profit and loss account except for exchange differences relating to fixed assets acquired from outside India, which are adjusted in the cost of the asset up to March 31, 2007 and thereafter charged to our profit and loss account. Non-monetary foreign currency items such as investments in foreign subsidiaries are carried at cost and expressed in Rupees at the rate of exchange prevailing at the time of making the original investment.

Deferred Revenue Expenditure

The compensation payable under our voluntary retirement schemes, the benefit of which is expected to accrue in future is deferred over its payback period. The compensation is generally amortised over three to five years depending on the payback period.

Results of Operations

The following table sets forth select financial data from our profit and loss account for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005, the components of which are also expressed as a percentage of total income for such periods.

For the Fiscal Year For the Three

Months Ended

June 30, 2007 2007 2006 2005

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

Income:

Turnover, Gross 6,763.30 95.78 24,386.48 98.90 20,981.63 99.62 20,099.92 100.54 Less: Excise Duty

116.82 1.65 596.77 2.42 551.91 2.62 586.37 2.93

Turnover, Net 6,646.48 94.13 23,789.71 96.48 20,429.72 97.00 19,513.55 97.61

Other Income 414.82 5.87 867.26 3.52 631.97 3.00 478.18 2.39

Total Income 7,061.30 100.00 24,656.97 100.00 21,061.69 100.00 19,991.73 100.00

Expenditure:

Materials Consumed and Cost of Sales

5,014.71 71.02 17,778.74 72.10 15,016.44 71.30 14,223.18 71.15

Expenses 1,522.41 21.56 5,498.02 22.30 4,676.31 22.20 4,386.61 21.94 Inventory Change (112.56) (1.59) (458.11) (1.86) (222.07) (1.05) (78.42) (0.39) Interest and 202.10 2.86 650.07 2.64 452.84 2.15 349.65 1.75

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For the Fiscal Year For the Three

Months Ended

June 30, 2007 2007 2006 2005

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

(Rs. in

Millions)

% of

Total

Income

Financial Charges, Net Depreciation 117.54 1.66 428.03 1.74 376.68 1.79 336.05 1.68

Total

Expenditure

6,744.20 95.51 23,896.75 96.92 20,300.20 96.38 19,217.07 96.13

Profit Before

Tax

317.10 4.49 760.22 3.08 761.49 3.62 774.66 3.87

Taxation:

Current Tax Liability

14.32 0.20 86.72 0.35 119.75 0.57 135.99 0.68

Deferred Tax Liability/(Asset)

(21.47) (0.30) 20.46 0.08 124.28 0.59 (71.88) (0.36)

Fringe Benefit Tax

19.73 0.28 19.74 0.08 11.48 0.05 - -

Total Taxation 12.58 0.18 126.92 0.51 255.51 1.21 64.11 0.32

Profit After Tax 304.52 4.31 633.30 2.57 505.98 2.40 710.55 3.55

Prior Period Adjustments, Net

6.88 0.10 (6.51) (0.03) (1.45) (0.01) 0.42 0.00

Share of Profit/(Loss) in Associates

(9.04) (0.13) 2.45 0.01 (7.81) (0.04) (13.77) (0.07)

Share of Minority Interest/(Loss)

9.70 0.14 (40.43) (0.16) (6.74) (0.03) (50.49) (0.25)

Net Profit 312.06 4.42 588.81 2.39 489.98 2.33 646.71 3.23

Income. We derive income from (a) the production and sale of oleochemicals and surfactants, (b) the development and sale of real estate and leasing and leave and licensing of properties, (c) the production and sale of compound feeds for cattle, poultry, shrimp and fish, (d) the processing, production and sale of fruit pulp and tomato puree, fruit juices, nectars and drinks, other beverages and confectionery products and sale of refined vegetable oils, vanaspati,and tea (e) the processing and bulk trading of refined vegetable oils and vanaspati, (f) the production and sale of household insecticides and commercial pest management services, (g) investments in associates and other companies, and (h) our rural based businesses comprising rural retailing, integrated poultry business, oil palm plantation, agricultural inputs and tissue culture and our other businesses comprising international vegetable oil trading, the distribution of medical diagnostics equipment, the generation of wind energy, the business process outsourcing business for healthcare, finance and accounting sectors and urban retailing.

Our other income includes dividend income received on investments made, interest income from investments and bank deposits, tax refunds, profits from sale of fixed assets and long-term investments and other miscellaneous income.

Our total income was Rs. 7,061.30 million for the three months ended June 30, 2007. Our total income was Rs. 24,656.97 million for the fiscal year 2007 as compared to Rs. 21,061.69 million for the fiscal year 2006 and Rs. 19,991.73 million for the fiscal year 2005, representing year over year increases of 17.07% and 5.35%, respectively. The increase in our total income for the fiscal year 2007 was comparatively more than such increase in fiscal year 2006 primarily due to the increase in turnover as a result of the growth of our property development business, confectionary business, income from sale of or returns from our investments, and poultry and oil palm plantation business.

Expenditure. Our total expenditure consists of costs of materials consumed and cost of sales, expenses, including administrative, operational, employees’ remuneration and general expenses, interest and financial charges and depreciation. Our total expenditure as a percentage of our total income was 95.51%, 96.92%,

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96.38% and 96.13% for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005, respectively.

Materials Consumed and Cost of Sales. Our costs of materials consumed consists of raw material costs in our various businesses, other than our property development business, cost of sales of properties and costs of purchase of goods for resale. Our costs of raw materials consumed primarily includes costs of (a) palm oil derivatives such as crude palm stearin, palm fatty acid distillate and palm kernel oil, and crude glycerin and alpha olefin in our chemicals business, (b) maize, soy extract, rice bran extract and de-oiled rice bran in our animal feeds business and (c) unprocessed vegetable oils and other edible products in our vegetable oils, beverages and foods businesses. Our cost of sales consists of costs of developing our properties, including costs of our building and finishing materials, costs of acquisition or development rights of land, construction expenses including subcontractor costs and expenses, labour costs, architects’ and consultants’ fees, power costs, rates and taxes allocable to projects and other miscellaneous construction expenses. Our costs of purchase of goods for resale relates primarily to our medical diagnostics and oil trading businesses. Our costs of material consumed also includes such costs of our jointly controlled entities, but only in proportion to our equity interests, as a result of our share in such jointly controlled entities.

Of Rs. 5,014.71 million of costs of materials consumed and cost of sales for the three months ended June 30, 2007, Rs. 4,008.51 million was attributable to raw materials consumed during such period, Rs. 214.04 million was attributable to cost of sales in our property development business, Rs. 436.30 million was from purchase of goods for resale and Rs. 355.86 million was due to our share of such expenses in jointly controlled entities. Of Rs. 17,778.74 million of costs of materials consumed and cost of sales for the fiscal year 2007, Rs. 13,569.94 million was attributable to raw materials consumed during such period, Rs. 758.40 million was attributable to cost of sales in our property development business, Rs. 1,977.56 million was from purchase of goods for resale and Rs. 1,472.85 million was due to our share of such expenses in jointly controlled entities.

Costs of materials consumed and cost of sales for property development are our most significant expenses and accounted for 71.02%, 72.10%, 71.30% and 71.15% of our total income for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005, respectively.

Expenses. Our expenses consist of salaries, wages and allowances paid to our officers and employees, contributions to provident and other funds for the benefit of our officers and employees, employee welfare expenses, costs of stores and spares consumed, power and fuel expenses, processing charges, rental costs, rates and taxes, costs of repairs and maintenance of machinery, buildings and other assets, insurance premiums, freight expenses, commissions, discounts, advertisement and publicity costs, sales promotion charges, selling and distribution expenses, costs of bad debts written off, provisions for doubtful debts, advances and depletion in the value of long-term investments, foreign exchange fluctuations in connection with imports of raw materials and other miscellaneous expenses. Our expenses do not include the costs of labour, architects or consultants and other costs which are allocable to specific developments in our property development business and are included under cost of sales for property development.

In December 2005, our Company instituted an employee stock option plan. Subsequent to our six for one stock split on September 1, 2006, the plan provides for the allotment of 9.00 million options, exercisable into such number of equity shares of our Company, to eligible employees of participating companies, which include our Company and its subsidiaries. The plan is administered by an independent employee stock option trust which purchases our equity shares from the market, in a number equal to the number of equity shares issued upon the exercise of the granted options. The participating companies lend funds to the trust for the purchase of equity shares. In December 2005, we granted 2.10 million options, on a stock split basis. Thereafter in April 2007, we granted additional 2.625 million options. The options vest three years after the date of the grant, provided that the employee continues to be in employment. The vested options must be exercised within two years of the date of vesting. The accounting for the option plans is based on the intrinsic value method and no compensation expense has been recognised since the market price of the equity shares at the grant date is the same or less than the exercise price of the option.

Our expenses accounted for 21.56%, 22.30%, 22.20% and 21.94% of our total income for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005.

Inventory Change. Our costs attributable to change in inventory is as a result of increase or decrease in inventory levels from such levels at the commencement of the fiscal period to such levels at the end of the fiscal period in finished goods and work-in-progress over all our businesses.

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Interest and Financial Charges. Interest and financial charges consist of interest paid on term loans, bank credit and overdraft facilities, inter-company deposits and other interest and is net of interest capitalised on property development loans during the construction period of such properties, and interest received on loans and deposits made by us, customer advances, and property development projects and landlord deposits. It also includes financial charges, gains or losses from foreign exchange fluctuations and our proportional share of such expenses in jointly controlled entities. Interest and financial charges accounted for 2.86%, 2.64%, 2.15% and 1.75% of our total income for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005, respectively. Our interest and financial charges have increased over the past three fiscal years as a result of the growth of our business and operations. See “– Financial Condition, Liquidity and Capital Resources – Indebtedness” for a summary of our outstanding indebtedness.

Depreciation. Depreciation accounted for 1.66%, 1.74%, 1.79% and 1.68% of our total income for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005, respectively. The following table provides the depreciation rates for our tangible assets as of March 31, 2007:

Assets Annual Depreciation Rate (%)

Plants and Machinery: Batch...................................................................... Continuous Process ............................................... Extra Shift in case of Batch ..................................

4.75 5.28 4.75 – 10.34

Buildings: Residential ............................................................ Factory...................................................................

1.67 3.34

Office Equipment ................................................. 4.75

Electrical Installations........................................... 4.75

Motor Vehicles ..................................................... 9.50

Interiors, Furniture and Fixtures ........................... 6.33

Computers ............................................................. 25.00

Taxation. Taxes accounted for 0.18%, 0.51%, 1.21% and 0.32% of our total income for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005, respectively. We provide for current taxes, comprising of income tax, wealth tax and fringe benefit tax, as well as deferred taxes. Current tax rates applicable to us for the fiscal year 2007 are as follows:

Type of Tax Rate

Corporate Income Tax on Normal Income 30.00%

Minimum Alternate Tax 10.00%

Surcharge on Corporate Income Tax and Minimum Alternate Tax 10.00%

Education Cess on Corporate Income Tax, Minimum Alternate Tax and Surcharge 2.00%

Prior Period Adjustments. Prior period adjustments relate to certain excess provisions for income tax and certain other expenses, and relate to periods prior to the relevant fiscal periods.

Share of Profit/(Loss) in Associates. Our share of profit/(loss) in associates is primarily attributable to our profit or loss from investments in associate companies, such as Swadeshi Detergents Limited and Godrej

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Upstream Limited. See Schedule 21 of our audited consolidated financial statements for a list of companies we consolidate in our consolidated financial statements for the fiscal years 2007, 2006 and 2005 as associates.

Share of Minority Interest. Share of minority interest is as a result of our consolidating, but not owning 100% of the equity interests in subsidiaries. We own 82.88% of Godrej Properties Limited, 70.30% of Godrej Agrovet Limited and 85.91% of Godrej Hicare Limited. See Schedule 21 of our audited consolidated financial statements for a list of companies we consolidate in our consolidated financial statements for the fiscal years 2007, 2006 and 2005 as subsidiaries, including our equity interests in such companies.

Three Months Ended June 30, 2007

Our results of operations for the three months ended June 30, 2007 were particularly influenced by the following factors:

• the growth of our chemicals and animal feeds businesses, increase of returns from investments (primarily as a result of the sale of certain equity shares of Godrej Hershey Foods & Beverages Limited) and the growth of integrated poultry and oil palm plantation businesses;

• the improvement of margins in our chemicals and animal feeds businesses; and

• the decrease of margins in our beverages and foods business.

Income. Our total income for the three months ended June 30, 2007 was Rs. 7,061.30 million and comprised of gross turnover of Rs. 6,763.30 million and other income of Rs. 414.82 million. For the three months ended June 30, 2007, Rs. 2,283.46 million of our total income was attributable to the animal feeds segment, Rs. 1,805.65 million to the others segment and Rs. 1,524.50 million to the chemicals segment.

Expenditure. Our total expenditure for the three months ended June 30, 2007 was Rs. 6,744.20 million and comprised primarily of materials consumed and cost of sales of Rs. 5,014.71 million and expenses of Rs. 1,522.41 million.

Materials Consumed and Cost of Sales. Our materials consumed and cost of sales for the three months ended June 30, 2007 was Rs. 5,014.71 million, of which Rs. 4,008.51 million was attributable to raw materials consumed during such period, Rs. 214.04 million was attributable to cost of sales in our property development business, Rs. 436.30 million was from purchase of goods for resale and Rs. 355.86 million was due to our share of such expenses in jointly controlled entities.

Expenses. Our expenses for the three months ended June 30, 2007 were Rs. 1,522.41 million. Such expenses primarily included salaries, wages and allowances paid to our officers and employees, miscellaneous expenses, power and fuel expenses, foreign exchange losses, processing charges and freight expenses.

Inventory Change. Our increase in inventory for the three months ended June 30, 2007 was Rs. 112.56 million.

Interest and Financial Charges. Our interest and financial charges for the three months ended June 30, 2007 were Rs. 202.10 million.

Depreciation. Our depreciation costs for the three months ended June 30, 2007 were Rs. 117.54 million.

Taxation. Our taxes for the three months ended June 30, 2007 were Rs. 12.58 million.

Net Profit. Our net profit for the three months ended June 30, 2007 was Rs. 312.06 million.

Fiscal Year 2007 Compared to Fiscal Year 2006

Our results of operations for the fiscal year 2007 were particularly influenced by the following factors:

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• the growth of our property development, animal feeds and oil palm plantation businesses, the increase in returns from investments and the acquisition of Nutrine Confectionery Company Limited; and

• the decrease of margins in our chemicals business due to cyclicality, announcements of additional production capacities and supply-demand mismatch.

Income. Our total income increased by 17.07% to Rs. 24,656.97 million for the fiscal year 2007 from Rs. 21,061.69 million for the fiscal year 2006, primarily due to the increase in our turnover.

Our gross turnover increased by 16.23% to Rs. 24,386.48 million for the fiscal year 2007 from Rs. 20,981.63 million for the fiscal year 2006, primarily due to the growth of our property development business, as well as confectionary products, poultry and oil palm plantation businesses.

Our other income increased by 37.23% to Rs. 867.26 million for the fiscal year 2007 from Rs. 631.97 million for the fiscal year 2006, primarily due to profit on sale of long-term investments.

Our income from our chemicals segment increased by 11.54% to Rs. 5,708.53 million for the fiscal year 2007 from Rs. 5,117.77 million for the fiscal year 2006, primarily due to the increase in production of chemicals due to the increase in our production capacity as a result of the commissioning of our export oriented unit in March 2006. Our income from our estate & property development segment increased by 72.87% to Rs. 1,581.95 million for the fiscal year 2007 from Rs. 915.12 million for the fiscal year 2006, primarily due to the recognition of revenue from our developments, Godrej Woodsman Estate in Bangalore and Planet Godrej in Mumbai. In addition, our income from our animal feeds segment increased by 7.63% to Rs. 7,276.78 million for the fiscal year 2007 from Rs. 6,760.98 million for the fiscal year 2006.

Expenditure. Our total expenditure increased by 17.72% to Rs. 23,896.75 million for the fiscal year 2007 from Rs. 20,300.20 million for the fiscal year 2006, primarily due to the increase in our materials consumed and cost of sales and expenses.

Materials Consumed and Cost of Sales. Our materials consumed and cost of sales increased by 18.40% to Rs. 17,778.74 million for the fiscal year 2007 from Rs. 15,016.44 million for the fiscal year 2006, primarily due to an increase in consumption of raw materials in our animal feeds, agricultural inputs and poultry businesses, an increase in cost of sales in our property development business, and an increase in purchase of goods for resale, all due to the growth in our business and operations. Our materials consumed also increased as a result of the increase in average prices of raw materials as well as the amount of raw materials consumed in our chemicals business. In addition, our materials consumed and cost of sales increased as a result of the increase in our share of such costs in jointly controlled entities, primarily in the household insecticides, confectionery and beverages & foods businesses. Of Rs. 17,778.74 million of cost of materials consumed and cost of sales for the fiscal year 2007, Rs. 13,569.94 million was attributable to raw materials consumed during such period, Rs. 758.40 million was attributable to cost of sales in our property development business, Rs. 1,977.56 million was from purchase of goods for resale and Rs. 1,472.85 million was due to our share of such expenses in jointly controlled entities. Of Rs. 15,016.44 million of cost of materials consumed and cost of sales for the fiscal year 2006, Rs. 12,258.33 million was attributable to raw materials consumed during such period, Rs. 425.25 million was attributable to cost of sales in our property development business, Rs. 1,808.56 million was from purchase of goods for resale and Rs. 524.31 million was due to our share of such expenses in jointly controlled entities.

Expenses. Our expenses increased by 17.57% to Rs. 5,498.02 million for the fiscal year 2007 from Rs. 4,676.31 million for the fiscal year 2006, primarily due to an increase in salaries, wages and allowances due to annual revisions in compensation as well as increase in number of employees, increases in power, fuel and miscellaneous expenses and an increase in our share of such costs in jointly controlled entities, primarily in the household insecticides, confectionery and beverages and foods businesses.

Inventory Change. Our change in inventory was Rs. 458.11 million for the fiscal year 2007 compared to Rs. 222.07 million for the fiscal year 2006, primarily due to the increase in inventory in our chemicals business.

Interest and Financial Charges. Our interest and financial charges increased by 43.55% to Rs. 650.07 million for the fiscal year 2007 from Rs. 452.84 million for the fiscal year 2006, primarily due to an increase in interest paid, as a result of an increase in outstanding indebtedness, and an increase in variable interest rates, partially offset by foreign exchange gains.

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Depreciation. Our depreciation costs increased by 13.63% to Rs. 428.03 million for the fiscal year 2007 from Rs. 376.68 million for the fiscal year 2006, primarily due to addition of fixed assets. Our additions to fixed assets for the fiscal year 2007 included additions to chemical production facilities, poultry production facilities, our rural retailing business, palm oil processing mill and our offices in Vikhroli, Mumbai.

Taxation. Our taxes decreased by 50.33% to Rs. 126.92 million for the fiscal year 2007 from Rs. 255.51 million for the fiscal year 2006, primarily due to minimum alternate tax credits and the effect of tax planning in the fiscal year 2006 as a result of commissioning of our windmills and contributions to gratuity funds. Our effective tax rate for the fiscal year 2007 was 16.70% as compared to 33.55% for the fiscal year 2006.

Net Profit. Our net profit increased by 20.17% to Rs. 588.81 million for the fiscal year 2007 from Rs. 489.98 million for the fiscal year 2006.

Fiscal Year 2006 Compared to Fiscal Year 2005

Our results of operations for the fiscal year 2006 were particularly affected by the following factor:

• the growth of our property development, vegetable oils, poultry, agricultural inputs and pest management solutions businesses, partially offset by a decrease in revenues from our chemicals business.

Income. Our total income increased by 5.35% to Rs. 21,061.69 million for the fiscal year 2006 from Rs. 19,991.73 million for the fiscal year 2005, due to the increase in our turnover and other income.

Our gross turnover increased by 4.39% to Rs. 20,981.63 million for the fiscal year 2006 from Rs. 20,099.92 million for the fiscal year 2005, primarily due to the growth of our property development business, vegetable oils, poultry, agricultural inputs and pest management solutions businesses, partially offset by a decrease in revenues from our chemicals business.

Our other income increased by 32.16% to Rs. 631.97 million for the fiscal year 2006 from Rs. 478.18 million for the fiscal year 2005, primarily due to dividend income, miscellaneous income, interest income from deposits, profit from sale of certain fixed assets.

Our income from our chemicals segment decreased by 5.51% to Rs. 5,117.77 million for the fiscal year 2006 from Rs. 5,416.05 million for the fiscal year 2005, primarily due to a decrease in international selling prices together with a reduction in customs duty, which adversely affected domestic prices. Our income from our estate & property development segment increased by 49.07% to Rs. 915.12 million for the fiscal year 2007 from Rs. 613.89 million for the fiscal year 2006, primarily due to the recognition of revenue from our developments, Godrej Woodsman Estate in Bangalore, Planet Godrej in Mumbai, Godrej Castlemaine in Pune, Godrej Waldorf in Mumbai, Godrej Coliseum in Mumbai and Godrej Eternia in Pune. Our income from our animal feeds segment increased by 3.38% to Rs. 6,760.98 million for the fiscal year 2007 from Rs. 6,539.97 million for the fiscal year 2006, primarily due to an increase in sale of shrimp feed.

Expenditure. Our total expenditure increased by 5.64% to Rs. 20,300.20 million for the fiscal year 2006 from Rs. 19,217.07 million for the fiscal year 2005, primarily due to the increase in our materials consumed and cost of sales and expenses.

Materials Consumed and Cost of Sales. Our materials consumed and cost of sales increased by 5.58% to Rs. 15,016.44 million for the fiscal year 2006 from Rs. 14,223.18 million for the fiscal year 2005, primarily due to an increase in cost of sales in our property development business and an increase in purchase of goods for resale. In addition, our materials consumed and cost of sales also increased as a result of the increase in our share of such costs in jointly controlled entities, primarily in the household insecticides and beverages and foods businesses. Of Rs. 15,016.44 million of cost of materials consumed and cost of sales for the fiscal year 2006, Rs. 12,258.33 million was attributable to raw materials consumed during such period, Rs. 425.25 million was attributable to cost of sales in our property development business, Rs. 1,808.56 million was from purchase of goods for resale and Rs. 524.31 million was due to our share of such expenses in jointly controlled entities. Of Rs. 14,223.18 million of cost of materials consumed and cost of sales for the fiscal year 2005, Rs. 12,279.90 million was attributable to raw materials consumed during such period, Rs. 261.36 million was attributable to cost of sales in our property development business, Rs. 1,198.16 million was from purchase of goods for resale and Rs. 483.77 million was due to our share of such expenses in jointly controlled entities.

62

Expenses. Our expenses increased by 6.60% to Rs. 4,676.31 million for the fiscal year 2006 from Rs. 4,386.61 million for the fiscal year 2005, primarily due to an increase in power and fuel costs, freight expenses, selling and distribution expenses, legal, professional and consultancy fees and miscellaneous expenses.

Inventory Change. Our change in inventory was Rs. 222.07 million for the fiscal year 2006 as compared to Rs. 78.42 million for the fiscal year 2005, primarily due to the increase in inventory in our various businesses.

Interest and Financial Charges. Our interest and financial charges increased by 29.51% to Rs. 452.84 million for the fiscal year 2006 from Rs. 349.65 million for the fiscal year 2005, primarily due to an increase in interest paid, as a result of an increase in outstanding indebtedness, particularly term loans, partially offset by a decrease in foreign exchange losses.

Depreciation. Our depreciation cost increased by 12.09% to Rs. 376.68 million for the fiscal year 2006 from Rs. 336.06 million for the fiscal year 2005, primarily due to addition of fixed assets, including additions to chemical production facilities at Valia, Gujarat, poultry facilities, rural retailing business and windmills.

Taxation. Our taxes increased by 298.55% to Rs. 255.51 million for the fiscal year 2006 from Rs. 64.11 million for the fiscal year 2005, primarily due to deferred tax liability as a result of the effects of tax planning for future fiscal years through our investments in windmills and contribution to gratuity funds. Our effective tax rate for the fiscal year 2006 was 33.55% as compared to 8.28% for the fiscal year 2005.

Net Profit. Our net profit decreased by 24.23% to Rs. 489.98 million for the fiscal year 2006 from Rs. 646.71 million for the fiscal year 2005.

Financial Condition, Liquidity and Capital Resources

We broadly define liquidity as our ability to generate sufficient funds from both internal and external sources to meet our obligations and commitments. In addition, liquidity includes the ability to obtain appropriate equity and debt financing and loans and to convert into cash those assets that are no longer required to meet existing strategic and financial objectives. Therefore, liquidity cannot be considered separately from capital resources that consist of current or potentially available funds for use in achieving long-range business objectives and meeting debt service and other commitments.

We have historically financed our capital requirements primarily through funds generated from our operations and financing from banks, financial institutions and other companies in the form of term loans, credit and overdraft facilities and deposits. Our primary capital requirements have been to finance purchases of land and development of our properties, capital expenditures for expansions of our existing businesses, as well as other capital expenditure and working capital requirements. We believe that we will have sufficient capital resources from our operations, net proceeds of this offering of equity shares and other financing from banks, financial institutions and other companies to meet our capital requirements for at least the next 12 months.

Cash Flows

The table below summarises our cash flows for the three months ended June 30, 2007 and the fiscal years 2007, 2006 and 2005:

For the Fiscal Year

(Rs. in Millions)

For the

Three

Months

Ended

June 30,

2007 2007 2006 2005

Net cash generated from / (used in) operating activities................................................... (451.98) (1,228.84) 273.15

1,076.81

Net cash generated from / (used in) investing 439.58 (1,610.08) (1,566.18)

63

For the Fiscal Year

(Rs. in Millions)

For the

Three

Months

Ended

June 30,

2007 2007 2006 2005

activities................................................... (539.90)

Net cash generated from / (used in) financing activities................................................... (413.64) 2,797.05 1,669.38

(475.16)

Cash and cash equivalents at the end of period/year ................................................................. 459.23 888.16 910.66

534.31

Cash and cash equivalents were Rs. 459.23 million as of June 30, 2007. Cash and cash equivalents decreased to Rs. 888.16 million as of March 31, 2007 from Rs. 910.66 million as of March 31, 2006. Cash in form of bank deposits, current account balances and cash on hand represents our cash and cash equivalents.

Operating Activities. Net cash used in operating activities was Rs. 451.98 million for the three months ended June 30, 2007, primarily due to increase in net working capital. Net cash used in operating activities consisted of profit before tax of Rs. 317.10 million, as adjusted for a number of non-cash items, primarily depreciation of Rs. 117.54 million, and other items, primarily profit on sale of investments of Rs. 311.77 million, interest expense of Rs. 214.63 million, and changes in working capital, such as increases in inventories of Rs. 227.77 million, trade and other receivables of Rs. 789.27 million and trade payables of Rs. 363.88 million.

Net cash used in operating activities was Rs. 1,228.84 million for the fiscal year 2007, primarily due to increase in net working capital. Net cash used in operating activities consisted of profit before tax of Rs. 760.22 million, as adjusted for a number of non-cash items, primarily depreciation of Rs. 419.06 million, and other items, primarily profit on sale of investments of Rs. 451.00 million, dividend income of Rs. 101.86 million, interest income of Rs. 141.53 million, interest expense of Rs. 666.85 million, and changes in working capital, such as increases in inventories of Rs. 1,898.72 million, trade and other receivables of Rs. 2,667.50 million, trade payables of Rs. 2,466.35 million and direct tax payment, net of refunds, of Rs. 212.86 million.

Net cash generated from operating activities was Rs. 273.15 million for the fiscal year 2006, primarily due to internal accruals and increase in net working capital. Net cash generated from operating activities consisted of profit before tax of Rs. 761.49 million, as adjusted for a number of non-cash items, primarily depreciation of Rs. 376.68 million, and other items, primarily profit on sale of investments of Rs. 229.96 million, dividend income of Rs. 129.98 million, interest expense of Rs. 435.21 million, voluntary retirement compensation paid of Rs. 268.51 million, and changes in working capital, such as increases in inventories of Rs. 582.90 million, trade and other receivables of Rs. 711.56 million, trade payables of Rs. 825.73 million and direct tax payment, net of refunds, of Rs. 142.85 million.

Net cash generated from operating activities was Rs. 1,076.81 million for the fiscal year 2005, primarily due to internal accruals partially offset by tax payments. Net cash generated from operating activities consisted of profit before tax of Rs. 774.66 million, as adjusted for a number of non-cash items, primarily depreciation of Rs. 336.06 million, and other items, primarily profit on sale of investments of Rs. 345.81 million, interest expense of Rs. 321.47 million, and changes in working capital, such as decreases in inventories of Rs. 104.33 million, increases in trade and other receivables of Rs. 254.59 million, trade payables of Rs. 259.02 million and direct tax payment, net of refunds, of Rs. 125.24 million.

Investing Activities. Net cash generated from investing activities was Rs. 439.58 million for the three months ended June 30, 2007, primarily as a result of redemption of liquid assets and sale of long term investments of Rs. 1,916.56 million partially offset by temporary investments in liquid assets of Rs. 1,530.87 million.

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Net cash used in investing activities was Rs. 1,610.08 million for the fiscal year 2007, primarily as a result of temporary investments in liquid assets of Rs. 7,109.47 million and purchases of fixed assets of Rs. 964.05 million, partially offset by redemption of liquid assets and sale of long term investments of Rs. 6,195.64 million.

Net cash used in investing activities was Rs. 1,566.18 million for the fiscal year 2006, primarily as a result of purchases of fixed assets of Rs. 1,614.40 million, temporary investments in liquid assets of Rs. 5,758.78 million, partially offset by redemption of liquid assets and sale of long term investments of Rs. 5,426.57 million.

Net cash used in investing activities was Rs. 539.90 million for the fiscal year 2005, primarily as a result of purchases of fixed assets of Rs. 527.10 million, temporary investments in liquid assets of Rs. 5,607.65 million, partially offset by redemption of liquid assets of Rs. 5,342.53 million.

Financing Activities. Net cash used in financing activities was Rs. 413.64 million for the three months ended June 30, 2007, primarily as a result of interest payments.

Net cash generated from financing activities was Rs. 2,797.05 million for the fiscal year 2007, primarily as a result of proceeds from borrowings, net of repayments, of Rs. 3,780.50 million partially offset by payments of interest and dividends.

Net cash generated from financing activities was Rs. 1,669.38 million for the fiscal year 2006, primarily as a result of proceeds from borrowings, net of repayments, of Rs. 1,605.15 million.

Net cash used in financing activities was Rs. 475.16 million for the fiscal year 2005, primarily as a result of repayments of borrowings of Rs. 2,531.52 million and payments of interest of Rs. 322.79 million, partially offset by the incurrence of indebtedness of Rs. 2,581.21 million.

Investments

We hold equity shares in companies, including associate companies, as well as investments in mutual funds. Our total investments were Rs. 1,953.32 million, Rs. 1,937.25 million, Rs. 2,410.09 million and Rs. 1,747.95 million as at June 30, 2007, March 31, 2007, March 31, 2006 and March 31, 2005, respectively.

Indebtedness

As of June 30, 2007, we had Rs. 8,730.17 million of aggregate principal amount of indebtedness outstanding. The following table provides certain characteristics of our outstanding indebtedness as at June 30, 2007:

Type of Indebtedness Amount Outstanding (as

of June 30, 2007)

(Rs. in Millions)

Total Amount of

Credit Facility

(Rs. in Millions)

Interest rate as of

June 30, 2007

(%)

Term Loan Facilities 6,862.64 7,569.31 8.62

Revolving Credit Facilities 744.54 2,244.50 12.10

Others 1,122.99 1,122.99 9.10

_______________________

* The interest rates provided are the average interest rates for the three month period ending June 30, 2007.

Contractual Obligations and Commercial Commitments

The following table summarises our contractual obligations and commercial commitments as of June 30, 2007 and the effect such obligations and commitments are expected to have on our liquidity and cash flows in future periods.

65

Contractual Obligations

(Rs. in millions)

As of June 30,

2007

Less than 1

year 1–3 years 3–5 years

More than 5

years

(Rs. in Millions)

Indebtedness ................................. 8,730.17 5,905.69 2,449.36 217.74 157.38

Purchase and other obligations (1) ...................................................

78.36 78.36 – – –

(1) Our purchase and other obligations include our capital expenditure obligations, commitments to purchase land and other obligations and commitments. These, however, do not include our commitments for revenue or profit sharing under our joint development agreements in our estate & property development business. We define a purchase obligation as an arrangement to purchase goods or services that is enforceable and legally binding upon us.

Contingent Liabilities

The following table provides our contingent liabilities as of June 30, 2007:

Particulars (Rs. In Millions)

Claims against us not acknowledged as debts (excise, customs duty, sales tax demand, octroi demand, stamp duty, income tax demands, industrial relations matters and others)

680.73

Guarantees issued by banks, excluding guarantees issued in respect of matter stated above

66.02

Guarantees given by us in respect of credit and guarantees limits sanctioned by banks to subsidiaries and other companies

1,411.41

Uncalled liability on partly paid shares and debentures 38.16

Share in jointly controlled entities 37.59

Related Party Transactions

We have engaged in the past, and may engage in the future, in transactions with related parties, including with our affiliates and certain key management members on an arm’s lengths basis. Such transactions could be for provision of services, lease of assets or property, sale or purchase of equity shares or entail incurrence of indebtedness. For details of our related party transactions, see Note 18 of Schedule 20 to our audited consolidated financial statements.

Seasonality

Some of our businesses such as animal feeds, poultry, beverages and foods exhibit seasonality. This is as a result of increased consumption patterns of such products or derivatives of such products in the summer and/or monsoon seasons in India. However, overall, our results of operations do not exhibit any significant seasonality.

Off Balance Sheet Commitments and Arrangements

We do not have any off-balance sheet arrangements, derivative instruments, swap transactions or relationships with unconsolidated entities or financial partnerships that would have been established for the purpose of facilitating off-balance sheet arrangements.

Inflation

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Although India has experienced minor fluctuation in inflation rates in recent years, inflation has not had a material impact on our business and results of operations.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk and commodities risk. We are exposed to commodity risk, interest rate risk, foreign exchange risk and credit risk in the normal course of our business.

Risk Management Procedures

The objective of market risk management is to avoid excessive exposure of our income and equity to loss. We generally manage our market risk through our treasury operations.

Interest Rate Risk

We currently have floating rate indebtedness and also maintain deposits of cash and cash equivalents with banks and other financial institutions and thus are exposed to market risk as a result of changes in interest rates. As of June 30, 2007, Rs. 512.67 million of our indebtedness consisted of floating rate indebtedness. Upward fluctuations in interest rates increase the cost of both existing and new debts. Currently there are no derivative instruments outstanding or operational to modify the nature of our exposure to floating rate indebtedness or our deposits so as to manage interest rate risk.

Commodity Risk

We have instituted a hedging policy to manage our commodity risks. In the normal course of business, we purchase our raw materials either on a purchase order basis or pursuant to supply agreements. As a result, we are exposed to market risk with respect to the prices of these raw materials. We are exposed to variation in the prices of our raw materials, particularly our key materials such as palm oil and its derivatives, steel, cement, vegetable oils, crop extracts and bran. In prior fiscal periods, we have hedged for imported crude palm oil by means of futures contracts on the Malaysian Commodities Exchange. For the three months ended June 30, 2007 and the fiscal year 2007, we do not have any hedging contracts outstanding in respect of any of our raw materials, including crude palm oil.

Foreign Exchange Risk

Changes in currency exchange rates influence our results of operations. We report our financial results in Indian rupees, while portions of our total income and expenses are denominated, generated or incurred in currencies other than Indian rupees, such as U.S. Dollars and Euros. As of June 30, 2007, we had forward exchange purchase contracts for US$9.85 million and sale contracts for US$3.70 million and €2.14 million. Our uncovered foreign exchange exposure as of June 30, 2007 was US$15.79 million. To the extent that our income and expenditures are not denominated in Indian rupees, and even though we enter into foreign exchange hedging contracts from time to time, exchange rate fluctuations could affect the amount of income and expenditure we record.

Although we closely follow our exposure to foreign currencies and selectively enter into hedging transactions in an attempt to reduce the risks of currency fluctuations of U.S. Dollars and Euros, these activities are not always sufficient to protect us against incurring potentially large losses if currencies fluctuate significantly.

Credit Risk

We are exposed to credit risk on monies owed to us by our customers. If our customers do not pay us promptly, or at all, we may have to make provisions for or write-off such amounts. Debts which are outstanding for periods more than six months and are considered doubtful are fully provided for.

67

INDUSTRY OVERVIEW

The information in this section is derived from various government publications and industry sources. Neither we nor any other person connected with the Offering have verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and, accordingly, investment decisions should not be based on such information.

Chemicals Industry

Global Scenario

The global chemicals industry, estimated at US$2.4 trillion, is one of the fastest growing sectors of the manufacturing industry (Source: http://www.chemicals.nic.in). Despite the challenges of escalating crude oil prices and adoption of demanding international environmental protection standards, the chemicals industry has continued to grow at a rate higher than the overall manufacturing segment. Commodity chemicals form the largest segment in the chemicals market with an approximate size of US$750 billion while the specialty and fine chemicals segment accounts for US$500 billion (Source: http://www.chemicals.nic.in). Some of the major markets for chemicals industry are North America, Western Europe, Japan and other emerging economies in Asia and Latin America. The United States accounts for approximately one-fifth of the global chemical consumption, whereas Europe comprises the largest consumer with approximately half the consumption (Source: http://www.chemicals.nic.in). The United States is the largest consumer of commodity chemicals whereas Asia Pacific is the largest consumer of agrochemicals and fertilizers (Source: http://www.chemicals.nic.in). Indian Chemicals Industry Scenario

The chemicals industry is an important constituent of the Indian economy. Its size is estimated to be approximately US$35 billion, which is equivalent to approximately 3% of India's Gross Domestic Product (“GDP”) (Source: http://www.chemicals.nic.in). The total investment in the Indian chemicals sector is approximately US$60 billion and total employment generated is about one million (Source: http://www.chemicals.nic.in). The Indian chemicals sector accounts for 13-14% of total exports and 8-9% of total imports of the country (Source: http://www.chemicals.nic.in). In terms of volume, it is the 12th largest in the world and third largest in Asia (Source: http://www.chemicals.nic.in). Currently, per capita consumption of products of the chemical industry in India is about one-tenth of the world average (Source: http://www.chemicals.nic.in). Over the last decade, the Indian chemicals industry has evolved from being a basic chemical producer to becoming an innovative industry. With investments in R&D, the industry is registering significant growth in the knowledge sector comprising of specialty chemicals, fine chemicals and pharmaceuticals. India’s strengths to leverage growth of the chemicals industry are as follows:

• Low cost, technically trained manpower.

• Large domestic market, with good potential for growth.

• Presence of supporting industries.

• Supportive Government policies. (Source: http://www.chemicals.nic.in)

68

The Oleochemicals Industry

Introduction Oleochemicals are chemicals derived from biological oils or fats. They are analogous to petrochemicals, which are chemicals derived from petroleum. Biochemicals are sometimes called bio-based chemicals, green chemicals, and plant-based chemicals. Oleochemicals include fatty acids, fatty alcohols and glycerin, and are used in the making of a variety of products, such as plastics, cosmetics, detergents and pharmaceuticals. The global oleochemical industry is witnessing a migration of global capacity from developed countries to rapidly developing countries. Partly as a consequence of this global structural shift, current and planned oleochemical capacity is outstripping demand. Further, the fast growing oleochemicals industries in East and South Asia face potential trade barriers to end-product exports as a result of tariff and non-tariff barriers in importing countries. (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”). Within this sector, the nature of competition between “natural” products derived from oils and fats, and “synthetic” products, based on petroleum raw materials, has evolved in very different ways. The fatty alcohol segment is split between the natural and synthetic feedstock, while natural oils and fat dominate the fatty acid segment. This distinction has created an extra dimension to the risks associated with downstream opportunities for both the natural and synthetic oleochemical suppliers (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”). Production and Consumption of Oleochemicals Demand for basic oleochemicals stems from their use in a wide range of products. This is also true of glycerin, the principal by-product from the production of oleochemicals. In recent years, global fatty acid consumption has approached five million tonnes per annum, fatty alcohol consumption has approached around two million tonnes, and glycerin consumption is closer to one million tonnes. Geographically, consumption is still dominated by the developed countries, whereas output is increasingly dominated by Asia, in particular Southeast Asia. Glycerin, though, is an exception, because the large bio-diesel industry has kept Europe as the largest region for glycerin production (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”).

Planned Oleochemical Capacity Additions, 2004-08 by

Country

0200400600800

1000

Mala

ysia

Ind

on

esia

Ch

ina

Ind

ia

S. A

fric

a /

Au

str

alia

Ph

ilip

pin

es

Th

ailan

d

Eu

rop

e

'000 t

on

ness

Fatty Acid Fatty Alcohols

69

(Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”)

(Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”) Raw Material Feedstock - Availability and Pricing Lauric oils, palm kernel oil (“PKO”) and coconut oil (“CNO”), are the oils that are the most sensitive in terms of price to demand from the oleochemical sector. Their availability is key to oleochemical-based fatty alcohols production. Apart from CNO, the supplies of the other main raw materials for oleochemicals (palm oil, palm stearin, PKO and tallow) are driven mainly by developments outside the oleochemical industry. Furthermore, since oil palm and coconut palm are tree crops, it can take four or more years for any changes in plantings in response to higher oil prices to yield extra supplies of oil. As a result of these supply dynamics, the output of lauric oils is inelastic to changes in oleochemicals demand over a period of up to four years or so. Consequently, increased demand and rapidly rising oleochemical capacity should, in the short term, feed directly into increases in the price of lauric oils. Oleochemical demand for palm oil is small vis-à-vis food use and therefore its availability for oleochemical producers is not a concern. Further, demand for olein will make sufficient palm stearin available. Consumer sensitivity to animal-based fats has meant that tallow supply has remained fairly static in developed markets (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”). Outlook for the Global Oleochemical Industry Reduced Margins for Independent Oleochemical Producers: The increasing countervailing bargaining power of the major end-users such as oleochemical buyers rather than producers is likely to have the long term effect

Consumption of Oleochemicals by Region, 2000-2015

0123456789

101112

2000 2005 2010 2015

millio

n t

on

nes

North America Europe Rest of Asia ASEAN

China India South America Rest of the World

Global Production of Oleochemicals (Fatty Acids and

Fatty Alcohols) by Region, 1980-2004

01234567

1980 1985 1990 1995 2000 2004

millio

n t

on

s

North America Europe Rest of Asia

South East Asia Rest of the World

70

of reducing oleochemical prices vis-à-vis raw materials. Plantation-integrated oleochemical producers have the cushion of vegetable oil margins behind them, whereas independent producers could be affected by lower oleochemical prices and the inflexibility of the commodity price (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”). Fatty Alcohol Producers are Better Placed to Handle Raw Material Price Changes: The reliance upon lauric oils for fatty alcohol production means that the alcohol producers will have to compete to draw lauric oils away from food uses. However, with higher capacity utilisation than in the fatty acid sector, it should be easier to pass on any rises in lauric oil prices in the short run. The major constraining factors for alcohol producers are reformulation into linear alkylbenzene sulfonate in detergents if prices move too high and the prospect that the recent acceleration of investment will lead to overcapacity (though not on the same scale as for fatty acids) from 2007 (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”). Developed World Traditional Fatty Acid Producers to Contract: In the developed world, it is expected to see fatty acid capacity shrink to levels sustainable on local tallow supplies, with the rising gap between demand and domestic output being filled by Southeast Asian imports. Eventually, plantation-based companies will follow the example of refining and buying oleochemical assets in the developed world. When this occurs, investment would flow into operations near or in ports, so the raw materials can be imported directly with no inland transportation (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”). Relative Stability for Fatty Alcohol Sector: In the fatty alcohol market, supply and demand will remain fairly well balanced, if not quite as tight as in the last two years. As long as energy prices are high, it is unlikely that petro-alcohol output will regain market share. Equally, it is unlikely that we will see a further reduction in petro-alcohol based capacity, because there is simply not enough lauric oil to fill the gap. It does not imply, however, that prices may have to rise to allow more satisfactory margins for the petro-alcohol producers if current capacity levels are to be maintained. Unlike in the mid 1990s, when petro-alcohols held down prices on favourable oil costs when the oleo-alcohol producers were suffering from increasing lauric oil prices, in the recent past the petro-alcohol producers have needed higher prices just as much, if not more than the oleo producers (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”). Fatty Alcohol output will Shift from Major Users: The petro-alcohol sector’s difficulties imply that, although alcohol prices might weaken with the new capacity coming on stream, greater diversion of lauric oils away from food uses and continuing high petroleum/ethylene prices will limit the damage. The fatty alcohol market remains concentrated on surfactants, which mean that the end market will still be dominated by the needs of the big users of surfactants. As the number of producers expands, we should see further withdrawals of major alcohol users from the production side of the business, as has been experienced in fatty acids (Source: LMC International’s “the Outlook for Oleochemicals to 2015-the Scope for Adding Value to Vegetable Oil Production”).

Surfactants Industry

Surfactants, also known as tensides, are wetting agents that lower the surface tension of a liquid, allowing easier spreading and lowering the interfacial tension between two liquids. Because of these characteristic behaviours of surfactants to orient at surfaces, surfactants act as foaming agents, emulsifiers, dispersants and solubilisation agents. The function of detergency or cleaning is a complex combination of all of these functions. Therefore, laundry detergents are the largest single user of surfactants. Surfactants are an 11 billion ton per year industry that is changing from a diverse field of participants to one that is increasingly concentrated (Source: Colin A. Houston & Associates Report). There are many reasons for this trend. First of all, the industry is perceived to be maturing. Historically, soap was the only commercial surfactant. There was a shift from this in the 1930s, when other organic materials were introduced as surfactants. After World War II, growth for the surfactant industry exploded. The industry matured in the 1980s and many of the entrepreneurs that had developed the business moved on. In the last decade, there has been much consolidation, to the point where it is about 75 percent consolidated. Today, the world of surfactants is dominated by a few dozen global suppliers with backward integration, cross integration, forward integration or some combination. Worldwide surfactant consumption is estimated at 12 million tonnes in 2005 (Source: Colin A. Houston & Associates Report).

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Alpha-Olefin Sulfonates

Alpha-olefin sulfonates (“AOS”) are anionic in nature and can be used as a partial replacement for other high-foaming anionics. The largest use of AOS in detergents is in Asia, where India currently accounts for the greatest portion (Source: Colin A. Houston & Associates Report). In 2002, the appropriate chain lengths of alpha-olefin have been in high demand for oil well drilling and supply pressure from alpha-olefin has not been a factor driving AOS forward. However, potential new alpha-olefin capacity in Asia and Qatar could dwarf the current capacity in those regions and make considerably more alpha-olefin available for AOS production.

Sodium Lauryl Sulphates

Sodium lauryl sulphates (“SLS”) are a type of primary surfactants. SLS accounted for a worldwide consumption of 499,000 tonnes in 2000. According to Colin A. Houston & Associates in its report on the surfactants industry, consumption of SLS is expected to increase to 759,000 tonnes by 2010, representing an average annual increase of 4.3%. The expected growth rates for various regions are shown in the table below.

World – Sodium Lauryl Sulphates Consumption by Region, 2000-2010 (Thousand

Tonnes)

2000 2002 2005 2010 AAGR%

2000-2010

North America ………... 140 165 172 178 2.4%

Latin America ………… 41 45 63 79 6.8%

West Europe ………...... 120 121 174 180 4.1%

Asia …………………… 143 153 178 216 4.2%

Other Regions ………… 55 61 79 106 6.8%

TOTAL ………………. 499 545 666 759 4.3%

(Source: Colin A. Houston & Associates Report on Surfactants) In household applications, SLS find use in heavy duty powders and to a minor extent in light duty liquids and other specialty cleaners. Personal care applications include shampoo, shower products, toothpaste and shaving preparations. SLS is also used for industrial purposes, including plastics and elastomers, textiles and wallboard. Sodium Lauryl Ether Sulphates

Sodium lauryl ether sulphates (“SLES”) are another type of primary surfactants. SLES consumption is forecast by Colin A. Houston & Associates in their report on the surfactants industry to be 1,598,000 tonnes in 2010, up from 972,000 tonnes in 2000. They are expected to have an annual growth rate of 5.1 per cent during this period. The following table shows the expected growth rates for various regions.

World – Sodium Lauryl Ether Sulphates Consumption by Region, 2000-2010

(Thousand Tonnes)

2000 2002 2005 2010 AAGR%

2000-2010

North America ………... 380 416 517 625 5.1%

Latin America ………… 54 63 80 117 8.0%

West Europe ………...... 270 281 309 345 2.5%

Asia …………………… 220 248 303 409 6.4%

Other Regions ………… 48 54 72 102 7.8%

TOTAL ………………. 972 1,062 1,281 1,598 5.1%

(Source: Colin A. Houston & Associates Report on Surfactants)

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The largest market for SLES is in household products where they are used in heavy and light duty liquids. Personal care applications are based on their mildness and they find use in shampoos and body washes. Their use in industrial applications is limited, however, they are used in emulsion polymerisation and the production of wallboard. Economic Developments

The increasing affluence of society today is leading the world to consume more surfactants. Laundry detergents are part of the world’s greatest recycling system and the largest single user of surfactants. Improvements in the standard of living lead people to own larger wardrobes and use more effective products to care for them. They also utilise more sophisticated products for personal care. Thus, besides driving industrial use of surfactants, economic growth also drives consumer products. In a brief review of the economic status of the main global regions, it was confirmed that the North American and European regions are well developed in terms of surfactant use. Other areas have tremendous growth potential (Source: Colin A. Houston & Associates Report). Animal Feed Industry

Introduction

The animal feed industry is currently evolving from a fragmented industry into an organised one. Demand for compound feed, according to the Compound Livestock Feed Manufacturers Association (“CLFMA”) was at 45 million MT for the year 2005 Increasingly, modern and sophisticated methods are being used in an effort to incorporate global best practices.

Challenges Facing the Animal Feed Industry

This sector faces certain challenges, such as deep rooted traditional feeding habits, particularly by dairy farmers, the high cost of reaching out to the farmers, and increasing input costs, particularly on the energy front. Main Sub-Sectors

The compound animal feed industry is composed primarily of:

• poultry feed;

• cattle feed; and

• other feed, such as aqua feed. The following chart shows the major producers in the animal feed industry in India, in terms of tonnes produced:

Name No. of Units Installed Capacity

Godrej Agrovet Ltd. 28 700,000

Gold Mohur Foods & Feeds Ltd. (a subsidiary of Godrej Agrovet Ltd.)

17 486,000

SKM Animal Feeds & Foods (India) Ltd. 1 219,600

Suguna Poultry Farm Ltd. 13 594,000

(Source: CLFMA’s Statement showing All India and State Wise Feed Production during the year 2005-06) Poultry Feed Industry

The following chart shows the major producers in the poultry feed industry in terms of tonnes produced:

Name 2005-06

Amrit Feeds Limited 124,992

Godrej Agrovet Ltd. 241,004

Gold Mohur Foods & Feeds Ltd. (a subsidiary of Godrej Agrovet Ltd.) 244,299

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Name 2005-06

Japfa Oberoi Agro Ltd. 90,000

SKM Animal Feeds & Foods (India) Ltd 82,429

(Source: CLFMA’s Statement showing All India and State Wise Feed Production during the year 2005-06) Cattle Feed Industry

The following chart shows the major producers in the cattle feed industry in terms of tonnes produced:

Name 2005-06


Gold Mohur Foods & Feeds Ltd. 38,487

K.S.E. Ltd. 263,511

Kaira District Co-op. Milk Producers Union 154,497

Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. 75,557

Sabarkantha Dt. Co-op. Milk Producers Union Ltd. 100,034

SKM Animal Feeds & Foods (India) Ltd. 86,689

(Source: CLFMA’s Statement showing All India and State Wise Feed Production during the year 2005-06) Other Feeds

The following chart shows the major players in other feeds in terms of tonnes produced:

Name 2005-06

Avanti Feeds Ltd. 21,800


Gold Mohur Foods & Feeds Ltd. (a subsidiary of Godrej Agrovet Ltd.) 12,496

New Maharashtra Chakan Oil Mills Ltd. 726

Pranav Agro Industries Ltd. 704

(Source: CLFMA’s Statement showing All India and State Wise Feed Production during the year 2005-06) The Real Estate Sector in India

Historically, the real estate sector in India was unorganised and characterised by various factors that impeded organised dealing, such as the absence of a centralised title registry providing title guarantee, a lack of uniformity in local laws and their application, non-availability of bank financing, high interest rates and transfer taxes and the lack of transparency in transaction values. In recent years however, the real estate sector in India has exhibited a trend towards greater organisation and transparency by various regulatory reforms. These reforms include:

• the support of GoI for the repeal of the Urban Land Ceiling Act, with nine state governments having already repealed the Urban Land Ceiling Act;

• modifications in the Rent Control Act to provide greater protection to homeowners wishing to rent out their properties;

• rationalisation of property taxes in a numbers of states; and

• the proposed computerisation of land records. The trend towards greater organisation and transparency has contributed to the development of reliable indicators of value and organised investment in the real estate sector by domestic and international financial institutions and has also resulted in the greater availability of financing for real estate developments. Regulatory changes permitting foreign investment are expected to further increase investment in the Indian real estate sector. The nature of demand is also changing, with heightened consumer expectations that are influenced by higher disposable incomes, increased globalisation and the introduction of new real estate products and services.

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These trends have been reinforced by the substantial recent growth in the Indian economy, which has stimulated demand for land and developed real estate across our business lines. Demand for residential, commercial and retail real estate is rising throughout India, accompanied by increased demand for hotel accommodation and improved infrastructure. In addition, tax and other benefits applicable to special economic zones are expected to result in a new source of demand. Residential Real Estate Development

The growth in the residential real estate market in India has been largely driven by rising disposable incomes, a rapidly growing middle class, low interest rates, fiscal incentives on both interest and principal payments for housing loans and heightened customer expectations as well as increased urbanisation and nuclearisation. In connection with a review of opportunities in the Indian real estate sector, Jones Lang LaSalle’s publication “The New Investment Mantra – Understanding Risks and Returns in the Indian Real Estate Sector” (July 2006), highlights that:

• India’s housing shortage has increased from 19.4 million units in 2004 to 22.4 million units in 2005-2006 and is expected to rise further; and

• The retail market for mortgages grew by 30% in the second quarter of 2004 and is expected to further grow at a CAGR of 17% from US$16 billion in the fiscal year 2006 to US$30 billion in the fiscal year 2009.

Trend towards high-rise residences in urban areas A large proportion of the demand for residential developments, especially in urban centres such as Mumbai, Bangalore, Delhi (Gurgaon and Noida) and Pune, is likely to be for high-rise residential buildings. Since this is a fairly new segment, the growth of the high-rise segment is expected to be faster than the growth of more traditional urban housing segments. The reasons for the anticipated demand are the lack of space in cities such as Mumbai and proximity to offices and IT parks in places such as Gurgaon, Bangalore and Pune. The high-rise culture is gradually seeping into other cities such as Kolkata, Hyderabad and Chennai due to increasing affordability, nearness to IT or BPO parks and the township concept being embraced within close proximity to such IT and BPO parks. Commercial Real Estate Development

The recent growth of the commercial real estate sector in India has been fuelled, in large part, by the increased revenues of companies in the services business, particularly in the IT and ITES sectors. The IT/ITES demand is about 75-80% of the total office space demand in India. Industry sources expect the IT and ITES sectors to continue to grow and generate additional employment. According to Knight Frank, the IT/ITES sector would require fully developed space amounting to 60-80 million square feet over a span of the next 3 years. (Source: Office Market Review - Quarter 2, 2006) Karnataka, Maharashtra, National Capital Region, Tamil Nadu and Andhra Pradesh are the biggest exporters of IT/ITES services from India.

183,580

25,000 9,700

155,000139,600

125,210

370,000

0

100,000

200,000

300,000

400,000

Ka

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a

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ida

(U

P)

Ko

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Source: http://www.apit.gov.in/insoft.html

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Within the IT and ITES sectors, the volume of operations outsourced to India by multinational companies is expected to increase demand for commercial space. Many of these companies have set up world class business centers to house their growing work force. According to Jones Lang La Salle, the total demand for commercial office real estate in 2005 in the top seven centers of Bangalore, Chennai, Delhi-NCR, Mumbai, Pune, Hyderabad and Kolkata was over 22 million square feet and is expected to be over 25 million square feet in 2006. (Source: The New Investment Mantra – Understanding Risks and Returns in the Indian Real Estate Market (July 2006)) The following table sets out the top five states in India in terms of IT and ITES exports over the past four years (Rs. in Billions):

State 2002-2003 2003-2004 2004-2005 2005-2006

Karnataka 123.50

(24%)

181.00

(46%)

276.00

(52%)

370.00

(34%)

Maharashtra 54.20

(20%)

78.45

(44%)

115.00

(46%)

155.00

(35%)

Tamil Nadu 63.15

(35%)

74.00

(17%)

107.30

(41%)

139.60

(29%)

Andhra Pradesh 36.68

(26%)

50.25

(37%)

82.70

(64%)

125.21

(51%)

Noida (Uttar Pradesh) 74.50

(22%)

99.00

(32%)

129.00

(30%)

183.58

(40%)

(Source: http://www.apit.gov.in/insoft.html)

Special Economic Zones

SEZs are specifically delineated duty free enclaves deemed to be foreign territories for the purposes of Indian custom controls, duties and tariffs. There are three main types of SEZs: integrated SEZs, which may consist of a number of industries; services SEZs, which may operate across a range of defined services; and sector specific SEZs, which focus on one particular industry line. SEZs, by virtue of their size, are expected to be a significant new source of real estate demand. According to the Ministry of Commerce and Industry, 61 SEZs are currently approved and under establishment. As of March 31, 2005 there were eight functional SEZs operating in India comprising 811 units, employing over a 100,000 people. Investment per unit in these SEZs is approximately of Rs. 18 billion.

Challenges Facing the Indian Real Estate Sector

Challenges facing the Indian real estate sector include a lack of national reach of existing real estate development companies; high fragmentation resulting in lack of transparency and sharing of information; generation of adequate demand for projects, which is dependant on a number of external factors; increasing raw material prices; interest rates and tax incentives.

Household Insecticides Industry

Household insecticides comprise various products for the elimination of insects. The principal types of insecticides in India include insecticide coils, electric insecticides (which are plugged into an electrical outlet and slowly release repellent), spray and aerosol insecticides and other forms of insecticides. The following table sets out the total market for various household insecticides in India as of August 2006 and August 2007 (Rs. in Millions) as well as the market leaders in India for each product segment:

Product August 2006

(moving annual

total)

August 2007

(moving annual

total)

Percentage

Growth

Leading Products

Coils 7,174.90 8,521.50 18.8% Good Knight, Jet, Hit, Banish, Mortein, Tortoise, Maxo and All Out

Liquid Vaporiser 3,008.40 3,702.30 23.1% Good Knight, Jet, Hit, All Out, Mortein and Knight Queen

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Product August 2006

(moving annual

total)

August 2007

(moving annual

total)

Percentage

Growth

Leading Products

Aerosol 1,030.20 1,296.30 25.8% Cockroach Killer, Flying Insect Killer, Multi Killer, Hit, Mortein and Baygon

Mats 814.80 657.20 (19.3)% Good Knight, Jet, Banish, Mortein, Odomos and All Out

Creams/lotions 231.00 296. Good Knight, Mosfree and Dabur

EMD 74.00 76.30 3.1% Good Knight, Jet, Banish and Casper

Electrical Gel 13.30 11.40 (14.3)% Good Knight

LMD 2.40 5.40 128.1% Good Knight, Jet, Hit, All Out, Baygon and Mortein

(Source: AC Nielsen) Beverages and Food Industry

The beverages and food industry in India is one of the largest in terms of production, consumption, export and growth prospects (Source: http://www.mofpi.nic.in ). The government has accorded the beverages and foods industry a high priority, with a number of fiscal reliefs and incentives, to encourage commercialisation and value addition to agricultural produce and also for minimising pre and post harvest wastage, generating employment and export growth. Important Sub Sectors in the Beverages and Food Industry

The following are the important sub-sectors in the beverages and food industry.

• Fruit and Vegetable Processing;

• Fish Processing;

• Milk Processing;

• Meat & Poultry Processing;

• Packaged/Convenience Foods;

• Alcoholic Beverages; and

• Soft Drinks and Grain Processing. Government Policy

As a result of several policy initiatives undertaken since liberalisation in August 1991, the industry has witnessed fast growth in most of the segments. As per a recent study on the sector, the turnover of the total food market is approximately Rs. 2,500 billion (US$69.4 billion) out of which value-added food products comprise Rs. 800 billion (US$22.2 billion) (Source: APEDA Export Statistics and Annual Report 1999-2000, MFPI & http://www.indianinfoline.com ). Positive Factors for the Indian Beverages and Food Industry

According to the ministry of food processing industry, the following are the positive factors affecting the Indian Beverages and Food Industry:

• Diverse agro-climatic conditions in India help it in having a wide-ranging and large raw material base suitable for the industry.

• Rapid urbanisation, increased literacy and rising per capita income, have all caused rapid growth and changes in demand patterns, leading to tremendous new opportunities for exploiting the large, latent market. An average Indian spends about 50% of household expenditure on food items.

• Demand for processed/convenience food is constantly on the rise.

• India’s comparatively cheaper workforce can be effectively utilised to set up large low cost production bases for domestic and export markets.

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• Very good investment opportunities exist in many areas of the beverages and food industry, the important ones being fruit and vegetable processing, meat, fish and poultry processing, packaged, convenience food and drinks, milk products etc.

Non-Carbonated Beverages Market in India

The market leader in the Indian non-carbonated beverages market is Coca-Cola India, with a share of 30% of the market. It is followed by Parle Agro and Pepsico India, with a share of 22.5% and 18.9%, respectively, according to AC Nielsen. According to AC Nielsen’s outlet purchase data (urban India), the non-carbonated beverages market in India is dominated by fruit drinks. Fruit drinks account for 71.3% of the Indian non-carbonated beverages market. They are followed by fruit juices and fruit nectars, with a share of 11.3% and 7.6%, respectively. Fruit Drinks According to AC Nielsen’s All India Urban Retail Purchase Data, the total market size of fruit drinks in India is Rs. 3.01 billion (US$ 68 million). The market leaders in the fruit drinks market in India are Parle Agro and Coca-Cola India, with shares of 55% and 22%, respectively. They are followed by Pepsico India, with a market share of 8%. Fruit Nectars The market for fruit nectars in India is led by Parle Agro with a market share of 37%. It is followed by Dabur Foods, with a market share of 30%. Surya Fresh, Pepsico India and Seabuck Thorn Indage come next, with a market share of 8%, 7% and 7%, respectively. The total market size is Rs. 650 million (US$ 15 million) (Source: AC Nielsen’s All India Urban Retail Purchase Data). Soy Milk The market size of soy milk in India is Rs. 34 million (US$ 0.8 million). The market leader is Godrej Beverages, with a share of 48%. It is followed by Prosoya Foods, with a share of 30%. Soaghurt comes next, with a share of 14% of the soymilk market in India (Source: AC Nielsen’s All India Urban Retail Purchase Data).

Sugar Confectionery Market in India

According to AC Nielsen, the sugar confectionery market in India is worth approximately Rs. 20.5 billion (US$ 465 million). It is a highly fragmented and competitive market. The market leader is Perfetti, with a share of 18% of the total market, followed by Parle, with a market share of 15%, and Nutrine, with a market share of 14%. Hard boiled candy The hard boiled candy market in India is worth Rs. 5.23 billion (US$ 119 million). The market leader is Nutrine, with a market share of 22%, followed by Parle Products and Perfetti Van Melle, with a market share of 20% each (Source: AC Nielsen). Éclairs Nestle India, with a market share of 31%, leads the Rs. 2.78 billion (US$ 63 million) éclairs market in India. It is followed by Cadbury India, with a share of 26%, ITC, with a share of 13%, and Nutrine, with a share of 12% (Source: AC Nielsen). Toffee The toffee market in India is worth Rs. 2.54 billion (US$ 56 million). The market leader is Parle Products, with a market share of 37%, followed by Lotte India, with a market share of 26%, and Nutrine, with a market share of 9% (Source: AC Nielsen).

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Retail Industry

Retailing is one of the biggest contributors to the GDP of most countries and also one of the biggest employers. In India, however, the retail sector has seen a high level of fragmentation with a large share held by unorganised players.

Retail Market in India

India’s retail market size is estimated at $286 billion, with only 3.9% being organised retail, and more than half of this growing market lies in rural India. (Source: United States Department of Commerce, http://www.buyusa.gov/india). The rural market accounts for 55% of private retail consumption, contributing US$ 165 billion to the Indian retail market. According to the National Council of Applied Economic Research, India (“NCAER”), rural India houses 720 million consumers across 627,000 villages. 17% of these villages account for 50% of the rural population as well as 60% of rural wealth. Two-thirds of middle income households with an annual income between Rs. 35,000 and Rs, 140,000 are in the rural areas. Of the 60 million high-income households with annual incomes above Rs. 140,000, one-third live in the countryside. Approximately seven-eight million sq. ft. of built-up property in small towns primarily belongs to the retail, IT and commercial sector. The rural market consumes about 53% of fast moving consumer goods and 50% of durables in India. The contribution of the tier two cities to total organised retailing sales is expected to grow to nearly 20-25%. About 35% of India’s retail space is expected to come up in the next few years in the tier two and three cities. The cities in the reckoning are state capitals like Lucknow, Jaipur, Jammu, Chandigarh, Thiruvananthapuram and Bhubaneshwar, including smaller cities like Mysore, Kochi, Madurai, Vizag, Cuttack, Ludhiana and Nagpur. Benefits of Retailing in Small Towns Retailers see the following benefits of foraying into small towns:

• Costs – The cost of setting up an enterprise is low; and

• Aspiration for Brands – The aspiration for brands from cities exists and can be leveraged.

Effect of Corporate Sector Participation on Rural Retailing Growing corporate sector participation in rural India has led to:

• Consolidation of the agri-marketing chain;

• Standardisation of produce and improved quality; and

• Improved infrastructure and supply chain.

Growth of Organised Retail in India Indian consumers in the past have shown an ability to leapfrog evolution cycles as has happened in the case of various consumer products such as mobile phones. As per estimates, retail spending in India in fiscal year 2005 stood at Rs. 9,990 billion, of which the organised sector accounts for Rs. 349 billion, or approximately 3.5%. The size of the organised sector is expected to grow at 25-30% p.a., reaching Rs. 1,095 billion in 2010.

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OUR BUSINESS

Overview

We are one of the leading business groups in India with a market capitalisation of Rs. 61,580.77 million as of October 31, 2007, operating in a diverse range of businesses, such as the production and sale of oleochemicals and surfactants, animal feeds, confectionery products, beverages and foods, household insecticides as well as in the business of developing property. We have been listed on the BSE since 1990 and the NSE since 1995. We are the listed flagship company of the Godrej group of companies, which is one of the oldest prominent corporate houses in India. The Godrej group was established in 1897 and has since grown into a conglomerate with combined turnover of Rs. 75 billion. The Godrej group was awarded the “Corporate Citizen of the Year” award by the Economic Times in 2003. Additionally, according to a survey undertaken by the Boston Consultancy Group published by Businessworld in June 2007, we ranked fourth highest in India for delivering total shareholder returns of 146% per annum for the period 2002-2007. Our total income was Rs. 7,061.30 million for the three months ended June 30, 2007 and Rs. 24,656.97 million for the fiscal year 2007, as compared to Rs. 21,061.69 million for the fiscal year 2006, representing an increase of 17.07%. Our net profit was Rs. 312.06 million for the three months ended June 30, 2007 and Rs. 588.81 million for the fiscal year 2007, as compared to Rs. 489.98 million for the fiscal year 2006, representing an increase of 20.17%. We currently operate in diversified business segments on our own and through our subsidiaries, joint ventures and associates including: � Chemicals business, which includes the production and sale of oleochemicals and surfactants, such as

fatty acids, fatty alcohols, refined glycerine, alpha olefin sulphonates, sodium lauryl sulphate and sodium lauryl ether sulphate.

� Estate and property development business, which includes the development and sale of real estate and

leasing and leave and licensing (short term rentals) of properties. � Animal feeds business, which includes the production and sale of compound feed for cattle, poultry,

shrimp and fish. � Beverages and foods business, which includes the business of processing, production and sale of fruit

pulp, tomato puree, fruit juices, nectars and drinks, other beverages and confectionary products and sale of refined vegetable oils and vanaspati (hydrogenated vegetable oil).

� Vegetable oils business, which includes the processing and bulk trading of refined vegetable oils and

vanaspati. � Household insecticides services business, which includes the production and sale of household

insecticides and commercial pest management services. � Finance and investments business, which includes our investments in associates and other companies

such as Godrej Consumer Products Limited, CBaySystems Holdings Limited, Avestha Gengraine Technologies Limited and Verseon LLC.

� Other businesses, which includes (a) our rural based business comprising rural retailing, integrated


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The percentages of our total revenue generated from our business segments for the fiscal year 2007 were:

Our Strengths

We believe that we have significant industry expertise and knowledge. In particular, we believe that the following strengths enable us to compete effectively:

Established brand name and market leader in many of our businesses

We are the listed flagship company of the Godrej group of companies, which is one of the oldest prominent corporate houses in India. The Godrej group was established in 1897 and has since grown into a conglomerate with combined turnover of Rs. 75 billion. We believe the Godrej brand commands strong resonance among the populace in India due to its long presence in the Indian market and the diversified businesses in which the group operates. In addition to our various businesses, the Godrej group is involved in businesses, such as manufacturing locks and safes, typewriters, precision equipments, fabrications, white goods, furniture, machine tools and a range of personal care products. We are currently the market leader in India in our oleochemicals and surfactants business, which has won awards and certifications such as the Chemexcil Award for “Lifetime Achievement” in the year 2004 and the “Outstanding Exporter of the Year – Chemicals” award from CNBC TV 18 for international trade in the year 2006-2007. Our animal feeds business is the largest in the organised sector in India and commanded a market share of over 20% for the year 2005 according to CLFMA of India. We also enjoy leadership positions for some of our products in the beverages businesses. For example, our products Mahalacto and Sofit are market leaders in the hard boiled candy and soymilk sections with market shares of 22% and 48%, respectively, according to AC Nielsen. In addition, we are also one of the first estate and property development company in India to have been awarded the ISO 9000 certification. In addition, our residential project, Planet Godrej, was awarded the “Pinnacle Award, 2006” by ZEE Business for being the best upcoming real estate project in India.

A diversified business model

We operate in diverse business segments and are therefore not overly reliant on one particular business. Our businesses consist of mature and established businesses, such as our chemicals business and our animal feeds business, which are our traditional and more established businesses. These are complemented with our relatively new businesses, such as estate and property development, poultry, beverages and foods, and confectionary products. We have a diversified portfolio of manufacturing facilities located across India and operations spread across six continents. We believe we have created a diversified and sustainable business model which has increased shareholder wealth and grown our revenues. We also believe that a diversified business portfolio such as ours diminishes the risks associated with the dynamics of any particular industry while simultaneously helps us to benefit from the synergies of operating diverse businesses under one company.

Ability to identify new business opportunities

We have promoted emerging or new businesses such as our estate and property development business, rural retail initiatives and pest management services and household insecticides businesses. In addition, we enter into joint ventures and strategic alliances with market leaders to grow our businesses. For example, we have entered into a joint venture with Sara Lee-Kiwi Holdings Limited for manufacturing, selling and distributing

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household insecticides and with the Hershey Company, USA for producing and selling beverage and food products, including tea, fruit and vegetable drinks, and confectionery such as toffees, éclairs, hard boiled candies, chocolates and flavoured syrups. In our finance and investments business, we continually seek to identify and invest in companies that are engaged in what we consider to be high growth businesses, such as consumer products, knowledge process management, business process outsourcing and bio-technology. We believe that our ability to identify new business opportunities and partners has resulted in synergies in our diverse businesses. We will continue to identify new business opportunities and will continue to enter into strategic alliances and relationships to maintain our market leadership across our various businesses.

Widespread sales and distribution networks

We have strong and widespread sales and distribution networks across India for our businesses. For our chemicals business, we have branches in Mumbai, Delhi, Kolkata and Chennai, a network of C&F agents across India, a distributor network across eight countries and we export our products to approximately 60 countries across six continents. For our animal feeds business, we have a network of over 1,100 distributors which in turn support a number of dealers, direct customers and C&F agents, which enables our animal feeds products to be available across India. We have also commenced rural retailing and have 47 “Aadhaar” branded stores spread across the states of Maharashtra, Gujarat, Punjab, Haryana, Andhra Pradesh, Tamil Nadu, Orissa and West Bengal. Our selling and distribution networks enable us to penetrate our targeted markets, optimise our sales and revenues and enable us to launch new products which can leverage this existing network.

Qualified and skilled employee base and experienced management team

We believe that a motivated and empowered employee base is key to our competitive advantage. As of September 30, 2007, we employed 6,442 full-time employees across our diversified businesses. The skills and diversity of our employees gives us the flexibility to best adapt to the challenging needs of our diverse businesses. Our personnel policies are aimed towards recruiting talented employees and facilitating their integration into our organisation and encouraging the development of their skills and expertise. In addition to our Chairman and our Managing Director, our Board includes a strong combination of executive as well as independent members that bring significant business experience to our Company. We have constituted a Young Executive Board, which comprises of executives in the age group 25 to 40 years, and advises us on new business development initiatives, strategies, systems and processes. We have also constituted a “Think Tank” that continually analyses long-term trends and how these might affect our businesses. We believe that the combination of our experienced Board and our dynamic, forward-looking management team have been key to our success and position us well to capitalise on future growth opportunities.

Our Business Strategies

We intend to pursue the following principal strategies to exploit our competitive strengths and grow our business:

Continue to operate across diversified businesses

We believe we have created a diversified and sustainable business model which has increased shareholder wealth and grown our revenues over the years. We are constantly seeking to improve our performance across all our businesses and will continue to invest in new and improved technology and resources for improving our products and operations, as well as entering into new businesses. We will also continue to focus on increasing our market reach and presence through improved marketing efforts of our products. We believe that maintaining a diversified business portfolio will allow us to diminish the risks associated with the dynamics of any particular industry while simultaneously allowing us to benefit from the synergies of operating diverse businesses under one entity.

Focus on the estate and property development business

We undertake our property development business through our subsidiary, Godrej Properties Limited (“GPL”). GPL has entered into memoranda of understanding with certain group companies under which GPL may be appointed to develop lands of such entities. In addition, GPL will actively seek to identify and acquire low cost land in fast growing cities and suburban areas which generally attracts increasing economic activity in the

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IT, ITES and other sectors as it intends to focus on developing large scale residential projects, retail malls, IT parks, and other office space projects. GPL currently operates in five cities and is looking to expand to an additional ten cities across India. In addition, GPL will continue to follow its business strategy of executing development functions within its core areas of expertise and aligning itself with third parties for design and architecture, project execution and marketing, which we believe has established GPL’s reputation in the real estate market as a developer of quality and reliable real estate properties across residential and commercial sectors.

Expand current product and service offerings in existing and new businesses

We have a track record of successfully introducing and establishing new products in new and existing segments. In our chemicals business, we intend to focus on producing and marketing higher chain-length alcohols, specialty fatty acids, surfactants and derivatives. In our estate and property development business, we intend to focus on developing large scale residential projects, retail malls, IT parks, and other office space projects. In our beverages and foods business, we offer a diverse range of products, which we continually supplement and which we expect to further enhance with our joint venture with the Hershey Company, USA. We intend to continuously evaluate changing tastes and preferences of consumers and explore new propositions, with the goal of creating a pipeline of new products in India and overseas. In addition, in our finance and investments business, we intend to continue to identify and invest in companies that operate in what we consider to be high growth industries. We also plan to leverage our current leadership in certain businesses, our brand equity and our wide distribution reach to help us successfully launch and support new brands, products and services.

Continue to upgrade, modernise and optimise our plants and facilities

For our chemicals business, we operate out of our manufacturing facilities located in Valia, Gujarat and Vikhroli, Maharashtra. Our manufacturing plant located in Vikhroli is ISO 9001, ISO 14001 and OHSAS 18001 certified. Our manufacturing plant located in Valia is ISO 9001 and ISO 14001 certified and is a modern, integrated factory where vegetable oils are converted into crude and distilled fatty acids, refined glycerine, crude and fractionated fatty alcohols and alpha olefin sulphonates. We are committed to maintaining modern manufacturing facilities, which we believe improves the quality of our products, improves efficiency of our production processes and reduces our operational costs. We also focus on management of our logistics, supply chain and distribution functions, which we believe, will enable us to increase our revenues and improves our margins. In addition, we will continue to focus on our total quality management (“TQM”) and our total productivity management (“TPM”) tools to streamline our processes. We also intend to continue to modernise our other operations and invest in technology and systems as appropriate. Enhance and leverage the Godrej brand

One of our key strengths is the affiliation and our relationship with the Godrej group of companies and the strong brand equity generated from the “Godrej” brand name. We believe the Godrej brand commands strong resonance among the populace in India due to its long presence in the Indian market. We also believe that customers and consumers perceive us to be a quality provider of superior products and services. We intend to leverage the brand equity that we enjoy as a result of our relationship with the Godrej group of companies to offer more products and services across our businesses.

Focus on growing rural business opportunities

Currently our rural based businesses include the production and sale of agricultural inputs, integrated poultry, the oil palm plantation business, as well as rural retailing. We believe that the organised sector has been unable to penetrate the rural market in the past. Increasing awareness across the rural space has translated into business opportunities on which we intend to leverage on. Our rural retailing business consists of distribution of agricultural and consumer products for personal and household use, including apparel, food, groceries and consumer durables. We currently operate out of 47 “Aadhaar” branded retail outlets across India and intend to open additional stores with different formats to spread our presence and reach to rural villages and semi-urban cities in India. We believe that this sector will be an important revenue generator for us, and we intend to capitalise on being one of the earlier organised companies to enter the rural market.

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Our Businesses

The following chart outlines our current corporate structure, including our equity ownership in our subsidiaries, associates and joint ventures:

# As on October 1, 2007 * Godrej Properties Limited has various SPVs for its projects

Note: The holdings in the companies depicted above are GIL’s holdings. Apart from these holdings, the above mentioned group companies may be held by other Godrej entities or family members

Our Chemicals Business

We are one of India’s leading manufacturer of oleochemicals and surfactants, such as fatty acids, fatty alcohols, glycerine, alpha olefins (“AO”), alpha olefin sulphonates (“AOS”), sodium lauryl sulphates (“SLS”) and sodium lauryl ether sulphates (“SLES”). We have grown and expanded our production capacity to 65,000 MT per year for fatty alcohols, 75,800 MT per year for fatty acids, 8,280 MT per year for glycerine and 31,250 MT per year for sulphonated products. Fatty alcohol is used as an alternative to synthetic alcohol products that are derived from petroleum. For the fiscal years 2007, 2006 and 2005, our chemicals business contributed Rs. 5,708.53 million, representing 23.15%, Rs. 5,117.77 million, representing 24.30%, and Rs. 5,416.05 million, representing 27.09%, respectively, of our total income, on a consolidated basis. The table below provides the break-up of income and quantities sold of our chemicals for the periods indicated:

For the Fiscal Year Item

2007 2006 2005

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Quantity

(in MT)

Amount

(Rs. in

Millions)

Quantity

(in MT)

Amount

(Rs. in

Millions)

Quantity

(in MT)

Amount

(Rs. in

Millions)

Alpha Olefin and its precursors and derivatives

88,771.00 3,093.11 62,657.00 2,831.12 71,967.00 3,151.76

Fatty Acids 58,448.00 2,042.83 56,110.00 1,744.80 51,369.00 1,701.45

Glycerine 11,965.00 406.67 8,897.00 349.13 8,390.00 379.67 Total 5,542.61 4,925.05 5,232.88 Our Production Facilities

Our production facilities are located in Valia, Gujarat and Vikhroli, Mumbai. Our plant located in Vikhroli was established in 1963 and is ISO 9001, ISO 14001 and OHSAS 18001 certified and manufactures fatty acids and sulphonated products. Our manufacturing plant located in Valia is 9001 and ISO 14001 certified for manufacturing crude and distilled Fatty Acids, refined Glycerin and franctionated fatty alchohols and alfa olefin sulfonates from vegetable oils. Uses of Our Products

Our chemicals are used in the manufacture of the following products: ● Fatty acids are used in the production of facial and shaving cosmetics, rubber processing for tyres and PVC processing; ● Glycerine is used in the production of pharmaceuticals, humectants and cosmetics; ● AO is used in the production of detergents and oil drilling; ● AOS is used in the production of shampoos, cosmetics and detergents; ● SLS is used in the production of toothpaste and detergents; and ● SLES is used in the production of shampoos and conditioners. Our Raw Materials

The key raw materials in our chemicals business include crude palm stearin, palm kernel oil, palm fatty acid distillate, palm kernel fatty acid distillate and alpha olefin, which we source from south-east Asia. The raw materials that we source from south-east Asia are subject to an import duty ranging from 10% to 15.00%. Power and Fuel

We require a substantial amount of energy to operate our chemicals business. We purchase some of our electricity needs from the state electricity boards and we also generate electricity through our steam turbine generators. As back up, we have diesel generator sets that we use during times of power or energy shortages. We have recently converted our medium pressure boilers to run on natural gas, which we source from Mahanagar Gas Limited.

Our Distribution Network

We have branches in Mumbai, Delhi, Kolkata and Chennai, a network of C&F agents across India, a distributor network across eight countries and we export our products to approximately 60 countries in six continents. In addition to our distributor networks, we have also deployed electronic customer relationship management solutions as a part of our continuing endeavour to build a more transparent relationship with our customers for our chemicals business.

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Our Customers

We supply our products to a diverse range of customers, including Unilever, Bridgestone, Takemoto Group and Clariant. Our Competition

We compete with United Coconut Chemicals, Inc., VVF Limited, Cognis GmbH, Oxiteno SA and Kao Corporation.

Our Estate and Property Development Business

We undertake our property development business through our subsidiary, Godrej Properties Limited. Currently, GPL focuses on the development of residential projects and commercial projects in Mumbai, Pune, Bangalore, Kolkata and Hyderabad. As of September 30, 2007, GPL has Land Reserves comprising 154.23 acres aggregating to approximately 17.99 million sq. ft. of Saleable Area. Many of the land that form a part of the Land Reserves are in prime locations. For example, Planet Godrej, a residential project with a Saleable Area of 0.82 million sq. ft. is proposed to be developed over a nine acre plot in the Mahalaxmi area in Central Mumbai. In addition, GPL has entered into memoranda of understanding with certain group companies under which GPL may be appointed to develop lands of such entities. A plot of approximately 3.00 acres at Thane in Mumbai, owned by Lawkim Limited will be the first such property to be developed by GPL. GPL is contemplating various fund raising options including an initial public offering of its equity shares in India. We cannot assure you that such a fund raising programme would happen in the near future on terms contemplated or at all.

The table below provides our Land Reserves and estimated Saleable Area by cities:

Location Area (in acres) Estimated Saleable Area

(Sq. ft. in Millions) Mumbai 62.93 1.41 Pune 3.89 0.22 Bangalore 22.30 2.03 Kolkata 31.11 4.74 Hyderabad 34.00 9.60 Total 154.23 17.99

GPL’s residential projects include apartment complexes targeted towards mid to high income groups, which include amenities such as sports facilities, play areas and electricity back-up. GPL was awarded the ISO 9000 certificate in 1995. We believe GPL is one of the first property development companies in India to have been awarded the ISO 9000 certification in 1995. GPL follows a balanced business strategy based on executing development functions within its core areas of expertise and aligning itself with third parties to perform functions outside its core focus areas. For example, GPL outsources most of its design, engineering and construction activities to leading market service providers such as Knight Frank for land acquisition and Sembawang Infrastructure India Private Ltd. for execution.

Of the total Land Reserves aggregating to 154.23 acres, GPL has the development rights (through joint venture agreements and joint development agreements) to 8.74 million sq. ft. of Developable Area, out of which its economic interests aggregates to 4.66 million sq. ft. of Saleable Area. GPL has also purchased property aggregating to 13.33 million sq. ft. of Saleable Area which has been fully paid for.

Typically, GPL recognises its income from joint ventures on a revenue sharing basis and from its joint developments on a revenue sharing, profit sharing or property sharing basis. For its residential projects, GPL generally receives advance payments from its clients upon them agreeing to purchase the unit. For its commercial projects, GPL either sells the commercial space or leases out the commercial space on a long term basis and then capitalises the lease by selling it to institutional investors and others. We have licensed properties from time to time. As of September 30, 2007, we had licensed approximately 0.40 million sq. ft. of area to licensees including Accenture, Capgemini, CBaySystems, Tech Pacific and Compass BPO. Licensing of properties generated revenues of Rs. 256.19 million in the fiscal year 2007.

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For the fiscal years 2007, 2006 and 2005, our estate and property development business contributed Rs. 1,581.95 million, representing 6.42%, Rs. 915.12 million, representing 4.34%, and Rs. 613.89 million, representing 3.07%, respectively, of our total income on a consolidated basis.

GPL’s Residential Projects

The details of GPL’s completed residential projects, all of which have been fully sold, are:

Name, Location Date of Completion of the Project Developable Area

( Sq. Ft. in Millions.) Godrej Edenwoods, Thane, Mumbai 2000 0.40

Godrej Grenville Park, Ghatkopar, Mumbai 2001 0.06

Godrej Hill, Kalyan 2002 1.21

Godrej Sky Garden, Panvel, Mumbai 2002 0.30

Godrej Plaza, Panvel, Mumbai 2002 0.07

Godrej Indraprastha, Santacruz, Mumbai 2003 0.03

Godrej Bayview, Worli, Mumbai 2003 0.03

Godrej Sherwood, Shivaji Nagar, Wakdewadi, Pune 2003 0.09

Godrej La Vista, Shivaji Park, Mumbai 2006 0.01

Godrej Glenelg, Cuffe Parade, Mumbai 2007 0.04

Godrej Waldorf, Oshiwara, Mumbai 2007 0.04

Total 2.28

The details of GPL’s ongoing and forthcoming residential projects are:

Name, Location Type of

Development

Land

Area

(In Acres)

Estimated

Developable

Area

(Sq. Ft. in Millions.)

Estimated

Saleable

Area


Percentage

of Project

Sold

(As on September 30, 2007)

Expected

Completion

Date

GPL’s ongoing residential projects

Planet Godrej, Mahalaxmi, Mumbai

Residential apartment complex

2.71 0.82 0.25 85 2009

Edenwoods – Phase III, Thane, Mumbai


3.09 0.16 0.08 50 2010

Godrej Hill, Kalyan


4.39 0.50 0.29 12 2010

Godrej Woodsman Estate, Bellary-Hebbal Road, Bangalore


15.80 2.42 1.91 62 2009

Tumkur Road, Bangalore

Residential villas and apartment complex

6.50 0.24 0.12 Nil 2009

Total 32.49 4.12 2.65

GPL’s forthcoming residential projects

B.T Road, Kolkata(1)


22.99 2.76 2.76 Nil 2013

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Name, Location Type of

Development

Land

Area

(In Acres)

Estimated

Developable

Area


Estimated

Saleable

Area


Percentage

of Project

Sold


Expected

Completion

Date

Girikandra Holiday Homes and resorts, Mumbai (2)

To be determined

50.00 0.54 0.54 Nil To be determined

Total 72.99 3.30 3.30 (1) This property can be commercially exploited. GPL intends to apply for permission to construct a

mixed-use project with residential apartment complex, commercial and retail space. (2) Current zoning permits construction of a resort.

Given below is a brief overview of some of GPL’s ongoing and forthcoming residential projects: Planet Godrej: This is a residential project of premium apartments located on nine acres in Mahalaxmi, Central Mumbai, with a Developable Area of 0.82 million sq. ft. and a Saleable Area of 0.25 million sq. ft. Upon completion, this project will have 380 units of two bedroom, three bedroom, four bedroom, duplex and penthouse apartments across five towers of 50 storeys each. The project is designed with amenities such as designer lobbies, 24 hour security and maintenance, tree lined pathways and walkways, waterfalls, a tennis court, a badminton court, a table tennis table, an Olympic sized swimming pool, a squash court, volleyball and basketball courts, a fitness centre, an amphitheatre and a meditation centre. This project was awarded the “Pinnacle Award, 2006” by ZEE Business for being the best up-coming real estate project in India. As of September 30, 2007, approximately 85% of the area proposed to be constructed had been sold. This project is expected to be completed by 2009. Godrej Woodsman Estate: This is a residential project of apartment complexes located on 15.80 acres on Hebbal-Bellary Road, Bangalore near the new international airport, with a Developable Area of 2.42 million sq. ft. and a Saleable Area of 1.91 million sq. ft. Upon completion, this project will have 896 units of two bedroom and three bedroom apartments across seven tower blocks of 16 storeys each and one premium tower of 26 storeys. The project is designed with amenities such as a tree lined entrance promenade, a central plaza, a clubhouse, electricity back-up of up to one KW for each apartment, central cooking gas supply, an amphitheatre with a stage, a multi-purpose court, a maze garden, a children’s play area, a swimming pool, a yoga plaza, a jogging park, an outdoor cafeteria and a department store. As of September 30, 2007, 2007, approximately 62% of the area proposed to be constructed have been sold. This project is expected to be completed by 2009. GPL’s Commercial Projects

GPL’s commercial projects business includes building modern, state-of-the-art IT parks, office complexes and retail malls for its clients. The details of GPL’s completed commercial projects, of which all are fully sold or leased, are:

Name, Location Type of Development Date of Completion of

the Project

Developable

Area

( Sq. Ft. in Millions)

M.G.S.M., Bandra, Mumbai Commercial office space 1997 0.03 Godrej Millennium, Deccan Gymkhana, Pune

Commercial office space 2000 0.12

Godrej Eternia, Shivaji Nagar – Wakdewadi, Pune

IT park and commercial office space

2003 0.31

Godrej Avanti, Shankarsheth Road, Pune

Commercial office space 2003 0.02

Godrej Castlemaine, Bund Garden, Pune


2004 0.29

Coliseum – Phase I and II, Sion, Commercial office space 2007 0.22

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Name, Location Type of Development Date of Completion of

the Project

Developable

Area

( Sq. Ft. in Millions)

Mumbai Total 0.99

The details of GPL’s ongoing and forthcoming commercial projects are:

Name,

Location

Type of

Development

Land Area

(In Acres) Developable

Area

(Sq. Ft. in Millions)

Estimated

Saleable Area

(Sq. Ft. in Millions)

Percentage

of Project

Sold/Leased


Expected

Completion

Date

GPL’s ongoing commercial projects

Godrej Waterside, Salt Lake City, Sector V, Kolkata

IT park 1.74 1.82 0.57 10 2009

Godrej Genesis, Salt Lake City, Sector V, Kolkata

IT park 2.67 1.58 0.97 Nil 2010

Godrej Genesis, Pune

IT park 3.73 0.50 0.25 Nil 2009

Coliseum – Phase II & III, Sion, Mumbai

Commercial office space

0.46 0.16 0.06 Nil 2009

Godrej Eternia – A, Shivaji Nagar, Wakdewadi, Pune


0.16 0.26 0.07 100 2008

Total 8.76 4.32 1.92

GPL’s forthcoming commercial projects

Godrej Genesis Hyderabad, Pattancheru


34.00 9.60 9.60 Nil 2013

Lawkim, Thane, Mumbai


2.28 0.30 0.19 Nil 2009

BT Road, Kolkata

Commercial office and retail space

3.71 0.44 0.44 Nil 2013

Total 39.99 10.34 10.23

Given below is a brief overview of GPL’s ongoing commercial projects:

Godrej Waterside: This is an IT park project located in Sector V of the Salt Lake area of Kolkata. This project is undertaken by Godrej Waterside Properties Private Limited, a joint venture that GPL has entered into with Infinity Infotech Parks Limited (a joint venture with the West Bengal Electronics Industry Development Corporation Limited). This project has been designed with amenities such as central air conditioning, a lobby,

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an outdoor lounge pavilion, a food court and car parking facilities for over 1,400 cars, central air conditioning, electricity back-up, a rain water harvesting and sewage treatment plant and a satellite and a micro-wave tower. Godrej Genesis, Hyderabad: This is an IT space located in APIIC’s Industrial Estate. This project has been designed to have amenities such as a food court, multi-level parking and a convention hall. The details of the Land Reserves are as follows:

S.

No.

Land Reserves Acreage

% of

Total

Acreage

Estimated

Saleable Area

(square feet

million)

% of

Saleable

Area

(i) Land Owned By the Company 1. By itself 2. Through its subsidiaries 3. Through entities other than (1) and

(2) above

- 110.70 -

- 71.78% -

- 13.33 -

- 74.12% -

(ii) Land Over which the Company has sole Development rights: 1. Directly by the Company 2. Through its subsidiaries 3. Through entities other than (1) and

(2) above

33.11 2.67

21.47% 1.73% -

2.77 0.97 -

15.41% 5.42% -

(iii) Memorandum of Understanding/ Agreements to acquire/ letters of acceptance to which company and/or its subsidiaries and/or its group companies are parties, of which: 1. Land subject to government

allocation 2. Land subject to private acquisition 3. With group company

- - 2.28

- - 1.48%

- - 0.20

- - 1.08%

(A)

Sub Total of (i)+(ii)+(iii):

148.76

96.46%

17.27

96.03%

Joint Developers With Partners

(iv) Land for which Joint Development agreements have been entered into by: 1. By the Company 2. Through the subsidiaries 3. Through entities other than (1) and

(2) above

- 5.47 -

- 3.54% -

- 0.71 -

- 3.97% -

(v) Proportions interest in lands owned indirectly by the company through joint ventures

51%

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S.

No.

Land Reserves Acreage

% of

Total

Acreage

Estimated

Saleable Area

(square feet

million)

% of

Saleable

Area

(B) Sub-total (iv)+(v) 5.47

3.54% 0.71 3.97%

(C)

Total (i)+(ii)+(iii)+(iv)+(v):

154.23

100%

17.99

100%

Material Terms of the Memorandum of Understanding with the Group Companies

GPL has entered into memoranda of understanding with Godrej and Boyce Manufacturing Company Limited, Godrej Industries Limited, Agrovet and Lawkim Limited for being appointed as the developer of the lands of the entities. Under the terms of these memoranda, GPL shall, in the case of Godrej Industries Limited, Agrovet and Lawkim Limited, and may in the case of Godrej and Boyce Manufacturing Company Limited, be appointed by the entity desirous of developing any of its land in any part of India to provide advice on the regulations affecting a proposed project and the feasibility and the design of the project. GPL shall also be responsible for obtaining all of the sanctions and permissions for the development of the project and for overseeing the quality, cost, schedule, aesthetics, pricing and marketing of the project.

Competition

We face competition from various regional and local property developers including large corporate and small real estate developers such as DLF Limited, Unitech Limited, Ansal Properties Limited and Raheja Developers Private Limited. Our Animal Feeds Business

We undertake our animal feeds business through our subsidiary, Godrej Agrovet Limited (“Agrovet”), and its subsidiary, Goldmohur Foods and Feeds Limited (“Goldmohur”) and through Agrovet’s joint venture, Godrej Goldcoin Aquafeed Limited. The animal feeds business was started in 1971 as a division of Godrej Industries Limited and was transferred to Agrovet in 1992. Agrovet also acquired Goldmohur Foods and Feeds Limited from Hindustan Lever Limited in 2001. For the fiscal years 2007, 2006 and 2005, our animal feeds business contributed Rs. 7,276.78 million, representing 29.51%, Rs. 6,760.98 million, representing 32.10%, and Rs. 6,539.97 million representing 32.71%, respectively, of our total income, on a consolidated basis. Products

Agrovet manufactures and markets a range of feed products for dairy, poultry (layer and broiler feed), shrimp and fish. Agrovet is one of the leading manufacturers in the animal feeds industry with a total market share of over 20% in the organised sector for the year 2005 according to CLFMA of India. During the fiscal year 2007, our total animal feeds production was 516,934 MT.

Agrovet’s Joint Ventures

Agrovet has entered into a joint venture with Advanced Chemical Industries, Bangladesh and with Al-Rahaba U.A.E for manufacturing and marketing animal feeds in Bangladesh and the U.A.E respectively. Agrovet has also entered into a joint venture, called Godrej Gold Coin Aquafeed Limited, with Gold Coin Aqua Feed Pte. Limited, Singapore for the manufacture, distribution, sale and marketing of aquaculture feed (excluding hatchery and sinking fish feed). Godrej Gold Coin Aquafeed Limited manufactures aquafeeds in its plant located at Vijayawada and Chennai but is planning to move all of its Chennai manufacturing operations to Vijayawada.

Production Facilities

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Agrovet, either directly or through its subsidiaries, operates out of 43 manufacturing units located across India. Agrovet owns four units and outsources production to 39 third-party owned manufacturing units whose activities are supervised by Agrovet. Eight units are located in north India, 12 are located in the south, five in the east and 18 in the west of India. On a combined basis, as of September 15, 2007, Agrovet’s total manufacturing capacities is 1,200,000 MT of mash and 840,000 MT of pellets per year, for its dairy, poultry and shrimp feeds businesses. Agrovet generates approximately 22% of the total mash and pellets that are produced by us each year. Raw Materials

The key raw materials that are required in the animal feeds business are maize, soya extract, rice bran extract and de-oiled rice bran. Agrovet generally purchases these raw materials off the market.

Marketing and Distribution Network

Agrovet distributes its products through approximately 1,100 distributors who in turn support a number of dealers, direct customers and C&F agents, which enables its products to be available across India. For its dairy feed, Agrovet generally conducts its distribution operations through distributors and dealers. For its poultry feed, Agrovet conducts its operations through distributors and also directly sells feeds to large customers. Some of the brands under which Agrovet markets its products are “Godrej Crumbro”, “Godrej Milk More” and “10-D”. Competition

Agrovet’s key competitors in the animal feeds business are PT Japfa Comfeed Indonesia, Venky’s (India) Limited, Amrit Feeds Limited, Nutrikraft India Private Limited and SKM Animal Feeds and Foods India Limited.

Research and Development

The animal feeds business constantly undertakes research and development in its dedicated research and development centre located in Bangalore called Animal Nutrition Innovation Centre. Our innovative animal feeds products include “Godrej Crumbro” and “Godrej Bypro”. Our Beverages and Foods Business

We operate our beverages and foods business primarily through our joint venture, Godrej Hershey Foods & Beverages Limited. The company was originally incorporated as Godrej Tea Limited in 2003. It acquired our foods division (comprising of, the production and sale of vegetable oils, vanaspati, fruit drinks, nectars, fruit juices and tomato puree) in 2006 and was renamed Godrej Beverages & Foods Limited. Godrej Beverages & Foods Limited acquired Nutrine Confectionary Company in June 2006. Godrej Beverages & Foods Limited subsequently entered into a joint venture agreement with the Hershey Company USA and Mr. Mahendran to manufacture and market beverage and food products including tea, fruit drinks, juices, tomato puree, fruit pulps and concentrates, soya cereals and soya based drinks and confectionery, such as toffees, éclairs, hard boiled candies, chocolates and flavoured syrups. Pursuant to the terms of the joint venture agreement, Hershey Company USA and its affiliates hold a 51% stake while Godrej Industries Limited hold a 43% stake and Mr. Mahendran holds 6%, of the equity capital of the company. Subsequent to entering into the joint venture agreement, the name of the company was changed to Godrej Hershey Foods & Beverages Limited. Our current holding in Godrej Hershey Foods & Beverages Limited is 37.00%. Godrej Hershey Foods & Beverages Limited also processes beverages and foods for a number of prominent beverages and foods companies. For the fiscal years 2007, 2006 and 2005, our beverages and foods business contributed Rs. 1,356.43 million, representing 5.50%, Rs. 78.29 million, representing 0.37%, and Rs. 157.91 million, representing 0.79%, respectively, of our total income, on a consolidated business.

Production facilities

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Godrej Hershey Foods & Beverages Limited has manufacturing facilities at Mandideep, Bhopal for its fruit drinks and processing operations and at Chitoor in Andhra Pradesh for its confectionery products. Products and Brands

Godrej Hershey Foods & Beverages Limited’s major trademarks and copyrights are “Nutrine”, “Mahalacto”, “Assay”, “Kokonaca”, “Jumpin”, “Noble House”, “Sofit” and “X’s”. Some of the brands under which the vegetable oils products are marketed are “Godrej Cooklite”, “Godrej Refined Sunflower Oil”, “Godrej refined Groundnut Oil”, “Godrej Himgiri” and “Godrej Margarine”. Distribution Network

Godrej Hershey Foods & Beverages Limited has an all India sales and distribution network with approximately 2,000 distributors and 470 sales personnel and interim sales representatives. According to AC Nielsen, the company’s Nutrine products are available in one million outlets across India, out of which 400,000 are directly serviced by the company.

Competition

Godrej Hershey Food & Beverages Limited faces competition for its sugar confectionery business from Perfetti, Parle, Lotte, Nestle, ITC, Cadbury and others, and for its beverages business from Coca Cola, Pepsico India, Parle Agro and Dabur India Limited. Our Vegetable Oils Business

The foods division of our Company was transferred to Godrej Beverages & Foods Limited with effect from March 31, 2006. Subsequent to this transfer, the vegetable oils division acts as a contract processor for edible oils and vanaspati where it processes edible oils, vanaspati and bakery fats marketed in bulk by us and edible oils and vanaspati for other companies in India. Our processing customers include a number of prominent Indian vegetable oil and vanaspati companies.

For the fiscal years 2007, our vegetable oils business contributed Rs. 508.57 million, representing 2.06% of our total income on a consolidated basis. Our vegetable oils plant is located in Wadala, Mumbai and is capable of producing 33,000 metric tonnes of refined edible oils per year. It also hosts a hardening plant that is capable of producing 20,000 metric tonnes of vanaspati and bakery shortenings per year. It also has a gas liquid chromatograph to identify fatty acid compositions of oil which identifies the amount of adulteration in edible oils. The plant also has a net weight filler from Serac, France to pack edible oils which is accurate to within five grams. We face competition from ITC, Marico, National Dairy Development Board and Bunge in our vegetable oils business. Our Household Insecticides Business

We operate our household insecticides and pest control services business through our subsidiary, Godrej Hicare Limited, and through our joint venture, Godrej Sara Lee Limited. Godrej Hicare Limited focuses on providing rodent protection, termite protection, common household pest protection, wood borer management and bed bugs management products and services. Godrej Sara Lee focuses on the manufacturing and sale of household insecticides through its brands “Goodknight”, “Jet”, “Hit” and “Banish”. For the fiscal years 2007, 2006 and 2005, our household insecticides business contributed Rs. 1,356.45 million, representing 5.50%, Rs. 1,117.65 million, representing 5.31%, and Rs. 1,108.75 million, representing 5.55% respectively, of our total income, on a consolidated business. Godrej Sara Lee Limited

Godrej Sara Lee Limited is a joint venture with Sara Lee-Kiwi Holdings Incorporated for the manufacture and sale of household insecticides in India. Sara Lee Kiwi-Holdings Incorporated is affiliated with the Sara Lee

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Corporation, Chicago. We hold 20% of the equity capital of Godrej Sara Lee Limited. Godrej Sara Lee Limited currently manufactures and sells household insecticides across product segments such as coils, mats, vaporisers, aerosols and it also has a portfolio of products that includes insect repellents through its brands, including “Goodknight” which was ranked 21st in a brand equity survey conducted by Super Brands Council in 2005, “Hit”, “Jet” and “Banish”. Currently, Godrej Sara Lee Limited is a market leader in the household insecticide industry and holds approximately 33% of the market share according to AC Nielsen. Production Facilities Godrej Sara Lee Limited has its manufacturing units in Guwahati, Meghalaya, Pondicherry, Karaikal, Goa and Jammu. Godrej Sara Lee Limited has entered into the Sri Lankan and Bangladeshi markets through its subsidiaries. It is committed to research and development in the field of household insecticides and has a research and development centre in Vikhroli, Mumbai.

Distribution

Godrej Sara Lee Limited has a wide distribution network in India and distributes its products through 32 depots, supplying approximately 600,000 retail outlets. India has a wide wholesale distribution channel, which caters to another 600,000 retail outlets. Godrej Sara Lee has a strong presence in the evolving Modern Trade channel amongst its competitors whereby the company distributes its products to malls and large department stores directly.

Competition

Currently, Godrej Sara Lee Limited’s main competitors include Reckitt Benckiser with its "Mortein" brand and SC Johnson with its “All-Out” and “Baygon” brands. Godrej Hicare Limited

Godrej Hicare Limited focuses on pest management services for the residential and the commercial segments which includes hotels and restaurants, health care units, food processing and pharmaceutical units, factories, corporate offices, ITES establishments, malls and multiplexes and airports and railways. We currently hold 85.91% of the equity capital of Godrej Hicare Limited. The company has its operations in 18 cities and has 43 service centres across India. Godrej Hicare Limited provides various pest management services, including termite protection, household pest management, rodent control, bed bug management and wood treatment and preservation. Our Finance and Investments Business

In our finance and investment business we typically invest in companies that are either associated with us or businesses in which we see a long-term investment advantage. For the fiscal years 2007, 2006 and 2005, our finance and investments business contributed Rs. 707.88 million, representing 2.87%, Rs. 349.63 million, representing 1.66%, and Rs. 367.46 million, representing 1.84%, respectively, of our total income, on a consolidated basis. The following table represents our investments at cost and the amount and shareholdings in our investments, as of June 30, 2007:

Company Business Book value of

Investment (Rs. in

Millions)

Percentage of Holding

(%)

Group Companies

Godrej Consumer Products Limited

Fast moving consumer goods and household care products

921.63 10.2

Non-Group Companies

CBaySystems Holdings Limited

Medical Transcription, Accounts, Patient Financial Services

427.79 14.8

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Company Business Book value of

Investment (Rs. in

Millions)

Percentage of Holding

(%)

Verseon LLC Computer aided drug discovery

114.23 8.7

Avestha Gengraine Technologies Private Limited(1)

Bio-technology 88.33 4.4

Others(2) 35.92 - (1) Since June 30, 2007, we have made an additional investment of Rs. 9.59 million and we currently

hold 4.6% of its shareholding. (2) Since June 30, 2007, we have made additional investments of Rs. 10.00 million.

Godrej Consumer Products Limited

We hold a 10.2% shareholding in Godrej Consumer Products Limited (“GCPL”), a consumer goods company, at a book value of Rs. 921.63 million. GCPL’s market capitalisation as of September 28, 2007 was Rs. 31,900.48 million. GCPL is a leading manufacturer of soaps and hair colour categories, and owns various well known brands, such as Cinthol, Fairglow, No. 1, Ezee, Colour Soft and Renew.

CBaySystems Holdings Limited

We hold a 14.8% shareholding in CBaySystems Holdings Limited (“CBay”), a company engaged in medical transcription, accounts processing and patient financial services business outsourcing in the health care sector at a book value of Rs. 427.79 million. CBay is listed on the AIM exchange in London. CBay’s market capitalisation as of September 28, 2007 was Rs. 4,206.08 million (converted at GBP 1 Rs. – 80.88).

Avestha Gengraine Technologies Private Limited

We hold a 4.6% shareholding in Avestha Gengraine Technologies Private Limited (“Avesthagen”), a company engaged in biotechnology, at a book value of Rs. 88.33 million. Subsequent to our investment in Avesthagen, investors have invested in the company at a higher valuation. Verseon LLC

We hold a 8.7% shareholding in Verseon LLC (“Verseon”), a company engaged in the computer aided drug discovery business, at a book value of Rs. 114.23 million.

Our Other Businesses

Our other businesses includes (a) our rural based businesses comprising rural retailing, integrated poultry business, oil palm plantation, agricultural inputs and tissue culture and (b) our other businesses comprising international vegetable oil trading, the distribution of medical diagnostics equipment, the generation of wind energy, the business process outsourcing business for healthcare, finance and accounting sectors and urban retailing. For the fiscal years 2007, 2006 and 2005, our other businesses contributed Rs. 6,160.38 million, representing 24.98%, Rs. 4,610.75 million, representing 21.89%, and Rs. 3,868.50 million, representing 19.35%, respectively, of our total income, on a consolidated business.

Rural Based Businesses

Our rural retailing, integrated poultry, oil palm plantation business, agriculture inputs and tissue culture businesses are broadly categorised as part of our rural based businesses. We believe that the reputation of the Godrej brand name will enable our growth in this market.

Retailing Business Agrovet undertakes retailing under the brand “Aadhaar” and is focused on the retail distribution of agricultural and consumer products for personal and household use, and includes apparel, food, groceries and consumer

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durables in rural and semi-urban towns in India. Aadhaar currently operates out of 47 retail outlets across the states of Andhra Pradesh, Gujarat, Maharashtra, Haryana, Orissa, Punjab, Tamil Nadu and West Bengal, with a combined area of 200,000 sq.ft. We follow a hub and spoke model for our retail outlet business. The “hub” stores typically have a built up area of about 10,000 sq.ft. while the “spoke” stores have 3,000 sq.ft. Agrovet has entered into business alliances with entities, to provide products and services in the field of healthcare and pharmaceuticals, agricultural finance, insurance, farm equipment and internet services, in order to complement and increase the range of the Aadhaar product and service offerings. For example, Agrovet has a business alliance with Eicher Motors for selling farm equipment through Aadhaar stores. In addition, Agrovet operates new petro-format retail stores through tie ups with petroleum companies called “Aadhaar Suvidha”.

In addition, in connection with its retailing business, Agrovet provides value-add services, including agricultural advisory services, soil testing services, seed sampling, assistance with inter-cropping and coordinating bank loans. Our competition in the retail store format are ITC through its “Choupal Sagar” stores, Tata Group through its “Tata Kisan Kendra” stores and Triveni Engineering through its “Triveni Khushali Bazaar”. Integrated Poultry Business

Agrovet commenced with the integrated poultry business in 1999 through its acquisition of the India Poultry Farm. Agrovet’s integrated poultry business covers the entire value chain in such business, from breeding, hatching and rearing of broilers to processing and marketing chilled and frozen chicken. We believe Agrovet was one of the first companies in India to retail processed chilled chicken, which we began marketing in 1999 under the brand “Godrej Real Good Chicken”. For the fiscal year 2007, the integrated poultry business contributed to Rs. 1,291.54 million representing 5.23% of our total income. Production Facilities Agrovet undertakes breeding activity for its broilers in its grandparent farm located in the outskirts of Bangalore. In addition to its grandparent breeding farm, Agrovet also uses 20 third party parent breeding farms that are located across the south and the west of India. Agrovet processes its broilers in two facilities that are located near Bangalore and Mumbai and that have a combined processing capability of 50,000 broilers a day. The broiler processing facility located near Mumbai and the processing facility located near Bangalore are in the process of obtaining ISO 9001:2000 certifications.

Products and Brands

In addition to the processing and sale of chicken, Agrovet also processes and sells chicken cold-cuts, breaded chicken, and frozen peas, french fries and other snacks. Agrovet currently markets its products under the brand “Godrej Real Good Chicken” and “Yummiez”. Godrej Real Good Chicken caters to retailing broilers, while Yummiez is catered towards value added frozen products. The current markets for Godrej Real Good Chicken are in Delhi and other cities in Maharashtra, Karnataka, Kerala, Goa and Tamil Nadu. The distribution network is critical to Agrovet’s delivery of its products and as a part of this strategy, Agrovet has supplied more than 400 visicoolers to the retail outlets where its products are sold. Agrovet intends to expand its operations to the northern and eastern regions in India.

Agrovet’s Joint Venture and Associate

Agrovet has entered into a joint venture called ACI Godrej Agrovet Private Limited with Advanced Chemical Industries Limited, Bangladesh for undertaking the business of raising, rearing, marketing, selling and trading in poultry birds in Bangladesh. Agrovet invested in Polychem Hygiene Laboratories Private Limited together with other investors for undertaking the business of providing bio-security to poultry units through products and services including post-mortem diagnosis, antibiotic sensitivity tests, MIC testing, hygiene audits, isolation and identification of avian pathogens and serological tests.

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Agrovet has entered into a joint venture with Al-Rahaba, U.A.E for undertaking the business of raising, rearing, marketing, selling and trading in poultry birds and animal feeds in the U.A.E. Oil Palm Plantation Business We commenced the oil palm plantation business in 1991 in the State of Andhra Pradesh. Since 1991, the business has expanded its reach to palm plantations in the States of Goa, Mizoram, Orissa and Karnataka. Palm plantation areas are allotted by the state governments to palm oil manufacturers. The plantation owners are obliged to sell the palm fruit to such allottees at government regulated prices. Agrovet, through which the business is currently operated, is entitled to an area of approximately 12,450 hectares of palm plantations. Agrovet has two manufacturing facilities located in Goa and Andhra Pradesh. These mills have a combined capacity of 14,850 MT of crude palm oil per year. For the fiscal year 2007, the oil palm plantation business contributed to Rs. 462.26 million representing 1.87% of our total income. Agricultural Inputs and Tissue Culture Businesses Our tissue culture business involves the development and marketing of banana plantlets, sugarcane and potato tubers using pure planting materials sourced from accredited research facilities. Our tissue culture facility and greenhouse is located near Hyderabad. We manufacture and sell agricultural inputs, such as plant growth promoters, urea coating agents, herbicides, chemical and natural pesticides. For the fiscal year 2007, the agricultural inputs and tissue culture businesses contributed to Rs. 630.28 million representing 2.55% of our total income. Other Businesses

International Vegetable Oil Trading

The international vegetable oil trading business is undertaken by our subsidiary Godrej International Limited, an Isle of Man registered company. The principal trading commodity is palm oil and its derivatives which is traded in lots of 1,000 tonnes each in bulk. For the fiscal year 2007, the international vegetable oil trading business contributed to Rs. 2,677.20 million representing 10.85% of our total income.

Medical Diagnostics

Our medical diagnostics business involves the distribution and sale of instruments and machines such as instruments for measuring packed cell volumes, diagnosing malaria, measuring blood cell counts and tuberculosis detection sets. We have entered into distribution agreements with Guilin Medical Electronic Instrument Factory, China and have been appointed as the exclusive distributor of their products within India and the other SAARC countries. For the fiscal year 2007, the medical diagnostics business contributed to Rs. 83.32 million representing 0.33% of our total income. We are considering options for restructuring our medical diagnostics division including sale and/or joint ventures. There can be no assurances that such restructuring may happen in the near future or at all. Business Process Outsourcing

We undertake business process outsourcing through our subsidiary, Godrej Global Solutions Limited. This company is focused on transaction processing services and medical billing for the healthcare industry, document management for large universities and publishing houses and provides knowledge process management for telecom bills auditing, finance auditing and tax preparation. Godrej Global Solutions Limited is a ISO 27001 certified company. For the fiscal year 2007, the business process outsourcing business contributed Rs. 184.50 million, representing 0.74% of our total income. Godrej Global Solutions Limited is headquartered in Vikhroli, Mumbai in the state of Maharashtra and has two sales offices in the United States, delivery centres in Chennai and Belapur, with an aggregate of approximately 800 seats.

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Wind Energy We have nine windmills of 1.25 MW each as a part of our windmill project at Dhule in Maharashtra. We have entered into a power purchase agreement with the Maharashtra State Electricity Board for 13 years whereby the power generated from the windmills will be supplied to the state grid starting from the year 2006. The project has been registered for clean development mechanism benefits under the Kyoto Protocol under the United Nations framework on Climate Change Convention, and we are thereby entitled to certified emission reductions that are generally known as carbon credits. Carbon credits will continue to accrue on the power generated from our windmills for a period of ten years from 2005. Urban retailing

We also undertake the business of retailing gourmet food through our “Natures’ Basket” brand and currently have eight outlets in Mumbai.

Health, Safety and Environment

We believe that we are generally in compliance with applicable environmental laws and regulations. We are not currently a party to any environmental proceedings which, if adversely determined, would reasonably be expected to have a material adverse effect on our financial condition or results of operations.

We are committed to complying with applicable health, safety and environmental legislation and other requirements in our operations. To ensure the effective implementation of our practices, we seek to identify at every project all hazards at the beginning of our work on a project, evaluate the associated risks and institute and monitor appropriate controls and methods.

We believe that all accidents and occupational health hazards can be prevented through systematic analysis and control of risks and by providing appropriate training to employees, subcontractors and communities. We encourage our employees to work constantly and proactively toward eliminating or minimising the impact of hazards to people and the environment. We encourage the adoption of occupational health and safety procedures as an integral part of our operations. We have implemented a number of precautionary measures for the safety of our manufacturing units and for the better usage and conservation of the environment. We have commenced rain water harvesting initiatives at our plants located in Vikhroli and at the staff quarters located at Vikhroli. We have covered 8,500 sq. mts of roof area towards rain harvesting and have collected 22,000 cubic meters of water during the fiscal year 2007.

Our Employees

As of September 30, 2007, we employed a total of 6,442 individuals. Some of our employees are covered by collective bargaining agreements. We have not experienced any strikes or work stoppages over two decades and we consider our relationship with our employees to be cordial and cooperative.

Function No. of Employees

Management 524

Administration 232

Manufacturing 561

Auditing and finance 188

Sales and marketing 1,039

Total 2,544

Non-Management 3,898

Grand Total 6,442

Intellectual property

We currently have the rights to the “Godrej” trademark and other trademarks that we generally use for our products. In 2001, Godrej & Boyce Manufacturing Company Limited transferred and assigned all the registered trademarks, all the trademarks for which registration was pending and all the copyrights in the

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artistic works comprised in the trademarks to us. We are thus entitled to exclusively use and reproduce the trademarks and artistic labels on our goods in respect of which the trademarks have been registered or are pending registration. Insurance

We maintain insurance coverage with leading insurers in India. Some of the major risks covered for our business assets are against risk of fire, natural calamities, transit, burglary, implosion and explosion for boilers. We also have a public liability policy and Directors and Officers liability coverage. Properties

Our registered office is located at Pirojshanagar, Eastern Express Highway, Vikhroli (East) Mumbai 400 079. Our manufacturing units are located at Pirojshanagar, Eastern Express Highway, Vikhroli (East) Mumbai 400 079, Burjorjinagar, Plot No.3, Village Kanerao, Valia, Bharuch, Gujarat 393 135, and L.M Nadkarni Marg, Wadala (East) Mumbai 400 037.

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REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the Government of India. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below are not exhaustive, and is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional legal advice

Set forth below are certain significant legislations and regulations that generally govern this industry in India.

Ownership Restrictions of FIIs

Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed 24% of post-issue paid-up capital of a company. However, the limit of 24% can be raised up to the permitted sectoral cap for that company if approved by its board of directors and shareholders. The total holding of a single FII should not exceed 10% of the post-issue paid-up capital of the company or 5% of the total paid-up capital if such sub-account is a foreign corporate or an individual. For an FII investing in equity shares of a company on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued capital of the company.

Environmental Legislation

Environment Protection Act, 1986

The Environment Protection Act, 1986 enacted with the purpose of protecting and improving the environment, empowers the Central Government to, inter alia, take all such measures as it deems necessary or expedient for the purpose of protecting and improving the quality of the environment and preventing, controlling and abating environmental pollution, make rules for various purposes including prescribing the standards of quality of air, water or soil for various areas and purposes and prescribing the maximum allowable limits of concentration of various environmental pollutants for different areas; laying down standards for emission or discharge of environmental pollutants from various sources; restriction of areas in which any industries, operations or processes or class of industries, operations or processes shall not be carried out or shall be carried out subject to certain safeguards; and inspection of any premises, plant, equipment, machinery, manufacturing or other processes, materials or substances and giving, by order, of such directions to such authorities, officers or persons as it may consider necessary to take steps for the prevention, control and abatement of environmental pollution. Water (Prevention and Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution)

Cess Act, 1977

The Water (Prevention and Control of Pollution) Act, 1981 prohibits the use of any stream or well for the disposal of polluting matter in violation of standards set down by the State Pollution Control Board. This Act also provides that the consent of the State Pollution Control Board must be obtained before opening any new outlets or discharges that are likely to discharge sewage or effluent. In addition, the Water (Prevention and Control of Pollution) Cess Act, 1977 (the “Water Cess Act”) requires a person carrying on any industry specified in Schedule I of the Water Cess Act to pay a cess in this regard. The cess to be paid is to be calculated on the basis of the amount of water consumed by such industry and the industrial purpose for which the water is consumed. The rates to be charged in this regard are specified in Schedule II of the Water Cess Act. The person in charge must affix meters of prescribed standards to measure and record the quantity of water consumed. A monthly return showing the amount of water consumed in the previous month must also be submitted. Air (Prevention and Control of Pollution) Act, 1981

Under the Air (Prevention and Control of Pollution) Act, 1981 no person may establish or operate an industrial plant in any area that has been notified as an air pollution control area by the state government without the consent of the State Pollution Control Board. The State Pollution Control Board is required to grant consent within four months of receipt of an application to establish or operate an industrial plant in an air pollution

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area. The consent may contain conditions relating to specifications of pollution control equipment to be installed.

Legislations and Government policies governing our various businesses

Prevention of Food Adulteration Act, 1954

In order to sell foodstuffs in India, We are required to comply with the Prevention of Food Adulteration Act, 1954 (the “PFA”). The PFA is considered to be a consumer protection legislation, which has been designed to prevent, curb and check the adulteration of foodstuffs and to adequately punish the offenders. It covers various aspects of food processing such as food colour, preservatives, pesticide residues, packaging and labeling and regulation of sales. To give effect to the provisions of the PFA, the Prevention of Food Adulteration Rules, 1955 (the “PFA Rules”) were promulgated. The enforcement of the PFA and the PFA Rules is entrusted to the Additional Director General of Health Services, Ministry of Health and Family Welfare, Government of India. Each State Government and Union Territory has created its own organization for implementation of the PFA and rules framed thereunder. The offence of adulteration under the PFA is a cognizable offence. The company may authorize any of its directors or managers (such manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and to take all such steps as maybe necessary and expedient to prevent the commission by the company of any offence under the PFA. If any offence is committed by the company under the PFA then the nominee shall be liable to be proceeded against and punished accordingly. The courts are empowered to impose penalties on the offenders for the contraventions of the provisions of the PFA. The procedure for the collection of samples, their analysis in the laboratory and timely report by the public analyst has been laid down in the PFA and the PFA Rules. The food inspectors appointed under the PFA are empowered to follow up cases of adulteration for which their powers and duties are prescribed. Provisions regarding search and seizure are also provided for in the PFA and the food inspector is empowered to break-open the package or door of any place. The liabilities of the manufacturers, dealers and retailers are also prescribed.

Hazardous Wastes (Management and Handling) Rules, 1989

The Hazardous Wastes (Management and Handling) Rules, 1989 ascribes responsibility to the occupier and the operator of a facility that treats hazardous wastes to properly collect, treat, store or dispose of the hazardous waste without adverse effects on the environment. They must take steps to ensure that persons working on the site are given adequate training and equipment to carry out the work. When an accident occurs on a hazardous site or during transportation of hazardous waste, the State Pollution Control Board must be immediately alerted. If, due to improper handling of hazardous waste, any damage is caused to the environment, the occupier or the operator of the facility will have to pay for the necessary remedial and restoration work.

The Standard of Weights and Measures Act, 1976

The Standard of Weights and Measures Act, 1976 (the “Weights and Measures Act”) aims at introducing standard in relation to weights and measures used in trade and commerce. The Weights and Measures Act stipulates that every unit of weight or measure shall be based on the units of the metric system. The Weights and Measures Act provides to prescribe specification of measuring instruments used in commercial transaction, industrial production and measurement affecting public health and human safety. The specifications are given in the Standard of Weights and Measures (General) Rules 1987. The Weights and Measures Act contains penal provisions for violating the provisions of the Weights and Measures Act. While the Weights and Measures Act is a central legislation, its enforcement lies with the state governments through the Standards of Weights and Measures (Enforcement) Act, 1985. The Weights and Measures Act also gives powers to inspectors to search, seize and forfeit non-standard weight or measures. The Packaged Commodities Rules 1977 framed under the Weights and Measures Act contains provisions laying down the norms to be followed, in the interests of consumer safety, when commodities are sold or distributed in packaged form in the course of inter-state trade or commerce.

Insecticides Act, 1968 and the Insecticide Rules, 1971

The Insecticides Act, 1968 (the “Insecticides Act”) and the Insecticides Rules, 1971 govern the sale, manufacture and distribution of substances containing insecticides. Under the Act, the Government has created the Central Insecticides Board. The Central Insecticides Board may advise on matters relating to the risk, to

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human beings or animals, involved in the use of insecticides, the safety measures necessary to prevent such risk and the manufacture, sale, storage, transport and distribution of insecticides with a view to ensuring the safety of human beings or animals. A Registration Committee, as envisaged by the Insecticides Act has also been established which, inter alia, registers insecticides after scrutinizing their formulae and verifying claims made by the importer or the manufacturer, as the case may be, as regards their efficacy and safety to human beings and animals. Such registration is compulsory for a person desiring to import or manufacture any insecticide. Any person desiring to manufacture, sell, distribute, stock or exhibit for sale any insecticide, or to undertake commercial pest control operations using any insecticide, must apply to the licensing officer appointed under the Act for a license. The licensing officer may grant a license in such form, on such conditions and on payment of such fee as may be prescribed. The license granted shall be valid for the period specified therein and may be renewed from time to time for such period and on payment of such fee as may be prescribed. If the licensing officer is satisfied that a license has been granted because of misrepresentation as to an essential fact, that the license holder has failed to comply with the conditions of the license or has contravened any provision of the Act or the Rules, the licensing officer may, after giving the license holder an opportunity to show cause, revoke or suspend the license. No person is allowed to stock or exhibit for sale, distribute or cause to be transported, any insecticide unless it is packed and labelled in accordance with the provisions of the Insecticides Rules. Export Oriented Unit (“EOU”) scheme

The EOU scheme was introduced in the year 1980 in order to boost exports by facilitating the creation of additional production capacity. In its current form, the EOU scheme is available to units engaged in the manufacture, repairing, re-making, re-conditioning, re-engineering of goods, provided that such units undertake to export their production of goods and services. Under the scheme, EOU units are permitted to sell a specified percentage of their production in the domestic tariff area. Under the current EOU scheme, units are allowed to import or locally procure all types of goods including capital goods, raw materials, components, packing materials, consumables, spares and various other specified categories of equipments including material handling equipments, required for export production or in connection therewith without paying duty on such goods during the course of import or such local procurement. EOUs are required to achieve the minimum NFEP (Net Foreign Exchange Earning as a Percentage of Exports) and the minimum EP (Export Performance) as per the provisions of the EXIM Policy. In accordance with the provisions of Section 10B of the I T Act, a 100% EOU unit is entitled for tax benefits for a period of ten consecutive assessment years. The availability of this incentive is subject to certain conditions. For instance this exemption does not apply to trading units, or to profits derived from sales to Indian customers. Further, under the Foreign Trade Policy 2004-09, a 100% EOU, is further entitled to:

• A reimbursement of Central Sales Tax on purchase of goods manufactured in India;

• An exemption from payment of Central Excise Duty on goods procured from manufacturing unit in India; and

• A reimbursement of duty paid on fuels procured from domestic oil companies as per the rate of Drawback notified by the Director General of Foreign Trade from time to time.

EOUs have also been exempted from the payment of the whole of the duty of customs leviable under the first schedule to the Customs Tariff Act, 1975 (51of 1975) and any additional duty leviable under the Customs Tariff Act, 1975. Further, EOUs are permitted to realize the export proceeds within 12 months from the date of export as against the normal 6 months. In addition, EOUs are allowed to retain 100% of their earnings in the Exchange Earners Foreign Currency Account. EOUs are licensed to manufacture goods within custom bonded premises for the purpose of export. Supplies from units located in the DTA to EOU/EHTP/STP units are regarded as "deemed exports". Further, units under the scheme enjoy an exemption from Corporate Income Tax for a period of first 10 years of commencement of production or till the financial year ending March 31, 2009, whichever is earlier. Labour Legislations

The following labour legislations are applicable to our industry –

• Factories Act, 1948.

• Payment of Wages Act, 1936.

• Payment of Bonus Act, 1965.

• Employees’ State Insurance Act, 1948.

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• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

• Payment of Gratuity Act, 1972.

• Workmen’s Compensation Act, 1923;

• Minimum Wages Act, 1948.

• Workmen’s Compensation Act, 1923.

• Contract Labour (Regulation and Abolition) Act, 1970.

• Industrial Employment (Standing Orders) Act and Regulations.

• Shops and Commercial Establishments Act.

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Our corporate governance bodies comprise the Board of Directors, the audit committee, the compensation committee and the investors’ grievance committee. In addition to the foregoing, our Board of Directors constitutes committees from time to time depending on operational requirements. Currently, our Board of Directors has established an audit committee, compensation committee and shareholders committee. Board of Directors

The general supervision, direction and management of our operation and business is vested in our Board which exercises all powers and does all acts and things which may be done by us under our Memorandum and Articles of Association. The primary responsibility of the Board of Directors includes all general powers as per section 291, 292 and 293(1)(d) of the Companies Act, 1956. We currently have 14 Directors. The minimum and maximum number of Directors may be increased or decreased by an ordinary resolution of our shareholders, subject to the provisions of the our Articles of Association and the Companies Act. The table below sets forth the details of our Board of Directors:

Name

Age Address Designation

Mr. A. B. Godrej 65 Godrej House, 67-H Walkeshwar Road, Opposite Birla Public School, Mumbai 400 006

Chairman

Mr. J. N. Godrej 58 40-D, B.G. Kher Marg, Malabar Hill, Mumbai 400 006

Director

Mr. N. B. Godrej 55 40-D, B.G. Kher Marg, Malabar Hill, Mumbai 400 006

Managing Director

Mr. S. A. Ahmadullah 67 52, Jupitor, 1, Anstey Road, Cumballa Hill, Mumbai 400 026

Director

Mr. V. M. Crishna 62 A-261, Grand Paradi Apartments, Dadyseth Hill, Off August Kranti Marg, Mumbai 400 026.

Director

Mr. K. K. Dastur 65 Rajab Mahal, 144, Maharshi Karve Road, Churchgate, Mumbai 400 020.

Director

Mr. V. N. Gogate 73 28, Pushkar, Julian Co-op. Soc Ltd., Pathare Marg, Dadar, Mumbai 400 028

Director

Mr. K. N. Petigara 60 801, Citadel, 18-B, Ruparel Marg, Malabar Hill, Mumbai 400006

Director

Mr. F. P. Sarkari 75 Sethna Bhabha Building., B Jaykar Marg, Mumbai 400 002

Director

Mr. V. F. Banaji 53 G/14/2&5, Godrej Hillside Colony, Vikhroli (West), Mumbai 400 079.

Executive Director and President (Group Corporate Affairs)

Ms. T. A. Dubash 38 Benreeza Estate, 6th Floor, 91 Khan Abdul Gaffar Khan Road, Worli Sea Face, Mumbai 400 018

Executive Director and President (Marketing)

Mr. M. Eipe 55 G/14/F1, Godrej Hillside Colony, LBS Marg, Vikhroli (West), Mumbai 400 079

Executive Director and President (Chemicals)

Mr. M. P. Pusalkar 57 Bungalow no.G14/3, Godrej Hillside Colony, LBS Marg, Vikhroli West, Mumbai 400 079.

Executive Director and President (Corporate Projects)

Mr. C. K. Vaidya (w.e.f September 18, 2007)

57 J – 145, Lokmanya Nagar, Mahim, Mumbai – 400 016

Executive Director and President (Business Excellence)

The business address of all our Directors is Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079.

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Brief Biographies of our Directors

Mr. A. B. Godrej holds a B.S, and a M.S from Massachusetts Institute of Technology, USA. He is a member of the National Council of the CII and the Governing Board of the Indian School of Business. He is the recipient of the Rajiv Gandhi Award 2002, the Globoil India Legend 2002 and the Scodet Life Time Achievement Award 2003 He is the Chairman of the Godrej group.

Mr. N. B. Godrej holds a B.S. from the Massachusetts Institute of Technology, a M.S from Stanford University and a M.B.A. from Harvard Business School. He is on the Advisory Committees of the Indian Chemical Manufacturers' Association. He was honored by the French Government with the award of "Chevalier de L'Ordre National du Merite. Mr. S. A. Ahmadullah holds a B.A (Cantab). He has been a Director of the Company since 1995.

Mr. V. M. Crishna holds a B.A. (Economics) from St. Stephen’s College, University of Delhi. He has been a Director of the Company since 1995. He serves on the Board of Governors of the National Institute of Industrial Engineering (NITIE), Mumbai and also serves on the Board of Trustees of the Bombay Scottish Orphanage Society.

Mr. K. K. Dastur is a Chartered Accountant. He held senior positions in the Godrej group and retired as the head of Finance Department in 2002. He has been a director on the Board since then. Mr. V. N. Gogate is a Chartered Accountant and a Company Secretary. He retired as head of Finance of Godrej Soaps Limited. He has been a Director of the Company since 1995. Mr. K. N. Petigara holds a graduate degree in chemical engineering from the Massachusetts Institute of Technology. He has been associated with chemical and allied businesses in India and abroad for many years.

Mr. F. P. Sarkari is a Chartered Accountant and specialises in direct taxation. He has been a Director of the Company since 2002.

Mr. V. F. Banaji, before joining the Company, was based in Paris as leader of ALSTOM’s global project for re-engineering key Human Resources processes and supporting them through the deployment of a HR Management System. Ms. T. A. Dubash holds a graduate degree in economics & political science from Brown University, USA and has completed the Advanced Management Program from the Harvard Business School. Mr. Mathew Eipe holds a B. Tech (Chem.) from the Indian Institute of Technology, Mumbai, a post graduate diploma in management from IIM, Kolkata and has been with the Company for over 29 years. He has been a member of the Committee of Administration of Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council for the last two years. Mr. M. P. Pusalkar holds a B. Tech (Elec.) from Indian Institute of Technology (Kanpur) and Master of Management Studies fromJamnalal Bajaj Institute of Management, Mumbai and has been in Godrej group for over 28 years.

Mr. C. K. Vaidya holds a B. Tech from IIT, Mumbai and PGDM from IIM Calcutta and has been with the Group for 33 years. He has been Vice-Chairman of CLFMA and Chairman of CII’s National Committee on Dairy, Livestock, Fisheries & Poultry. He is a member of CII’s National Council.

COMPENSATION AND BENEFITS IN KIND GRANTED TO THE DIRECTORS

Remuneration Details of Directors – Financial Year 2006 -2007:

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Name of Director Relationship

with

Directors

Sitting

fees

Commis

sion on

profits

Salary Perquisites Provident

Fund

Total

A. B. Godrej Brother of N.B.Godrej Father of T.A. Dubash

170,000 Nil Nil Nil Nil 170,000

J. N. Godrej None Nil Nil Nil Nil Nil N. B. Godrej Brother of

A.B.Godrej Nil Nil 7,350,000 640,000 576,000 8,566,000

S. A. Ahmadullah None 105,000 Nil Nil Nil Nil 105,000 V. M. Crishna None 20,000 Nil Nil Nil Nil 20,000 K. K. Dastur None 80,000 Nil Nil Nil Nil 80,000 V. N. Gogate None 105,000 Nil Nil Nil Nil 105,000 K. N. Petigara None 85,000 Nil Nil Nil Nil 85,000 F. P. Sarkari None 100,000 Nil Nil Nil Nil 100,000 V. F. Banaji None Nil Nil 6,096,270 448,752 410,400 6,955,422 T. A. Dubash Daughter of

A.B.Godrej Nil Nil 4,893,000 159,657 367,200 5,419,857

M. Eipe None Nil Nil 5,582,585 399,620 417,600 6,399,805 M. P. Pusalkar None Nil Nil 4,223,232 252,592 247,680 4,723,504

Compensation of Directors

For fiscal 2007, we paid an aggregate compensation towards sitting fees to our Directors of Rs. 0.67 million. Employees Stock Option Plan

In December 2005, we had instituted an Employee Stock Option Plan (“ESOP”) approved by the Board of Directors and the shareholders, which provides for the allotment of 15,00,000 options that are convertible into 15,00,000 equity shares of Rs. 6 each to eligible employees of participating companies. In view of the sub-division of equity shares into face value of Rs. 1 each, the total number of options stands automatically increased to 9,000,000 options convertible into 9,000,000 equity shares of Rs. 1 each. The scheme is administered by an independent ESOP Trust which purchases the equity shares from the market equivalent to the number of options granted by the participating companies. We have decided to extend the benefits of the ESOP to other levels of management as approved by the Compensation Committee. The options granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting. Directors’ Interest

Our Articles of Association do not require our Directors to hold any Equity Shares. The table below sets forth the details of Equity Shares and employee stock options held by our Directors as at June 30, 2007:

Name Number of Equity

Shares

Number of employee stock

options

Mr. A.B. Godrej Nil Nil

Mr. J.N. Godrej Nil Nil

Mr. N.B. Godrej 1,220,572 Nil

Mr. S.A. Ahamadulla 6,000 Nil

Mr. V.M. Crishna Nil Nil

Mr. K.K.Dastur 2,106 Nil

Mr. V.N. Gogate 1,878 Nil

Mr. K.N. Petigara Nil Nil

Mr. F.P. Sarkari 19,590 Nil

Mr. V.F. Banaji Nil 300,000

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Name Number of Equity

Shares

Number of employee stock

options

Ms. T.A. Dubash 4,268,783 Nil

Mr. M.Eipe Nil 300,000

Mr. M.P. Pusalkar Nil 300,000

Mr. C. K. Vaidya 20,118 300,000

All our Directors, including Independent Directors, may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association. All our Directors, excluding our Managing Director, Whole-time Directors and Mr. J. N. Godrej are entitled to sitting fees of Rs. 20, 000 per meeting of the Board and Rs. 5,000 per committee meeting. All our Directors, including Independent Directors, may also be deemed to be interested to the extent of Equity Shares, if any, held by them and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Our Directors, including Independent Directors, may also be regarded as interested in the Equity Shares, if any, held by or that may be subscribed by and allotted to the companies, firms and trust, in which they are interested as directors, members, partners or trustees. All Directors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into by the Company with any company in which they hold directorships or any partnership firm in which they are partners as declared in their respective declarations. Except as otherwise stated in this Placement Document, we have not entered into any contract, agreements or arrangements during the preceding two years from the date of this Placement Document in which the Directors are interested directly or indirectly and no payments have been made to them in respect these contracts, agreements or arrangements which are proposed to be made with them. Corporate Governance

Corporate governance is administered through our Board of Directors and the committees of the Board, particularly, the audit committee, the compensation committee and the investors’ grievance committee. However, the primary responsibility for upholding the standards of corporate governance and providing necessary disclosures within the framework of legal provisions and institutional conventions with commitment to enhance shareholders’ value vests with our Board of Directors. A brief description of each of the audit committee, the compensation committee and the investors’ grievance committee is set forth below: Audit Committee The Audit Committee of the Board comprises of Mr. F. P. Sarkari (Chairman), Mr. S. A. Ahmadullah and Mr. V. N. Gogate all of whom are independent Directors. The terms of reference of the Audit Committee include the matters specified under Clause 49 of the Listing Agreement as well as in provisions of the Companies Act. We have complied with the requirements of Clause 49 as regards the composition of the Audit Committee. Compensation Committee

The Compensation Committee of the Board comprises Mr. S. A. Ahmadullah (Chairman), Mr. N. B. Godrej, Mr. V. N. Gogate and Mr. K. N. Petigara. The Compensation Committee recommends to the Board of Directors the compensation terms of the Managing Director and Executive Directors and reviews the Company wide broad policy for compensation to employees. Shareholders Committee

The Shareholders Committee comprises Mr. A. B. Godrej (Chairman), Mr. V. F. Banaji, Ms. T. A. Dubash, Mr. M. Eipe and Mr. M. P. Pusalkar. The Shareholders Committee has been constituted in terms of the mandatory requirement of Clause 49 of the listing agreement to look into the redressal of grievances of investors. The Shareholders Committee has to periodically review the status of complaints from shareholders

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and address redressal, ensure the adequacies of the control systems for recording complaints and disposal thereof. Policy on Disclosures and Internal Procedure for Prevention of Insider Trading

Regulation 12 (1) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 applies to us and our employees and requires us to implement a code of internal procedures and conduct for the prevention of insider trading. We have already implemented an employee trading policy in line with the SEBI guidelines in this regard. Senior Management

In addition to our Board of Directors as set forth above, the following form part of our senior management. Mr. Mani B. Mulki, Executive Vice-President (Information Systems), 42, holds a bachelor’s degree in Physics and a MMS (Marketing Management). He has more than 19 years of experience in the information technology field. Mr. A. A. Rege, Executive Vice-President (Vikhroli Factory), 58, holds a bachelor’s degree in Chemistry and Oil technology. He has more than 34 years of experience in production activities. Mr. R. V. Jog, Executive Vice-President (Corporate Technical Services), 53, holds a B.Tech (Chemical Engineering) and holds a post graduate diploma in Business Management. He has more than thirty years of experience in the field of technical services. Mr. Nitin S. Nabar, Executive Vice-President (Marketing & Imports), 44, holds a BSc. Tech. in Oil Technology and MMS (Marketing Management). He has more than 21 years of experience in marketing. Mr. S. K. Bhatt, Executive Vice-President (Corporate Services) and Company Secretary, 55, holds a masters degree in commerce and a masters degree in financial management. He is also a law graduate and a qualified company secretary. He has more than 36 years of experience in the banking and legal field. Mr. V. Srinivasan, Executive Vice-President (Finance & Estate), 42, holds a bachelors degree in Commerce and is a chartered accountant and company secretary. He has more than 20 years of experience in the finance field. Mr. B. S. Mehta, Executive Vice- President (Valia Factory), 58, holds a BE in Mechanical Engineering. He has more than 35 years of experience in production activities. Mr. D. E. Mistry, 54, is a Chartered Accountant, and has won the President’s Gold Medal. He started his career at Godrej in 1976. He has been a regular speaker on vegetable oil price outlook. He is currently also Vice President of the International Association of Seed Crushers Mr. C. D. Wakankar, Chief Operating Officer (Corporate Audit and Assurance), 57, is an associate member of ICAI and a graduate member of the Institute of Cost and Works Accountants of India. He is also a member of the Institute of Internal Auditors, Florida (local chapter- Mumbai). Godrej Agrovet Limited

Mr. B S .Yadav, Executive Director and President of Godrej Agrovet Limited, 43, holds a B.Sc. degree in Agronomy and a PGDM from IIM Ahmedabad and has been with the Godrej group for the past 16 years. He has been instrumental in establishing Godrej Agrovet Limited as a frontrunner in the poultry business. He is a member of the Managing Committee of the All India Poultry Breeders’ Association of India. Godrej Properties Limited

Mr. M. Korde, Managing Director of Godrej Properties Limited, 44, holds B.Sc, L.L.B, ACS degrees and has been a part of Godrej Properties Limited since its inception in 1990. Godrej Hicare Limited

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Mr. A Mahendran is a graduate from Madras Loyola College and a qualified Chartered Accountant. He is a founding member and President of the Home Insect Control Association. He is on the board of the Multi Commodity Exchange and is a member of industry forums such as FICCI, CII, Crop Care Federation of India and the Pest Control Association of India.

Interests of our Senior Management

Our senior management does not have any interest in the Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business, and to the extent of their shareholding, if any, in the Company. Transactions with Senior Management

There have been no transactions during the current or previous fiscal year between any of our senior management and the Company, which, because of their unusual nature or the circumstances in which they have been entered into, are or should be required to be disclosed in our accounts or approved by our shareholders and there are no such transactions during an earlier fiscal year which remain in any respect outstanding or unperformed.

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ORGANISATIONAL STRUCTURE AND PRINCIPAL SHAREHOLDERS

We were incorporated on March 7, 1988 as Gujarat-Godrej Innovative Chemicals Limited in the state of Gujarat. Brief history of the Company

The business and undertaking of the erstwhile Godrej Soaps Limited was transferred to us under a scheme of amalgamation with effect from April 1, 1994 and our name was changed to Godrej Soaps Limited. Subsequently, under a scheme of arrangement, our consumer products division was demerged with effect from April 1, 2001 into a separate company, Godrej Consumer Products Limited (GCPL). Subsequently the vegetable oils and processed foods manufacturing business of Godrej Foods Limited was transferred to us with effect from June 30, 2001. Our name thereafter was changed to Godrej Industries Limited on April 2, 2001. Thereafter, the foods division (except Wadala factory) was sold to Godrej Beverages & Foods Limited on March 31, 2006. Our Registered Office and the corporate office is located at Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079. Our Equity Shares were first listed on the BSE and NSE on March 14, 1990 and May 10, 1995 respectively: Our Principal Shareholders

The Promoters of our Company are: 1. Godrej and Boyce Manufacturing Company Limited; 2. Burjis Nadir Godrej; 3. Freyan Vijay Crishna; 4. Nadir Barjorji Godrej; 5. Navroze Jamshyd Godrej; 6. Nisaba Adi Godrej; 7. Nyrika Vijay Crishna; 8. Pheroza Jamshyd Godrej; 9. Pirojsha.Adi. Godrej; 10. Raika Jamshyd Godrej; 11. Rati Nadir Godrej; 12. Rishad Kaikhushru Naoroji; 13. Smita Vijay Crishna; 14. Sohrab Nadir Godrej; 15. Tanya Arvind Dubash; and 16. Vijay Mohan Crishna.

The following table contains information as of September 30, 2007 concerning the ownership of our Equity Shares by our Promoters and each person who we know beneficially owns 1% or more of our Equity Shares.

As at September 30, 2007

Category of shareholder No. of

shareholders

Total no. of

shares

Total no. of shares

held in

dematerialized form

Total

shareholding as

a % of total no.

of issued and

outstanding

Equity Shares Shareholding of

Promoter and Promoter

Group

(1) Indian Individuals / Hindu 12 64,031,786 64,031,750 21.94

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Category of shareholder No. of

shareholders

Total no. of

shares

Total no. of shares

held in

dematerialized form

Total

shareholding as

a % of total no.

of issued and

outstanding

Equity Shares Undivided Family

Bodies Corporate 1 187,202,388 187,202,388 64.14 Any Others

(Specify)

Partnership Firms

Sub Total 13 251,234,174 251,234,138 86.08

(2) Foreign

Total shareholding of

Promoter and Promoter

Group (A)

13 251,234,174 251,234,138 86.08

(B) Public Shareholding

(1) Institutions Mutual Funds / UTI 7 2,001,923 2,001,923 0.69

Financial Institutions / Banks

8 159,155 154,085 0.05

Insurance Companies

3 404,734 404,614 0.14

Foreign Institutional Investors

21 8,923,172 8,917,772 3.06

Sub Total 39 11,488,984 11,478,394 3.94

(2) Non-Institutions Bodies Corporate 661 8,030,323 8,010,102 2.75

Individuals Individual shareholders holding nominal share capital up to Rs. 0.1 million

19104 12,528,471 11,275,064 4.29

Individual shareholders holding nominal share capital in excess of Rs. 0.1 million

18 8,564,900 8,564,900 2.93

Any Others (Specify) - - - - Overseas Corporate Bodies 1 4,800 4,800 - Sub-total 19,784 29,128,494 27,854,866 9.98

Total Public

Shareholding 19,823 40,617,478 39,333,260 13.92

Shares held by

Custodians and against

which Depository

Receipts have been

issued

- - - -

Total 19,836 291,851,652 290,567,398 100 Shareholding of persons belonging to the category “Promoter and promoter group”

As at September 30, 2007

Name of the shareholder No. of shares Shares as a % of total number of Equity

Shares issued and outstanding

Burjis Nadir Godrej 5,446,740 1.87 Freyan Vijay Crishna 6,403,175 2.19 Godrej & Boyce Mfg. Co. Ltd. 187,202,388 64.14

Nadir Burjorji Godrej 1,220,572 0.42

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Navroze Jamshyd Godrej 6,403,181 2.19 Nisaba Adi Godrej 4,268,781 1.46

Nyrika Vijay Crishan 6,403,175 2.19 Pheroza Jamshyd Godrej 0 0.00 Pirojsha Adi Godrej 4,268,786 1.46 Raika Jamshyd Godrej 6,403,169 2.19 Rati Nadir Godrej 600,000 0.21 Rishad Kaikhushru Naoroji 12,806,350 4.39

Smita Vijay Crishna 0 0.00 Sohrab Nadir Godrej 5,539,074 1.90 Tanya Arvind Dubash 4,268,783 1.46 Vijay Mohan Crishna 0 0.00 Total 251,234,174 86.08

Shareholding of persons belonging to the category "Public" and holding more than 1% of the total number of shares

As at June 30, 2007



IL & FS Trust Company Ltd. (ESOP Trust)

4,725,000 1.62

Total 4,725,000 1.62

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ISSUE PROCEDURE

Below is a summary intended to present a general outline of the procedure relating to the application, payment, allocation and allotment of the Equity Shares. The procedure followed in the Issue may differ from the one mentioned below and the investors are assumed to have appraised themselves of the same from us or the Global Coordinator and Book Runner. The investors are advised to inform themselves of any restrictions or limitations that may be applicable to them.

Qualified Institutional Placements

The Issue is being made in reliance upon Chapter XIII-A of the SEBI Guidelines through the mechanism of Qualified Institutional Placements (“QIP”) wherein an Indian listed company may issue and allot equity shares/fully convertible debentures/ partly convertible debentures or any other security (excluding warrants) on a private placement basis to Qualified Institutional Buyers (“QIBs”) as defined in clause 2.2.2B (v) of the SEBI Guidelines.

We have applied for and received the in-principle approval of the Stock Exchanges under Clause 24 (a) of their listing agreements for the listing of the Equity Shares on the Stock Exchanges. We have also filed a draft of the Preliminary Placement Document with the Stock Exchanges.

Issue Procedure

1. The Global Coordinator and Book Runner and we shall circulate serially numbered copies of the Placement Document and the Application Form, either in electronic form or physical form, to not more than 49 QIBs.

2. The list of QIBs to whom the Application Form is delivered shall be determined by the Global Coordinator and Book Runner at their sole discretion. Unless a serially numbered Placement

Document along with the Application Form is addressed to a particular QIB, no invitation to

subscribe shall be deemed to have been made. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person.

3. QIBs may submit the Applications through the Application Form during the Application period to the Global Coordinator and Book Runner.

4. QIBs will be required to indicate the following in the Application:

a. Name of the QIB to whom Equity Shares are to be allotted; b. Number of Equity Shares; c. Price at which they are agreeable to apply for the Equity Shares, provided that QIBs may

also indicate that they are agreeable to submit an Application at a “Cut-off Price” which shall be any price as may be determined by us in consultation with the Global Coordinator and Book Runner at or above the minimum price calculated in accordance with Clause 13A.3 of the SEBI Guidelines which shall be the Floor Price; and

d. The details of the dematerialized account(s) to which the Equity Shares should be credited.

Note: Each sub-account of an FII will be considered as an individual QIB and separate forms

would be required from each such sub-account for submitting Applications.

5. Once the Application Form is submitted by the QIB, the Application cannot be withdrawn.

6. Upon receipt of the completed Application Form, the Company shall confirm the allocation to the QIBs by using CANs, subject to the receipt of application moneys from the QIBs. Upon receipt of the application monies from the QIBs, we shall issue and allot the Equity Shares to the QIBs as per the details provided in the respective CANs. The Company will intimate to the Stock Exchanges the details of the allotment.

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10. After receipt of the in-principle approval of the Stock Exchanges, we shall credit the Equity Shares into the depository participant accounts of the QIBs.

11. We shall then apply for the final trading and listing permissions from the Stock Exchanges.

12. The Equity Shares that have been so allotted and credited to the depository participant accounts of the QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of final trading and listing approvals from the Stock Exchanges.

13. The Stock Exchanges shall notify the final trading and listing permissions, which are ordinarily available on their websites, and we shall communicate the receipt of the final trading and listing permissions from the Stock Exchanges to the QIBs who have been allotted the Equity Shares. We shall not be responsible for any delay or non-receipt of the communication of the final trading and listing permissions from the Stock Exchanges or any loss arising from such delay or non-receipt. QIBs are advised to apprise themselves of the status of the receipt of the permissions from the Stock Exchanges or the Company.

Qualified Institutional Buyers

Only QIBs as defined in clause 2.2.2B (v) of the SEBI Guidelines are eligible to invest. Currently these include:

• Public financial institutions as defined in section 4A of the Companies Act;

• Scheduled commercial banks;

• Mutual funds registered with SEBI (“Mutual Funds”);

• Foreign institutional investors registered with SEBI (“FIIs”);

• Multilateral and bilateral development financial institutions;

• Venture capital funds registered with SEBI;

• Foreign venture capital investors registered with SEBI;

• State industrial development corporations;

• Insurance companies registered with Insurance Regulatory and Development Authority, India;

• Provident Funds with minimum corpus of Rs.250 million; and

• Pension Funds with minimum corpus of Rs.250 million. However, multilateral and bilateral development financial institutions that are non-resident in nature and foreign venture capital investors are not eligible to participate in this Issue.

FIIs are permitted to participate through the portfolio investment scheme in this Issue. FIIs are

permitted to participate in the QIP subject to compliance with all applicable laws and such that the

shareholding of the FIIs does not exceed specified limits as prescribed under applicable laws in this

regard.

We and Global Coordinator and Book Runner are not liable for any amendments or modification or

changes in applicable laws or regulations, which may occur after the date of this Placement Document.

QIBs are advised to make their independent investigations and satisfy themselves that they are eligible

to apply. QIBs are advised to ensure that any single Application from them does not exceed the

investment limits or maximum number of Equity Shares that can be held by them under applicable law

or regulation or as specified in this Placement Document. Further, QIBs are required to satisfy

themselves that their Applications would not eventually result in triggering a tender offer under the

Takeover Code.

A minimum of 10% of the Equity Shares in this Issue shall be allotted to Mutual Funds. If no Mutual

Fund is agreeable to take up the minimum portion as specified above, such minimum portion or part

thereof may be allotted to other QIBs.

Note: Affiliates or associates of the Global Coordinator and Book Runner who are QIBs may participate in the Issue in compliance with applicable laws.

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Application Process

Application Form

QIBs shall only use the specified Application Form supplied by the Global Coordinator and Book Runner in either electronic form or by physical delivery for the purpose of making an Application (including revision of Application) in terms of the Preliminary Placement Document and the Placement Document.

By making an Application (including revision) for Equity Shares pursuant to the terms of the Preliminary Placement Document and the Placement Document, the QIB will be deemed to have made the following representations and warranties and the representations, warranties and agreements made under “Selling Restrictions”:

1. The QIB confirms that it is a Qualified Institutional Buyer (“QIB”) in terms of Clause 2.2.2B (v) of the SEBI Guidelines and is eligible to participate in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoters, either directly or indirectly and its Application does not directly or indirectly represent the Promoter or promoter group of the Company;

3. The QIB confirms that it has no rights under a shareholders agreement or voting agreement with the Promoters or persons related to the Promoters, no veto rights or right to appoint any nominee director on the Board of the Company other than that acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoters;

4. The QIB has no right to withdraw its Application after submitting the Application Form;

5. The QIB confirms that if allotted Equity Shares pursuant to the Preliminary Placement Document and Placement Document, the QIB shall not, for a period of one (1) year from the date of allotment, sell the Equity Shares so acquired otherwise than on the floor of the Stock Exchanges; and

6. The QIB confirms that the QIB is eligible to apply and hold Equity Shares so allotted and together with any Equity Shares held by the QIB prior to the Issue. The QIB further confirms that the holding of the QIB, does not and shall not, exceed the level permissible as per any applicable regulations applicable to the QIB.

7. The QIB confirms that the Applications would not eventually result in triggering a tender offer under the Takeover Code.

8. The QIB confirms that to the best of its knowledge and belief together with other QIBs in the Issue that belong to the same group or are under common control, the allotment to the QIB shall not exceed 50% of the Issue Size. For the purposes of this statement:

a. The expression “belongs to the same group” shall derive meaning from the concept of “companies under the same group” as provided in sub-section (11) of Section 372 of the Companies Act; and

b. “Control” shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of the Takeover Code.

Submission of Application Form

All Application Forms shall be duly completed with information including the name of the QIB, the price and the number of Equity Shares applied. The Application Form shall be submitted to the Global Coordinator and Book Runner either through electronic form or through physical delivery at the following address:

115

Name: Kotak Mahindra Capital Company Limited Address: 3rd Floor, Bakhtawar; 229 Nariman Point; Mumbai 400 021 Contact Person: Mr Karl Sahukar Email: [email protected] The Global Coordinator and Book Runner shall not be required to provide any written acknowledgement of the same.

Pricing and Allocation

Build up of the Book

The QIBs shall submit their Applications through the Application Form within the Application period to the Global Coordinator and Book Runner who shall maintain the Book.

Price discovery and allocation

We, in consultation with the Global Coordinator and Book Runner, shall finalize the Issue Prices for the Equity Shares which shall be at or above the Floor Price.

After finalization of the Issue Price, We shall update the Preliminary Placement Document with the Issue details and file the same with the Stock Exchanges as the Placement Document.

Method of Allocation

We shall determine the allocation in consultation with the Global Coordinator and Book Runner on a discretionary basis and in compliance with Chapter XIII-A of the SEBI Guidelines.

Applications received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand. The Allocation to all such QIBs will be made at the Issue Price. Allocation shall be decided by us in consultation with the Global Coordinator and Book Runner on a discretionary basis. Allocation to Mutual Funds for up to a minimum of 10% of the Issue Size shall be undertaken subject to valid Applications being received at or above the Issue Price.

THE DECISION OF THE COMPANY AND GLOBAL COORDINATOR AND BOOK RUNNER IN

RESPECT OF ALLOCATION SHALL BE BINDING ON ALL QIBS. QIBS MAY NOTE THAT

ALLOCATION OF EQUITY SHARES IS AT OUR SOLE AND ABSOLUTE DISCRETION AND

QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID

APPLICATIONS AT OR ABOVE THE ISSUE PRICE. NEITHER THE WE NOR THE GLOBAL

COORDINATOR AND BOOK RUNNER ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH

NON-ALLOCATION.

Number of Allottees The minimum number of allottees in the Issue shall not be less than:

(a) two, where the issue size is less than or equal to Rs. 2.5 billion; or

(b) five, where the issue size is greater than Rs. 2.5 billion.

Provided that no single allottee shall be allotted more than 50% of the aggregate amount of the Issue.

Provided further that QIBs belonging to the same group or those who are under common control shall be deemed to be a single allottee for the purpose of this clause. For details of what constitutes “same group” or “common control” see “Application Process— Application Form.”

THE DECISION OF US AND GLOBAL COORDINATOR AND BOOK RUNNER IN RESPECT OF

ALLOTMENT SHALL BE FINAL AND BINDING ON ALL QIBS.

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The maximum number of allottees of Equity Shares shall not be greater than 49 allottees.

Submission of Application Form

All Application Forms duly completed along with payment and a copy of the PAN card or application for PAN shall be submitted to the Global Coordinator and Book Runner as per the details provided in the respective CAN’s.

The submission of Application Form by the QIB shall be deemed a valid, binding and irrevocable contract for the QIB to pay the entire Issue Price for all the Equity Shares allocated to such QIB by the Company.

Bank Account for Payment of Application Money

We has opened a special bank account with Kotak Mahindra Bank (“Collection Bank”) in terms of the arrangement between we and the Kotak Mahindra Bank. The QIB will be required to deposit the entire amount payable for the Equity Shares allocated to it by the Pay-In Date as mentioned in the respective CAN.

If the payment is not made favouring the Collection Bank Account within the time stipulated in the CAN, the Application Form and the CAN of the QIB are liable to be cancelled.

In case of cancellations or default by the QIBs, we and the Global Coordinator and Book Runner have the right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute discretion.

Payment Instructions

• The payment of application money shall be made by the QIBs in the name of “Godrej Industries

Limited - QIP Escrow” as per the payment instructions provided in the CAN.

• QIBs may make payment through cheques or electronic fund transfer.

Note: Payment of the amounts through outstation cheques are liable to be rejected. Payments through cheques should be only through high value cheques payable at Mumbai.

Designated Date and Allotment of Equity Shares

1. The Equity Shares will not be allotted unless the QIBs pay the Issue Price to the Bank Account as stated above.

2. In accordance with the SEBI Guidelines, Equity Shares will be issued and allotment shall be made only in the dematerialized form to the allottees. Allottees will have the option to re-materialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.

3. We reserves the right to cancel the Issue at any time up to Allotment without assigning any reasons whatsoever.

4. Post Allotment and credit of Equity Shares into the QIBs depository participant account, we would apply for trading/listing approvals from the Stock Exchanges.

5. In the unlikely event of the any delay in the Allotment or credit of Equity Shares, or receipt of trading or listing approvals or cancellation of the Issue, no interest or penalty would be payable by us.

Submission to SEBI

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We shall submit the Placement Document to SEBI within thirty (30) days of the date of Allotment for record purposes.

Other Instructions

Permanent Account Number or PAN

Where application(s) is/are for Rs. 50,000 or more, the relevant QIB should mention its Permanent Account Number (PAN) allotted under the I T Act. The copy of the PAN card or PAN allotment letter is required

to be submitted with the Application Form. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that applicant should not submit the GIR number instead of the PAN as the Application Form is liable to be rejected on this ground.

Our Right to Reject Applications

We, in consultation with the Global Coordinator and Book Runner, may reject Applications, in part or in full, without assigning any reasons whatsoever. The decision of the Company and the Global Coordinator and Book Runner in relation to the rejection of an Application Form shall be final and binding.

Equity Shares in dematerialised form with NSDL or CDSL

The allotment of the Equity Shares in this Issue shall be only in de-materialized form, (i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode).

1. A QIB applying for Equity Shares must have at least one beneficiary account with a depository participant of either NSDL or CDSL prior to making the Application.

2. Allotment to a successful QIB will be credited in electronic form directly to the beneficiary account (with the depository participant) of the QIB.

3. Equity Shares in electronic form can be traded only on the Stock Exchanges having electronic connectivity with NSDL and CDSL. All the stock exchanges where our Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.

4. The trading of the Equity Shares of the Company would be in dematerialized form only for all QIBs in the demat segment of the respective Stock Exchanges.

5. We will not be responsible or liable for the delay in the credit of Equity Shares due to errors in the Application Form or on part of the QIBs.

118

PLACEMENT

Placement Arrangement

On November 2, 2007, the Global Coordinator and Book Runner entered into a Memorandum of Understanding with our Company, (the “MOU”), pursuant to which the Global Coordinator and Book Runner has agreed to manage the issue, up to such number of our Equity Shares, the aggregate subscription price of which shall be up to Rs. 600 crore or US$ 150 million, to Qualified Institutional Buyers, pursuant to Chapter XIII-A of the SEBI Guidelines, outside the United States, in reliance on Regulation S under the United States Securities Act of 1933, as amended, and within the United States to qualified institutional buyers (as such term is defined in Rule 144A under the Securities Act). The Global Coordinator and Book Runner will be paid a placement fee equal to 1.5% of the aggregate subscription price of our Equity Shares sold in the Issue.

The MOU provides that the obligations of the investors to pay for and accept delivery of our Equity Shares offered by the Placement Document is subject to the approval of certain legal matters by the counsels to the Global Coordinator and Book Runner and to other conditions. The MOU also provides that our Company will indemnify the Global Coordinator and Book Runner against certain liabilities.

Applications shall be made to list the Equity Shares and admit them to trading on the Indian Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for the Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be able to sell their Equity Shares. See “Risk Factors - Risks Associated with India and this Issue — There may not be an active or liquid market for our Equity Shares, which may cause the price of the Equity Shares to fall and may limit your ability to sell the Equity Shares”.

This Preliminary Placement Document or the Placement Document has not been, and will not be, registered as a prospectus with the Registrar of Companies in India and that, with the exception of QIBs, no Equity Shares will be offered in India or overseas to the public or any members of the public in India or any other class of investors other than QIBs.

In connection with the Issue, the Global Coordinator and Book Runner (or their affiliates) may, for their own accounts, enter into asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares at the same time as the offer and sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the Global Coordinator and Book Runner may hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the Issue and no specific disclosure will be made of such positions. Affiliates of the Global Coordinator and Book Runner may purchase Equity Shares and be allocated Equity Shares for proprietary purposes and not with a view to distribution or in connection with the issuance of P-Notes (see “P-Notes”).

The Global Coordinator and Book Runner and other affiliates have performed investment banking and advisory services for our Company from time to time for which they have received customary fees and expenses. The Global Coordinator and Book Runner and other affiliates may, from time to time, engage in transactions with and perform services for our Company in the ordinary course of their business for which they may receive customary compensation.

Lock-up

The Company and the Promoters and certain members of the Promoter Group have undertaken that they will not for a period of 180 days from the date of the Placement Document, without the prior written consent of the Global Coordinator and Bookrunner directly or indirectly, (i) offer, pledge, issue, contract to issue, grant any option, right or warrant for the subscription to, or otherwise dispose of or transfer, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position with respect to, any Equity Shares or securities convertible into or exchangeable or exercisable for any Equity Shares (including any warrants or other rights to subscribe for Equity Shares), whether now owned or hereinafter acquired, (ii) enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Equity Shares, whether any such aforementioned transaction is to be settled by allotment of the Equity Shares or such other securities, in cash or otherwise, or (iii) publicly disclose the intention to make any such offer, issuance and allotment, or to enter into any such transaction, swap, hedge or other arrangement. The foregoing sentence shall not apply to: (I) any grant by us of an option, right or warrant to purchase or acquire Equity Shares in our Company to our employees as part of the employee stock option plan in existence as of the date of the Placement Document, (II) inter-se transfers of the Equity Shares between the Promoters and the Promoter Group.

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SELLING RESTRICTIONS

The distribution of this Placement Document and the offer, sale or delivery of the Equity Shares is restricted by law in certain jurisdictions. Persons who come into possession of this Placement Document are advised to take legal advice with regard to any restrictions that may be applicable to them and to observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not authorized or permitted.

Canada. Equity Shares have not been sold in Canada or to residents of Canada other than in compliance with applicable securities laws, or the Canadian Securities Laws. Without limiting the foregoing, offers and sales of the Equity Shares included in this offering in Canada or to residents of Canada will be made only (i) through an appropriately registered securities dealer or in accordance with an available exemption from the applicable registered securities dealer requirements under the Canadian Securities Laws and (ii) pursuant to an exemption from the prospectus requirements under Canadian Securities Laws.

European Economic Area. In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), the Global Coordinator and Book Runner has represented and agreed that, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), it has not made and will not make an offer of Equity Shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Equity Shares to the public in that Relevant Member State at any time:

• to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

• to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year, (ii) a total balance sheet of more than €43,000,000 and (iii) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

• to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Global Coordinator and Book Runner for any such offer; or

• in any other circumstances which do not require the publication of a prospectus pursuant to Article 3(2) of the Prospectus Directive;

provided that no such offer of Equity Shares shall result in a requirement for the publication by our Company or the Global Coordinator and Book Runner of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any of the Equity Shares in any Relevant Member States means the communication in any form and by any means, of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State.

Hong Kong. The Global Coordinator and Book Runner has represented and agreed that no Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong Kong, by means of any document, other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent; or to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32) of Hong Kong. No document, invitation or advertisement relating to the Equity Shares has been issued or may be issued, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to Equity Shares which are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as

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defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance.

Singapore. The Global Coordinator and Book Runner has represented and agreed that this Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Placement Document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Equity Shares may not be circulated or distributed, nor may the Equity Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Equity Shares are subscribed or purchased under Section 275 by a relevant person which is:

• a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

• a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor,

shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the Equity Shares under Section 275 except: (i) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.

United Arab Emirates. This Placement Document is not intended to constitute an offer, sale or delivery of shares or other securities under the laws of the United Arab Emirates (the “UAE”). The Equity Shares have not been and will not be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and the Emirates Security and Commodity Exchange, or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities market or with any other UAE exchange.

The Issue, the Equity Shares and interests therein do not constitute a public offer of securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise. This Placement Document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the Equity Shares may not be offered or sold directly or indirectly to the public in the UAE.

United Kingdom. The Global Coordinator and Book Runner has represented and agreed that:

• (i) it is a person who is a qualified investor within the meaning of Section 86(7) of the Financial Services and Markets Act 2000 (the “FSMA”), being an investor whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell the Equity Shares other than to persons who are qualified investors within the meaning of Section 86(7) of the FSMA or who it reasonably expects will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Equity Shares would otherwise constitute a contravention of Section 19 of the FSMA by us;

• it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Equity Shares in circumstances in which Section 21(1) of the FSMA does not apply to it; and

• it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Equity Shares in, from or otherwise involving the United Kingdom.

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United States of America. The Global Coordinator and Book Runner has represented and agreed that the Equity Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and may not be offered, sold, pledged or otherwise transferred within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. The Global Coordinator and Book Runner is expected to make offers and sales of the Equity Shares to “qualified institutional buyers” (as defined such term is in Rule 144A under the Securities Act) in the United States pursuant to Section 4(2) of the Securities Act.

Australia. This Placement Document is not a disclosure document under Chapter 6D of the Corporations Act 2001 (Cth) (the “Australian Corporations Act”), has not been lodged with the Australian Securities & Investments Commission and does not purport to include the information required of a disclosure document under the Australian Corporations Act. (i) The offer of Equity Shares under this Placement Document is only made to persons to whom it is lawful to offer Equity Shares without disclosure to investors under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in Section 708 of the Australian Corporations Act; (ii) this Placement Document is made available in Australia to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within Australia any Equity Share sold to the offeree within 12 months after their transfer to the offeree under this Placement Document.

Bahrain. No approval has been sought or received from the regulatory authorities of Bahrain for the sale of the Equity Shares in Bahrain. All applications for investment in the Company should be received, and any

allotments should be made, in each case from outside Bahrain. This Placement Document has been prepared for private information purposes of intended investors only who will be high net worth individuals and institutions. It may not be used for and shall not be deemed a public offering of the Equity Shares and the Equity Shares may not be offered or sold in Bahrain or to residents thereof except as permitted by Bahrain law.

The Central Bank of Bahrain assumes no responsibility for the accuracy and completeness of the statements and information contained in this document and expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the contents of this document.

Cayman Islands. No invitation whether directly or indirectly may be made to the public in the Cayman Islands to subscribe for the Equity Shares.

Japan. The Equity Shares have not been and will not be registered under the Securities and Exchange Law of Japan (Law. No. 25 of 1948 as amended) (the “SEL”) and disclosure under the SEL has not been and will not be made with respect to the Equity Shares. No Equity Shares have, directly or indirectly, been offered or sold, and may not, directly or indirectly, be offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly in Japan or to, or for the benefit of, any resident of Japan except (1) pursuant to an exemption from the registration requirements of the SEL and (2) in compliance with any other relevant laws, regulations and governmental guidelines of Japan. Jordan. The Equity Shares are being offered in Jordan on a cross border basis based on one-on-one contacts to no more than thirty potential investors and accordingly the Equity Shares will not be registered with the Jordanian Securities Commission and a local prospectus is not required.

Korea. The Equity Shares have not been registered under the Korean Securities and Exchange Law, and the Equity Shares acquired in connection with the distribution contemplated hereby may not be offered or sold, directly or indirectly, in Korea or to or for the account of any resident thereof, except as otherwise permitted by applicable Korean laws and regulations, including, without limitation, the Korean Securities and Exchange Law and the Foreign Exchange Transaction Laws.

Kuwait. This Placement Document has not been approved by the Kuwait Central Bank or the Kuwait Ministry of Commerce and Industry, nor has the Company received authorisation or licensing from the Kuwait Central Bank or the Kuwait Ministry of Commerce and Industry to market or sell the Equity Shares within Kuwait. Furthermore, this Placement Document does not constitute the marketing or offering of securities in Kuwait pursuant to the Kuwaiti Securities Law (Law No. 31 of 1990, as amended).

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Malaysia. No prospectus or other offering material or document in connection with the offer and sale of the Equity Shares has been or will be registered with the Securities Commission of Malaysia pursuant to the Securities Commission Act, 1993 as the offer for purchase of, or invitation to purchase the Equity Shares is meant to qualify as an "excluded offer or excluded invitation" within the meaning of Section 38 of the Securities Commission Act, 1993. Each initial purchaser has severally represented, warranted or agreed that the Equity Shares will not be offered, sold, transferred or otherwise disposed, directly or indirectly, nor any document or other material in connection therewith distributed, in Malaysia, other than to persons falling within any one of the categories or person specified in Schedule 2 and/or Schedule 3 of the Securities Commission Act, 1993 who are also persons to whom any offer or invitation to purchase or sell would be an excluded offer or invitation within the meaning of Section 38 of the Securities Commission Act, 1993. Mauritius. This Placement Document is not intended to be distributed to the public in Mauritius and shall not be distributed, circulated directly or indirectly or issued to the public in Mauritius or to Mauritius residents and

the Equity Shares are not being offered or sold to the public in Mauritius, nor may they be offered or sold, directly or indirectly, in Mauritius or to, or for the account or benefit of, any resident of Mauritius. New Zealand. This Placement Document is not a prospectus. It has not been prepared or registered in accordance with the Securities Act 1978 of New Zealand (the “New Zealand Securities Act”). This Placement Document is being distributed in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money, within the meaning of section 3(2)(a)(ii) of the New Zealand Securities Act (“Habitual Investors”). By accepting this Placement Document, you represent and warrant that if you receive this Placement Document in New Zealand you are a Habitual Investor and you will not disclose this Placement Document to any person who is not also a Habitual Investor.

Norway. This Placement Document has not been approved by or registered with any Norwegian securities regulators pursuant to the Norwegian Securities Trading Act 1997. Accordingly, neither this Placement Document nor any other offering material relating to the Equity Shares constitutes, or shall be deemed to constitute, an offer to the public in Norway within the meaning of the Norwegian Securities Trading Act 1997 and is only made to qualified professional investors pursuant to the Norwegian Regulation of 9 December 2005 regarding exemption from the obligation to publish a prospectus or otherwise only in circumstances where an exemption from the obligation to publish a prospectus under the Norwegian Securities Trading Act 1997 is available.

Oman. The information contained in this Placement Document neither constitutes a public offer of securities in the Sultanate of Oman as contemplated by the Commercial Companies Law of Oman (Sultani Decree 4/74) or the Capital Market Law of Oman (Sultani Decree 80/98), nor does it constitute an offer to sell, or the solicitation of any offer to buy Non-Omani securities in the Sultanate of Oman as contemplated by Article 6 of the Executive Regulations to the Capital Market Law (issued vide Ministerial Decision No.4/2001). Additionally, this Placement Document is not intended to lead to the conclusion of any contract of whatsoever nature within the territory of the Sultanate of Oman.

Qatar. The Equity Shares have not been offered, sold or delivered, and will not be offered, sold or delivered at any time, directly or indirectly, in the state of Qatar in a manner that would constitute a public offering. This Placement Document has not been reviewed or registered with Qatari Government Authorities, whether under Law No. 25 (2002) concerning investment funds, central bank resolution No. 15 (1997), as amended, or any associated regulations. Therefore, this Placement Document is strictly private and confidential, and is being issued to a limited number of sophisticated investors, and may not be reproduced or used for any other purposes, nor provided to any person other than the recipient thereof.

Saudi Arabia. This Placement Document may not be distributed in the kingdom except to the extent permitted under the rules governing exempt offers as set forth in the offers of securities regulations (the “regulations”). It should not be distributed to any other person, or relied upon by any other person.

Switzerland. This Placement Document constitutes a Placement Document within the meaning of Article 652a or Article 1156 of the Swiss Code of Obligations (Schweizerisches Obligationenrecht) and is for the use of the direct recipient as addressed only, and is to be treated confidentially. The recipient must not forward this Placement Document to any third party.

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TRANSFER RESTRICTIONS

Resales of Equity Shares by “qualified institutional buyers” (as defined in Rule 144A), except on recognized stock exchanges, are not permitted for a period of one year from the date of Allotment, pursuant to Chapter XIII-A of the SEBI Guidelines. Because the following additional restrictions will apply, investors are advised to consult legal counsel prior to making any resale, pledge or transfer of our Equity Shares. Equity Shares Offered and Sold within the United States

Each purchaser of the Equity Shares within the United States pursuant to Section 4(2) of the Securities Act, by accepting delivery of this Placement Document, will be deemed to have represented, agreed and acknowledged that: 1. It (a) is a “qualified institutional buyer” (as defined in Rule 144A) (b) is aware that the sale of the

Equity Shares to it is being made in reliance on an exemption from registration requirements of the Securities Act and (c) is acquiring such Equity Shares for its own account or for the account of a “qualified institutional buyer”, as the case may be.

2. It understands that the Equity Shares have not been and will not be registered under the Securities Act

and may not be offered, sold, pledged or otherwise transferred except (a) for a period of one year from the date of allotment, in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S and on a recognized stock exchange, as applicable, and (b) thereafter (i) in accordance with Rule 144A to a person that it and any person acting on its behalf reasonably believes is a qualified institutional buyer (within the meaning of Rule 144A under the Securities Act) purchasing for its own account or for the account of a qualified institutional buyer, (ii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available) or (iii) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.

3. It understands that the Equity Shares purchased pursuant to Section 4(2) of the Securities Act (to the

extent they are in certified form), unless we determine otherwise in accordance with applicable law, will bear a legend substantially to the following effect:

“THESE EQUITY SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. BY ITS ACCEPTANCE OF AN EQUITY SHARE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT IT IS NOT ACQUIRING SUCH EQUITY SHARES WITH A VIEW TO ANY DISTRIBUTION THEREOF AND THAT IT IS QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A “QIB”) AND THAT IS EITHER PURCHASING THE EQUITY SHARES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB. THESE EQUITY SHARES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) FOR A PERIOD OF ONE YEAR FROM THE DATE OF ALLOTMENT, IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S AND ON A RECOGNIZED STOCK EXCHANGE, AS APPLICABLE, AND (B) THEREAFTER (I) IN ACCORDANCE WITH RULE 144A TO A PERSON THAT IT AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF AVAILABLE) OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THESE EQUITY SHARES.” 4. If it is acquiring any Equity Shares for the account of one or more qualified institutional buyers (as

defined in Rule 144A under the Securities Act), it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account.

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5. Our Company, the Global Coordinator and Book Runner, its affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements.

Regulation S Equity Shares

Each purchaser of the Equity Shares outside the United States pursuant to Regulation S, by accepting delivery of this Placement Document and those Equity Shares, will be deemed to have represented, agreed and acknowledged that: 1. It is, or at the time the Equity Shares are purchased pursuant to Regulation S will be, the beneficial owner of such Equity Shares and (a) it is not a U.S. person and it is located outside the United States (within the meaning of Regulation S) and (b) it is not an affiliate of us or a person acting on behalf of such an affiliate. 2. It understands that the Equity Shares have not been and will not be registered under the Securities

Act. 3. Our Company, the Global Coordinator and Book Runner, its affiliates, and others will rely upon the

truth and accuracy of the foregoing acknowledgments, representations and agreements.

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INDIAN SECURITIES MARKET

The information in this section has been extracted from publicly available documents from various sources, including officially prepared materials from SEBI, BSE and the NSE, and has not been prepared or independently verified by us or the Global Coordinator and Book Runner, or any of their respective affiliates or advisers. The Indian Securities Market

India has a long history of organised securities trading. In 1875, the first stock exchange was established in Mumbai. Stock Exchange Regulation

India’s stock exchanges are regulated primarily by SEBI, as well as by the GoI acting through the Ministry of Finance, Stock Exchange Division, under the Securities Contracts (Regulation) Act 1956 (“SCRA”) and the Securities Contracts (Regulation) Rules, 1957 (“SCRR”), which, along with the rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership and the manner in which contracts are entered into and enforced between members. The Securities and Exchange Board of India Act, 1992 granted powers to SEBI to regulate the Indian securities markets, including stock exchanges and other intermediaries in the capital markets, to promote and monitor self-regulatory organisations, to prohibit fraudulent and unfair trade practices and insider trading and to regulate substantial acquisitions of shares and takeovers of companies. SEBI has also issued guidelines and regulations concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider trading, substantial acquisition of shares and takeovers of companies, buyback of securities, delisting of securities, employee stock option schemes, stockbrokers, underwriters, mutual funds, foreign institutional investors (‘‘FIIs’’), credit rating agencies and other capital market participants. The Central Listing Authority of India (the “CLA”) has been set up by SEBI and will begin to address the issue of multiple listing of the same security across various Indian stock exchanges. It also aims to bring about uniformity in the due diligence process by scrutinising all listing applications on any stock exchange in India. The functions of the CLA are enumerated in the SEBI (Central Listing Authority) Regulations, 2003, which, inter alia, include processing the application made by any body corporate, mutual fund or collective investment scheme, for the letter of recommendation for it to be listed at the stock exchange; making recommendations as to listing conditions, making suggestions with respect to investor protection development and regulation of the securities market and disclosures to be made in offering documents and any other functions that may be specified by SEBI from time to time. Listing

The listing of securities on recognised Indian stock exchanges is regulated by the SCRA, the SCRR and the listing agreement of the respective stock exchanges, under which the governing body of each stock exchange is empowered to suspend trading of or dealing in a listed security for breach of our obligations under such agreement, subject to our receiving prior notice of such intent of the stock exchange. A listed Company can be delisted under the provisions of the SEBI (Delisting of Securities) Guidelines 2003, which govern voluntary and compulsory delisting of shares of Indian companies from the stock exchanges. SEBI has the power to direct the amendment of listing agreements and bye-laws of stock exchanges in India. Any amendment of the bye-laws by the stock exchanges on their own requires the prior approval of SEBI. In order to restrict abnormal price volatility in any particular stock, SEBI has instructed the stock exchanges to apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. An index based market-wide (equity and equity derivatives) circuit breaker system has been implemented and additionally, there are currently in place varying individual scrip-wise bands. The Stock Exchanges can also exercise the power to suspend trading during periods of market volatility. Disclosures under the Companies Act and Securities Regulations

Under the Companies Act, a public offering of securities in India must be made by means of a prospectus,

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which must contain information specified in the Companies Act and the SEBI (Disclosure and Investor Protection) Guidelines 2000, as amended. The prospectus must be filed with the Registrar of Companies having jurisdiction over the place where a Company’s registered office is situated, which in our case is currently the Registrar of Companies located in Mumbai. A Company’s directors and promoters may be subject to civil and criminal liability for misrepresentation in a prospectus. The Companies Act also sets forth procedures for the acceptance of subscriptions and the allotment of securities among subscribers and establishes maximum commission rates for the sale of securities. SEBI has issued detailed guidelines concerning disclosure by public companies and investor protection. Public limited companies are required under the Companies Act and SEBI guidelines to prepare, file with the Registrar of Companies and circulate to their shareholders audited annual accounts which comply with the disclosure requirements of Companies Act and regulations governing their manner of presentation and which include sections pertaining to corporate governance, related party disclosures and the management’s discussion and analysis as required under the listing agreement. In addition, a listed Company is subject to continuing disclosure requirements pursuant to the terms of its listing agreement with the relevant stock exchange. Accordingly, companies are now required to publish unaudited financial statements (subject to a limited review by auditors) on a quarterly basis and are required to inform stock exchanges immediately regarding any price-sensitive information. The Institute of Chartered Accountants of India and SEBI have implemented changes which require Indian companies to account for deferred taxation, to consolidate their accounts with subsidiaries, to provide sector reporting, to increase their disclosure of Related Party Transactions from April 1, 2001 and to account for investments in associated companies and joint ventures in consolidated accounts and interim financial reporting from April 1, 2002. From April 1, 2003, accounting of intangible assets is also regulated by accounting standards set by the ICAI and as of April 1, 2004, these accounting standards also regulate accounting for impairment of assets. Indian Stock Exchanges

There are now 23 stock exchanges in India. Most of the stock exchanges have their own governing board for self-regulation. A number of these exchanges have been directed by SEBI to file schemes for demutualisation as a measure of moving towards greater investor protection. The BSE and NSE together hold a dominant position among the stock exchanges in terms of the number of listed companies, market capitalisation and trading activity. The National Stock Exchange of India Limited

The NSE serves as a national exchange, providing nationwide on-line satellite-linked screen based trading facilities with an electronic order-based trading system, and electronic clearing and settlement for securities, including government securities, debentures, public sector bonds and units. The principal aim of the NSE is to enable investors to buy or sell securities from anywhere in India and to serve as a national market for securities. Deliveries for trades executed ‘‘on-market’’ are settled through the National Securities Clearing Corporation Limited. The NSE does not categorise shares into groups as in the case of BSE, except in respect of the trade-to-trade category. Screen-based paperless trading and settlement is possible through the NSE from 333 cities in India. The NSE commenced operations in the wholesale debt market in June 1994, in capital markets in November 1994 and in derivatives in June 2000. The average daily traded value of the capital market segment was Rs. 133.02 billion in September 2007. The market capitalisation of the NSE was approximately Rs. 48865.61 billion as at 30 September 2007. With a wide network in major metropolitan cities, screen-based trading, a central monitoring system and greater transparency, the NSE has steadily recorded high growth in volumes of trading The Bombay Stock Exchange Limited

The BSE, the oldest stock exchange in India, was established in 1875. It has evolved over the years into its present status as the premier stock exchange of India. The BSE switched over to online trading (‘‘BOLT’’) from May 1995. Only a member of the BSE has the right to trade in the stocks listed on the BSE.

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Derivatives trading commenced on the NSE in 2000. The BSE has wholesale and retail debt trading segments. Retail trading in government securities commenced in January 2003. Takeover Code

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the Takeover Code which prescribes certain thresholds or trigger points that give rise to these obligations, as applicable. The Takeover Code is under constant review by the SEBI and was last amended on May 28, 2007. The Takeover Code prescribes certain thresholds or trigger points that give rise to these obligations. Certain important provisions of the Takeover Code are as follows:

• Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire equity shares or voting rights in a company, either by himself or with any person acting in concert) who acquires equity shares or voting rights that would entitle him to more than 5%, 10%, 14%, 54% or 74% of the equity shares or voting rights in a company (together with the company’s equity shares or voting rights, if any, already held by him) is required to disclose the aggregate of his equity shareholding or voting rights in that company to the company (which in turn is required to disclose the same to each of the stock exchanges on which the company’s equity shares are listed) and to each of the stock exchanges on which the company’s equity shares are listed within two days of (a) the receipt of allotment information; or (b) the acquisition of equity shares or voting rights, as the case may be. The term “shares” has been defined under the Takeover Code to mean equity shares or any other security which entitles a person to acquire shares with voting rights.

• A person who, together with persons acting in concert with him, holds 15% or more but less than 55% of the equity shares or voting rights in any company is required to disclose any purchase or sale representing 2% of the equity shares or voting rights of that company (together with the aggregate shareholding after such acquisition or sale) to that company and the stock exchanges on which the company’s equity shares are listed within two days of the purchase or sale and is also required to make annual disclosure of his holdings to that company (which in turn is required to disclose the same to each of the stock exchanges on which the company’s equity shares are listed).

• Promoters or persons in control of a company are also required to make annual disclosure of their holding in the same manner. The listed company is also required to make annual disclosure of holdings of its promoters or persons in control as on March 31 of the respective year to each of the stock exchanges on which its equity shares are listed.

• An acquirer cannot acquire equity shares or voting rights which (taken together with existing equity shares or voting rights, if any, held by him or by persons acting in concert with him) would entitle such acquirer to exercise 15% or more of the voting rights in a company, unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the equity shares of the company at a price not lower than the price determined in accordance with the Takeover Code. A copy of the public announcement is required to be delivered, on the date on which such announcement is published, to SEBI, the company and the stock exchanges on which the company’s equity shares are listed.

• No acquirer who, together with persons acting in concert with him, has acquired, in accordance with law, 15% or more but less than 55% of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights that would entitle him to exercise more than 5% of the voting rights in any financial year ending March 31, unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the equity shares of the company at a price not lower than the price determined in accordance with the Takeover Code.

• An acquirer who, together with persons acting in concert with him, has acquired, in accordance with law, 55% or more but less than 75% of the equity shares or voting rights in a listed company (or, where the company concerned had obtained the initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957 (the “SCRR”), less than 90% of the shares or voting rights in the company) would require such an acquirer to make an open offer to acquire a minimum of 20% of the shares or voting rights which it does not already own in the company. However, if an acquisition made

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pursuant to an open offer results in the public shareholding in the target company being reduced below the minimum level required under the listing agreement with the stock exchanges, the acquirer would be required to take steps to facilitate compliance by the target company with the relevant provisions of the listing agreement with the stock exchanges, within the time period prescribed therein.

• Where an acquirer who (together with persons acting in concert) holds 55% or more, but less than 75% of the shares or voting rights in a target company (or, where the concerned company had obtained the initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR, less than 90% of the shares or voting rights in the company), intends to consolidate its holdings while ensuring that the public shareholding in the target listed company does not fall below the minimum level permitted by the listing agreement with the stock exchanges, the acquirer may do so only by making an open offer in accordance with the Takeover Code. Such open offer would be required to be made for the lesser of (i) 20% of the voting capital of the company, or (ii) such other lesser percentage of the voting capital of the company as would, assuming full subscription to the open offer, enable the acquirer (together with persons acting in concert), to increase the holding to the maximum level possible, which is consistent with the target company meeting the requirements of minimum public shareholding laid down in the listing agreement with the stock exchanges.

• In addition, regardless of whether there has been any acquisition of equity shares or voting rights in a company, an acquirer cannot directly or indirectly acquire control over a company (for example, by way of acquiring the right to appoint a majority of the directors or to control the management or the policy decisions of the company) unless such acquirer makes a public announcement offering to acquire a minimum of 20% of the voting equity shares of the company. In addition, the Takeover Code introduces the “chain principle” by which the acquisition of a holding Company will obligate the acquirer to make a public offer to the shareholders of each subsidiary company which is listed.

The Takeover Code sets out the contents of the required public announcements as well as the minimum offer price. The Takeover Code permits conditional offers as well as an acquisition and consequent delisting of the shares of a Company and provides specific guidelines for the gradual acquisition of shares or voting rights. Specific obligations of the acquirer and the board of directors of the target Company in the offer process have also been specified. Acquirers making a public offer are also required to deposit in an escrow account a percentage of the total consideration which amount will be forfeited in the event that the acquirer does not fulfil his obligations. The general requirements to make such a public announcement do not, however, apply entirely to bailout takeovers when a promoter (i.e. a person or persons in control of the Company, persons named in any offer document as promoters and certain specified corporate bodies and individuals) is taking over a financially weak Company but not a “sick industrial Company” pursuant to a rehabilitation scheme approved by a public financial institution or a scheduled company. A “financially weak Company” is a Company which has at the end of the previous financial year accumulated losses which have resulted in the erosion of more than 50% but less than 100% of the total sum of its paid up capital and free reserves as at the end of the previous financial year. A “sick industrial Company” is a Company registered for more than five years which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth. The Takeover Code, subject to certain conditions specified in the Takeover Code, exempts certain specified acquisitions from the requirement of making a public offer, including, among others, the acquisition of shares (1) by allotment in a public issue or a rights issue, (2) pursuant to an underwriting agreement, (3) by registered stockbrokers in the ordinary course of business on behalf of clients, (4) in unlisted companies, (5) pursuant to a scheme of reconstruction or amalgamation, (6) pursuant to a scheme under Section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985, (7) resulting from transfers between companies belonging to the same group of companies or between promoters of a publicly listed Company and relatives, (8) by way of transmission through inheritance or succession, (9) resulting from transfers by Indian venture capital funds or foreign venture capital investors registered with SEBI, to promoters of a venture capital undertaking or venture capital undertaking pursuant to an agreement between such venture capital funds or foreign venture capital investors with such promoters or venture capital undertaking, (10) by the Government of India controlled companies, unless such acquisition is made pursuant to a disinvestment process undertaken by the

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Government of India or a State Government, (11) change in control by takeover/restoration of the management of the borrower Company by the secured creditor in terms of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (12) acquisition of shares by a person in exchange of equity shares received under a public offer made under the Takeover Code and (13) in terms of guidelines and regulations relating to delisting of securities as specified by SEBI. The Takeover Code does not apply to acquisitions in the ordinary course of business by public financial institutions either on their own account or as a pledgee. An application may also be filed with the takeover panel seeking exception from the open offer requirements of the Takeover Code. In addition, the Takeover Code does not apply to the acquisition of Global Depository Receipts or American Depository Receipts so long as they are not converted into equity shares carrying voting rights. Under the Takeover Code, the term “promoter” includes any person who is control of the Company or any person identified as a promoter in any document for the offer of securities to the public or existing shareholders or in the shareholding information disclosed under the listing agreement, whichever is later, or any person named as a relative of or belonging to the promoter group as defined under the Takeover Code. Insider Trading Regulations

The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations 1992 (‘‘Insider Trading Regulations’’) have been notified by SEBI to prevent insider trading in India by prohibiting and penalising insider trading in India. The Insider Trading Regulations prohibit an ‘‘insider’’ from dealing, either on his own behalf or on behalf of any other person, in the securities of a Company listed on any stock exchange when in possession of unpublished price-sensitive information. The terms ‘‘unpublished’’ and ‘‘price-sensitive information’’ are defined in the Insider Trading Regulations. The insider is also prohibited from communicating, counselling or procuring, directly or indirectly, any unpublished price-sensitive information to any other person who whilst in possession of such unpublished price-sensitive information shall not deal in securities. The prohibition under the Insider Trading Regulations also extends to a Company dealing in the securities of a Company listed on any stock exchange whilst in the possession of unpublished price-sensitive information. It is to be noted that recently SEBI has amended the Insider Trading Regulations to provide certain defences to the prohibition on companies in possession of unpublished price-sensitive information dealing in securities. The Insider Trading Regulations make it compulsory for listed companies and certain other entities associated with the securities market to establish an internal code of conduct to prevent insider trading and also to regulate disclosure of unpublished price-sensitive information within such entities so as to minimise misuse of such information. To this end, the Insider Trading Regulations provide a model code of conduct. Further, the Insider Trading Regulations specify a model code of corporate disclosure practices to prevent insider trading which must be implemented by all listed companies. On a continuing basis, under the Insider Trading Regulations, any person who holds more than 5 per cent of the shares or of the voting rights in any listed Company is required to disclose to the Company,- the number of shares or voting rights held by him and any change in shareholding or voting rights, (even if such change results in the shareholding falling below 5%) if there has been change in such holdings from the last disclosure made, provided such change exceeds 2.0 % of the total shareholding or voting rights in the company. Such disclosure is required to be made within four working days of:

• the receipt of intimation of allotment of the shares; or

• the acquisition or the sale of the shares or voting rights, as the case may be.

Depositories

In August 1996, the Indian Parliament enacted the Depositories Act 1996 (the ‘‘Depositories Act’’) which provides a legal framework for the establishment of depositories to record ownership details and effect transfers in electronic book-entry form. SEBI has framed the Securities and Exchange Board of India (Depositories and Participants) Regulations 1996 which provide for the formation of such depositories, the registration of participants as well as the rights and obligations of the depositories, participants, the Company, the beneficial owners and the issuers. The depository system has significantly improved the operations of the Indian securities markets.

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Trading of securities in book-entry form commenced in December 1996. In January 1998, SEBI notified scripts of various companies for compulsory dematerialised trading by certain categories of investors such as foreign institutional investors and other institutional investors and has also notified compulsory dematerialised trading in specified scripts for all retail investors. SEBI has subsequently significantly increased the number of scripts in which dematerialised trading is compulsory for all investors. However, even in the case of scripts required for compulsory dematerialised trading, investors, other than institutional investors, may trade in and deliver physical shares on transactions outside the stock exchange where there are no requirements to report such transactions to the stock exchange and on transactions on the stock exchange involving lots of less than 500 securities. Transfers of shares in book-entry form require both the seller and the purchaser of the equity shares to establish accounts with depositary participants registered with the depositaries established under the Depositories Act. Upon delivery, the shares shall be registered in the name of the relevant depositary in the listed company and this depositary shall enter the name of the investor in its records as the beneficial owner, thus affecting the transfer of beneficial ownership. The beneficial owner shall be entitled to all rights and benefits of a shareholder and be subject to all liabilities in respect of his shares held by a depositary. Every person holding equity share capital of the company and whose name is entered as a beneficial owner in the records of the depository is deemed to be a member of the concerned company. The Companies Act compulsorily provides that Indian companies making any initial public offerings of securities for or in excess of Rs. 100.00 million should issue the securities in dematerialized form. Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRA rules and the SEBI Act. The SCRA was amended in February 2000 and derivative contracts were included within the term “securities,” as defined by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange. The derivative exchange or derivative segment of a stock exchange functions as a self regulatory organisation under the supervision of the SEBI. Derivatives products were introduced in phases in India, starting with futures contracts in June 2000 and index options, stock options and stock futures in June 2000, July 2001 and November 2001, respectively. Restrictions on Conversion of Indian Rupees

There are restrictions on conversion of Rupees into U.S. Dollars. Before February 29, 1992, RBI determined the official value of the Rupee in relation to a weighted basket of currencies of India’s major trading partners. In the February 1992 budget, a new dual exchange rate mechanism was introduced by allowing conversion of 60% of the foreign exchange received on trade or current account at a market-determined rate and the remaining 40% at the official rate. All importers were, however, required to buy foreign exchange at the market rate except for certain priority imports. In March 1993, the exchange rate was unified and allowed to float. In February 1994 and again in August 1994, RBI announced relaxations of the payment restrictions previously applicable to certain transactions. Since August 1994, the GoI has substantially complied with its obligations to the International Monetary Fund, under which India is committed to refrain from using exchange restrictions on current international transactions as an instrument to manage the balance of payments. Effective July 1995, the process of current account convertibility was advanced by relaxing restrictions on foreign exchange for various purposes, such as foreign travel and medical treatment. The GoI has also relaxed restrictions on capital account transactions by resident Indians since 1999. For example, resident Indians are now permitted to remit up to U.S. $100,000 for any capital/current account transaction without any prior approval.

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DESCRIPTION OF THE SHARES

Set forth below is certain information relating to our share capital, including a brief summary of some of the provisions of our Memorandum and Articles of Association, the Companies Act and certain related legislation of India, all as currently in effect. General

The authorised share capital of our Company is Rs.1,800,000,000 divided into 800,000,000 equity shares of Rs. 1 each and 100,000,000 unclassified shares of Rs. 10 each. Dividend

Under the Companies Act, unless the Board recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. Subject to certain conditions laid down in the Companies Act, no dividend can be declared or paid by a company for any financial year except out of the profits of the company determined in accordance with the provisions of the Companies Act or out of the undistributed profits or reserves of previous fiscal years or out of both, arrived at in accordance with the provisions of the Companies Act. Under our Articles of Association, the shareholders at a general meeting may declare a lower, but not higher, dividend than that recommended by the Board. Dividends are generally declared as a percentage of the par value of the shares. The dividend recommended by the Board and approved by the shareholders at a general meeting is distributed and paid to shareholders in proportion to the paid-up value of their Shares as at the record date for which such dividend is payable. In addition, the Board may declare and pay interim dividends. Under the Companies Act, dividends can only be paid in cash to shareholders listed on the register of shareholders on the date which is specified as the ‘‘record date’’ or ‘‘book closure date’’. No shareholder is entitled to a dividend while calls on any of his Shares are outstanding. Dividends must be paid within 30 days from the date of the declaration and any dividend that remains unpaid or unclaimed after that period must be transferred within seven days to a special unpaid dividend account held at a scheduled bank. Any money that remains unpaid or unclaimed for seven years from the date of such transfer must be transferred to the Investor Education and Protection Fund and thereafter any claim with respect thereto will lapse. Under the Companies Act, a company may pay a dividend in excess of 10.0 percent in any year, out of the profits of that financial year only after it has transferred to its reserves a certain percentage of its profits for that year ranging between 2.5 per cent and 10.0 per cent depending on the percentage of dividend proposed to be declared in that year. The Companies Act further provides that if the profit for a year is insufficient, the dividend for that year may be declared out of accumulated profits from previous years which have been transferred to reserves, subject to certain conditions prescribed under the Companies Act.

Capitalisation of Reserves/Profits

Article 171 (a) of our Articles of Association provides that our Company in any general meeting may resolve that any moneys standing to the credit of the reserves fund or any capital redemption reserve account or in the hands of the Company and available for dividends or representing premiums received on the issue of shares and standing to the credit of the share premium account be capitalized and distributed amongst such of the members as would be entitled to receive the same if distributed by way of dividends and in the same proportion and on the footing that they become entitled thereto as capital and that all or any part of such capitalized fund be applied on behalf of such members in paying up in full either at par or at such premium, any unissued shares of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares, and that such distribution, of payment shall be accepted by such members in full satisfaction of their interest in the said capitalized sum. Provided that the share premium account and a capital redemption reserve account may, for the purpose of this Article only be applied in paying up of unissued shares to be issued to members of the Company as fully paid bonus shares. Article 171 (b) of our Articles of Association provides that our Company in a general meeting can resolve that any surplus money arising from the realization of any capital assets of the Company or any investment representing the same, or any other undistributed profits of the Company not subject to charge for income-tax be distributed among the members on the footing that they receive the same as capital.

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Article 171 (c) of our Articles of Association provides that for the purpose of giving effect to any resolution under Article 171 (a) and Article 171 (b), the Board may settle any difficulty which may arise in regard to the distribution as it thinks expedient and in particular may issue fractional certificates and may fix the value for distribution of any specific assets, and may determine that cash payments shall be made to any members upon the footing of the value so fixed or that fraction of less value than fixed may be disregarded in order to adjust the right of all parties and may vest such cash or specific assets, in trustees upon such trusts for the person entitled to the dividend or capitalised funds as may seem expedient to the Board. Where requisite, a proper contract shall be delivered to the Registrar for registration in accordance with Section 75 of the Companies Act, and the Board may appoint any person to sign contract on behalf of the members entitled to the dividend or capitalized fund, and such appointment shall be effective. Any issue of bonus shares would be subject to the guidelines issued by SEBI in this regard. The relevant SEBI guidelines prescribe that no company shall, pending conversion of convertible securities, issue any shares by way of bonus unless a similar benefit is extended to the holders of such convertible securities, through a proportionate reservation of shares. Further, in order to issue bonus shares a company should not have defaulted in the payment of interest or principal in respect of on existing debentures. The declaration of bonus shares in lieu of a dividend cannot be made. A bonus issue may be made out of free reserves built out of genuine profits or share premium collected in cash and not from reserves created by revaluation of fixed assets. The issue of bonus shares must take place within six months from the date of approval by the Board or the shareholders, whichever is later. Pre-emptive Rights and Alteration of Share Capital

Article 4 of our Articles of Association provides that the Company may from time to time by Ordinary Resolutions increase its authorized Capital by such sum to be divided into shares of such amounts as may be specified in the resolution. Article 8 of our Articles of Association provides that the Company (subject to the provisions of the Companies Act, 1956) may from time to time, by special resolution, reduce its Capital Redemption Reserve Account or any share premium account in any manner for the time being authorised by law, and in particular may be paid off on the footing that it may be called upon again or otherwise. This Article is not to derogate from any power the Company will have if it was omitted. Article 9 of our Articles of Association provides that the Company in General Meeting may from time to time sub-divide or consolidate its shares or any of them subject as aforesaid in general meeting may also cancel shares which have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. However, under the provisions of the Companies Act, new shares may be offered to any persons whether or not those persons include existing shareholders, if a special resolution to that effect is passed by the shareholders of the company in a general meeting. This issue of the Equity Shares has been duly approved by a special resolution of our shareholders and such shareholders have waived their pre-emptive rights with respect to such shares. General Meetings of Shareholders

We must hold our annual general meeting each year within 15 months of the previous annual general meeting unless extended by the Registrar of Companies at our request for any special reason. The Board may convene an extraordinary general meeting of shareholders when necessary and shall convene such a meeting at the request of a shareholder or shareholders holding in the aggregate not less than 10 % of our issued paid-up capital. Article 82 of our Articles of Association provides that five members present in person shall be quorum for a general meeting. Article 88 of our Articles of Association provides that at any General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result on show of hands) ordered to be taken by the Chairman of the meeting of his own motion or so ordered to be

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taken by him on a demand made in that behalf by any member or members present in person or by proxy and holding shares in the Company conferring a right to vote on the resolution not being less than one tenth of the total voting power in respect of the resolution or on which an aggregate sum of not less than Rs.50,000 (Rupees Fifty Thousand) has been paid up and unless a poll is demanded, a declaration by the Chairman that resolution has on a show of hands been carried or carried unanimously, or by a particular majority or lost and an entry to that effect in the minutes book of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against that resolution. Written notices convening a meeting setting out the date and place of the meeting and its agenda must be given to members at least 21 days prior to the date of the proposed meeting and where any special business is to be transacted at the meeting an explanatory statement shall be annexed to the notice as required under the Companies Act. With the consent of all members entitled to receive notice of a meeting or to attend and vote at any such meeting which may be given by telegram or cable a meeting may be convened by shorter notice than that provided by the Act as such members approve. A company intending to pass a resolution relating to matters such as, but not limited to, an amendment in the objects clause of the Memorandum, a buy-back of shares under the Companies Act, the giving of loans or extending a guarantee in excess of limits prescribed under the Companies Act (and guidelines issued thereunder) may pass the resolution by means of a postal ballot instead of transacting the business in the general meeting of the company. A notice to all the shareholders must be sent along with a draft resolution explaining the reasons therefore and requesting them to send their assent or dissent in writing on a postal ballot within a period of 30 days from the date of such notice. Voting Rights

Article 94 of our Articles of Association provides that no member shall be entitled to vote either personally or by proxy at any general meeting or meeting of a class of shareholders either upon show of hands or upon a poll in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the Company has exercised any right of lien. Article 95 of our Articles of Association provides that every member, not disqualified by the last preceding article shall be entitled to be present and to speak and vote at such meeting and on a show of hand every member present in person shall have one vote and upon a poll the voting rights of every member present in person or by proxy shall be in proportion to his share of the paid up equity share capital of the Company. Provided however, if any preference share holder be present at any meeting of the Company, save as provided in the Act he shall have a right to vote only on resolutions placed before the meeting which directly affect the rights attached to his preference shares. Article 98 of our Articles of Association provides that if there be joint registered holders of any share, any one of such person may vote at any meeting and if more than one of such joint holders be present at any meeting, then one of the said person so present whose name stands higher on the register shall alone be entitled to speak and to vote in respect of such shares, but the other or others of the joint holders shall be entitled to be present at a meeting. Several executors or administrators of deceased member in whose name shares stand shall for the purpose of these Articles be deemed joint holders thereof. The same provisions shall apply in regard to the proxies of such joint holders. The joint holder present in person shall have preference over senior joint holder who is present by proxy. Article 101 of our Articles of Association provides that every proxy (whether a member or not) shall be appointed in writing under the hand of the appointee or of his attorney duly authorized in writing, or if such appointee is a body corporate under its common seal or the hand of an officer or attorney so authorized. The proxy so appointed shall not have the right to speak at the meeting. Article 108 of our Articles of Association provides that the chairman of any general meeting shall be the sole judge of the validity of every vote tendered at such general meeting. The chairman present at the taking of the poll shall be the sole judge of the validity of every vote tendered at such poll. Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require that the votes cast in favour of the resolution must be at least three times the votes cast against the resolution. The Companies Act provides that to amend the Articles of Association, a special resolution is required to be passed in a general meeting.

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The Companies Act allows us to issue shares with differential rights as to dividend, voting or otherwise, subject to certain conditions. In this regard, the law requires that for a company to issue shares with differential voting rights the company must have had distributable profits in terms of the Companies Act for a period of three financial years and the company must not have defaulted in filing annual accounts and annual returns for the immediately preceding three years. Register of Shareholders and Record Dates

We are obliged to maintain a register of shareholders at our Registered Office in Mumbai or at some other place in the same city. We recognise as shareholders only those persons whose names appear on the register of shareholders and cannot recognise any person holding any share or part of it upon any express, implied or constructive trust, except as permitted by law. In the case of shares held in physical form, transfers of shares are registered on the register of shareholders upon lodgement of the share transfer form duly completed in all respects accompanied by a share certificate or, if there is no certificate, the letter of allotment in respect of shares transferred together with duly stamped transfer forms. In respect of electronic transfers, the Depository transfers shares by entering the name of the purchaser in its books as the beneficial owner of the shares. In turn, the name of the Depository is entered into the company’s records as the registered owner of the shares. The beneficial owner is entitled to all the rights and benefits as well as the liabilities with respect to the shares. For the purpose of determining the shareholders, the register may be closed for periods not exceeding 45 days in any one year or 30 days at any one time, as the Board may deem expedient in accordance with the provisions of the Companies Act. Under the listing agreements of the Stock Exchanges on which the Company’s outstanding Shares are listed, the Company may, upon at least 15 days’ advance notice to such stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity of shareholders. The trading of shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed. Under the Companies Act, the Company is also required to maintain a register of debenture holders. Annual Report and Financial Results

Our Company’s Annual Report must be laid before the annual general meeting. The report includes financial information, a corporate governance section and management’s discussion and analysis and is sent to the company’s shareholders. Under the Companies Act, we must file the Annual Report with the Registrar of Companies within six months from the close of the accounting year or within 30 days from the date of the annual general meeting, whichever is earlier. As required under our listing agreements, copies are required to be simultaneously sent to the stock exchanges on which the Shares are listed. We must also publish our financial results in at least one English language daily newspaper circulating in the whole or substantially the whole of India and also in a newspaper published in the language of the region where our Registered Office is situated. The Company files certain information on-line, including its Annual Report, six-month and quarterly financial statements and the shareholding pattern statement, in accordance with the requirements of the listing agreements and as may be specified by the SEBI from time to time. Transfer of Shares

Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with SEBI regulations. These regulations provide the regime for the functioning of the depositories and their participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownerships of shares held through a depository are exempt from stamp duty. SEBI requires that for trading and settlement purposes shares should be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange. The shares are freely transferable, subject only to the provisions of the Companies Act under which, if a

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transfer of shares contravenes the SEBI provisions or the regulations issued under it or the SICA, or any other similar law, the Company Law Board may, on an application made by the company, a depository incorporated in India, an investor, SEBI or other parties, direct a rectification of the register of records. If a company without sufficient cause refuses to register a transfer of shares within two months from the date on which the instrument of transfer is delivered to the company, the transferee may appeal to the Company Law Board seeking to register the transfer. The Company Law Board may, in its discretion, issue an interim order suspending the voting rights attached to the relevant shares before completing its investigation of the alleged contravention. Under the Companies (Second Amendment) Act 2002, the Company Law Board will be replaced with the National Company Law Tribunal. Further, under the Sick Industrial Companies (Special Provisions) Repeal Act 2003, the SICA is sought to be repealed and the board of Industrial and Financial Reconstruction, as constituted under the SICA, is to be replaced with the National Company Law Tribunal, set up under the Companies Act. The Companies Act provides that shares or debentures of a public listed company (like ours) shall be freely transferable. However, our Articles of Association provide for certain restrictions on the transfer of shares, including granting power to the Board in certain circumstances to refuse to register or acknowledge transfer of shares or other securities issued by us. A transfer may also be by transmission. Subject to the provisions of the Company’s Articles, any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any member or by any lawful means other than by a transfer in accordance with these presents, may, with the consent of the Board, upon producing such evidence that he sustains the character in respect of which he proposes to act under the Article, or his title, as the Board thinks sufficient, be registered as a member in respect of such shares, or may, subject to the regulations as to transfer contained in the Articles, transfer such shares. Acquisition by the Company of its own Shares

A company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected by an approval of at least 75% of its shareholders, voting on it in accordance with the Companies Act and sanctioned by the High Court of competent jurisdiction. Subject to certain conditions, a company is prohibited from giving, whether directly or indirectly and whether by means of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person for any shares in the company or its holding company. However, pursuant to certain amendments to the Companies Act, a company has been empowered to purchase its own shares or other specified securities out of its free reserves, the securities premium account, the proceeds of any shares or other specified securities (other than the kind of shares or other specified securities proposed to be bought back) subject to certain conditions, including:

• the buy-back should be authorised by the Articles of Association of the company;

• a special resolution has been passed by postal ballot authorising the buy-back;

• the buy-back is limited to 25 per cent of the total paid-up capital and free reserves;

• the debt owed by the company is not more than twice the capital and free reserves after such buy-back; and

• the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of Securities) Regulations 1998.

The second condition mentioned above would not be applicable if the buy-back is for less than 10 per cent of the total paid-up equity capital and free reserves of the company and provided that such buy-back has been authorised by the Company’s board. A company buying back its securities is required to extinguish and physically destroy the securities so bought back within seven days of the last date of completion of the buy-back. Further, a company buying back its securities is not permitted to buy back any securities for a period of one year from the buy-back or to issue securities for six months. A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company including its own subsidiary companies or through any investment company. Further a company is prohibited from purchasing its own shares or specified securities, if the company is in default in the repayment

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of deposit or interest, redemption of debentures or preference shares, in payment of dividend to a shareholder, in repayment of any term loan or interest payable thereon to any financial institution or bank or in the event of non-compliance with certain other provisions of the Companies Act. Liquidation Rights

Subject to the rights of creditors, of employees and of the holders of any other shares entitled by their terms of issue to preferential repayment over the shares, in the event of winding up of our company, the holders of the shares are entitled to be repaid the amounts of capital paid-up or credited as paid-up on such shares. All surplus assets after payments due to employees, the holders of any preference shares and other creditors belong to the holders of the Shares in proportion to the amount paid-up or credited as paid-up on such shares respectively at the commencement of the winding-up.

In case assets available are insufficient to repay the whole of the paid up capital, the assets shall be so distributed such that the losses are borne to the extent possible by the shareholders in the ratio of capital contributed. In case any of the shares involve a liability to call or otherwise, any person may, within ten days after the passing of the resolution, by notice in writing direct the liquidators to sell his portion and pay him the net proceeds and the liquidator shall, if practicable, act accordingly.

The division of assets on winding up, if thought expedient, may subject to the provisions of the Companies Act, be otherwise than in accordance with the legal rights of the contributories (except when unalterably fixed by the Memorandum) and in particular, any class may be given preferential or special rights which may be excluded altogether or in part but any contributory who is prejudiced by the same shall have a right to dissent and possess ancillary rights as though such determination were a special resolution under section 494 of the Companies Act.

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TAXATION

The information provided below sets out the possible tax benefits available to the shareholders in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares, under the current tax laws presently in force in India. It is not exhaustive or comprehensive and is not intended to be a substitute for professional advice. Investors are advised to consult their own tax consultant with respect to the tax implications of an investment in the Equity Shares particularly in view of the fact that certain recently enacted legislation may not have a direct legal precedent or may have a different interpretation on the benefits, which an investor can avail.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES IN YOUR PARTICULAR SITUATION.

As per the taxation laws in force, the tax benefits / consequences as applicable, to the QIBs (not being individuals or HUFs) investing in the Equity Shares of the Company (on the assumption that the units are not held as stock-in-trade) are stated as follows:

1. Benefits available to resident shareholders

1.1 Dividends exempt under Section 10(34)

Dividends (whether interim or final) declared, distributed or paid by the Company are exempt in the hands of shareholders as per the provisions of Section 10(34) of the I T Act.

1.2 Computation of capital gains

1.2.1 Capital assets may be categorised into short term capital assets and long term capital assets based on

the period of holding. Shares in a company, listed securities or units will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sale of these assets held for 12 months or less are considered as “short term capital gains”.

1.2.2 Section 48 of the I T Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition / improvement with the indexed cost of acquisition / improvement, which adjusts the cost of acquisition / improvement by a cost inflation index as prescribed from time to time.

1.2.3 As per the provisions of Section 112 of the I T Act, long term gains as computed above that are not exempt under section 10(38) of the I T Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and various education cesses). However, as per the proviso to Section 112(1) of the I T Act, if the tax on long term capital gains resulting on transfer of listed securities or units, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and various education cesses).

1.2.4 As per the provisions of section 111A of the I T Act, short-term capital gains on sale of equity shares

where the transaction of sale is chargeable to Securities Transaction Tax (“STT”) shall be subject to tax at a rate of 10 per cent (plus applicable surcharge and various education cesses).

1.2.5 Exemption of capital gain from income tax

• According to section 10(38) of the I T Act, long-term capital gains on sale of equity shares where the transaction of sale is chargeable to STT shall be exempt from tax.

• According to the provisions of section 54EC of the I T Act and subject to the conditions and investment limits specified therein, capital gains not exempt under section 10(38) of the I T Act

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and arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

2. Benefits available to Non-residents

2.1 Dividends exempt under Section 10(34)

Dividends (whether interim or final) declared, distributed or paid by the Company are exempt in the hands of shareholders as per the provisions of Section 10(34) of the I T Act.

2.2 Computation of capital gains

2.2.1 Capital assets may be categorised into short term capital assets and long term capital assets based on

the period of holding. Shares in a company, listed securities or units will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sale of these assets held for 12 months or less are considered as “short term capital gains”.

2.2.2 Section 48 of the I T Act contains special provisions in relation to computation of capital gains on transfer of an Indian company’s shares by non-residents. Computation of capital gains arising on transfer of shares in case of non-residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain (i.e., sale proceeds less cost of acquisition/ improvement) computed in the original foreign currency is then converted into Indian Rupees at the prevailing rate of exchange. Indexation benefit in case of such long term capital gain is not available to non residents on the securities of an Indian company.

2.2.3 In case investment is made in Indian rupees, the long-term capital gain is to be computed after

indexing the cost.

As per the provisions of Section 112 of the I T Act, long term gains as computed above that are not exempt under section 10(38) of the I T Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and various education cesses). However, as per the proviso to Section 112(1) of the I T Act, if the tax on long term capital gains resulting on transfer of listed securities or units, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and various education cesses).

2.2.4 As per the provisions of section 111A of the I T Act, short-term capital gains on sale of equity shares,

where the transaction of sale is chargeable to STT, shall be subject to tax at a rate of 10 per cent (plus applicable surcharge and various education cesses).

2.2.5 Exemption of capital gain from income tax

• According to section 10(38) of the I T Act, long-term capital gains on sale of equity shares where the transaction of sale is chargeable to STT shall be exempt from tax.

• According to the provisions of section 54EC of the I T Act and subject to the conditions and investment limits specified therein, capital gains not exempt under section 10(38) of the I T Act and arising to the assessee on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. However, if the assessee transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

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3. Benefits available to Foreign Institutional Investors (‘FIIs’)

3.1 Dividends exempt under section 10(34) of the I T Act

Dividends (whether interim or final) declared, distributed or paid by the Company are exempt in the hands of shareholders as per the provisions of section 10(34) of the I T Act.

3.2 Taxability of capital gains

As per the provisions of section 115AD of the I T Act, FIIs will be taxed on the capital gains that are not exempt under section 10(38) of the I T Act at the following rates:

Nature of income Rate of tax (%) Long term capital gains 10 Short term capital gains 30

The above tax rates would be increased by the applicable surcharge and education cess. The benefits of indexation and foreign currency fluctuation protection as provided by Section 48 of the I T Act are not available to an FII. According to Section 111A of the I T Act, short-term capital gains on sale of equity shares where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 10 per cent (plus applicable surcharge and various education cesses).

3.3 Exemption of capital gain from income tax

According to section 10(38) of the I T Act, long-term capital gains on sale of shares where the transaction of sale is chargeable to STT shall be exempt from tax.

4. Benefits available to Mutual Funds

As per the provisions of Section 10(23D) of the I T Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India would be exempt from income tax, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf.

5. Tax Deduction at Source

No income-tax is deductible at source from income by way of capital gains under the present provisions of the I T Act in case of residents. However, the provisions of section 195 of the I T Act may apply to non-residents (other than Foreign Institutional Investors and long-term capital gains exempt under section 10(38) of the I T Act).

Accordingly income tax may have to be deducted at source in the case of a non- resident (other than foreign companies) at the rate of 10% (plus applicable surcharge and various education cesses) on short-term capital gains referred to in section 111A of the I T Act and at the rate of 30% (plus applicable surcharge and various education cesses) in case of short-term capital gains (other than under section 111A of the I T Act), unless a lower withholding tax certificate is obtained from the tax authorities, and at the rate of 20% (plus applicable surcharge and various education cesses) in case of long-term capital gains, unless a lower withholding tax certificate is obtained from the tax authorities.

In the case of foreign companies the rate of tax to be deducted at source on short-term capital gains referred to in section 111A of the I T Act would be 10% (plus applicable surcharge and various education cesses) and at the rate of 40% (plus applicable surcharge and various education cesses) in case of short-term capital gains (other than under section 111A of the I T Act), unless a lower withholding tax certificate is obtained from the tax authorities, and at the rate of 20% (plus applicable surcharge and various education cesses) in case of long term capital gains, unless a lower withholding tax certificate is obtained from the tax authorities.

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6. Tax Treaty benefits

An investor has an option to be governed by the provisions of the Act or the provisions of a Tax Treaty that India has entered into with another country of which the investor is a tax resident, whichever is more beneficial.

7. Benefits available under the Wealth-tax Act, 1957

Asset as defined under Section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies and hence, shares are not liable to wealth tax.

8. Benefits available under the Gift-tax Act, 1958

Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares will not attract gift tax.

The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary

manner only and is not a complete analysis or listing of all potential tax consequences of the purchase,

ownership and disposal of Equity Shares held as investment (and not as stock in trade). The statements

made above are based on the tax laws in force and as interpreted by the relevant taxation authorities as

of date. Investors are advised to consult their tax advisors with respect to the tax consequences of the

purchase, ownership and disposal of equity shares.

Certain U.S. Federal Income Tax Considerations

To ensure compliance with United States Treasury Department Circular 230, investors are hereby notified that: (i) any discussion of United States federal tax issues in this document is not intended or written by us to be relied upon, and cannot be relied upon by investors, for the purpose of avoiding penalties that may be imposed on investors under the United States Internal Revenue Code of 1986, as amended (the “Code”); (ii) such discussion is written in connection with the promotion or marketing of the transactions or matters addressed herein by the Company and the Global Coordinator and Book Runner; and (iii) investors should seek advice based on their particular circumstances from their own independent tax advisors. Counsel does not intend to be, and is not, engaged in the promotion or marketing of the transactions or matters described in this Placement Document and no inference to the contrary shall be implied by reason of the disclosures set forth in this section. The following is a discussion of certain material U.S. Federal income tax consequences of purchasing, owning and disposing of Equity Shares, but it does not purport to be a comprehensive description of all of the U.S. tax considerations that may be relevant to a particular person’s decision to acquire Equity Shares.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL,

STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, OWNING AND

DISPOSING OF EQUITY SHARES IN YOUR PARTICULAR SITUATION.

The discussion applies to you only if you acquire the Equity Shares in this Issue and you hold the Equity Shares as capital assets for tax purposes (generally, for investment). This section does not apply to you if you are a member of a special class of holders subject to special tax rules, including:

• a dealer in securities or foreign currencies;

• a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;

• a bank or other financial institution;

• a tax-exempt organization;

• a life insurance company;

• a holder liable for alternative minimum tax;

• a holder that actually or constructively owns 10% or more, by voting power, of the Company’s voting stock;

• a holder that holds Equity Shares as part of a straddle, hedging or conversion transaction; or

• a U.S. holder whose functional currency is not the U.S. Dollar.

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This section is based on the Code, existing and proposed income tax regulations issued under the Code, legislative history, and judicial and administrative interpretations thereof, all as of the date hereof. All of the foregoing are subject to change at any time, and any change could be retroactive and could affect the accuracy of this discussion. In addition, the application and interpretation of certain aspects of the passive foreign investment company rules, referred to below, require the issuance of regulations which in many instances have not been promulgated and which may have retroactive effect. There can be no assurance that any of these regulations will be enacted or promulgated, and if so, the form they will take or the effect that they may have on this discussion. This discussion is not binding on the U.S. Internal Revenue Service (“IRS”) or the courts. No ruling has been or will be sought from the IRS with respect to the positions and issues discussed herein, and there can be no assurance that the IRS will not take a different position concerning the U.S. Federal income tax consequences of an investment in the Equity Shares or that any such position would not be sustained.

You are a “U.S. holder” if you are a beneficial owner of Equity Shares and you are:

• a citizen or resident of the United States;

• a U.S. domestic corporation, or other entity treated as a domestic corporation for U.S. Federal income tax purposes;

• an estate whose income is subject to U.S. Federal income tax regardless of its source; or

• a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.

In addition, this discussion is limited to U.S. holders who are not resident in India for purposes of the Income Tax Treaty between the United States and India.

If a partnership (including for this purpose any entity treated as a partnership for U.S. Federal income tax purposes) is a beneficial owner of the Equity Shares, the U.S. tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. A holder of the Equity Shares that is a partnership and partners in such a partnership should consult their own tax advisors concerning the U.S. Federal income tax consequences of purchasing, owning and disposing of Equity Shares.

A “non-U.S. holder” is a beneficial owner of Equity Shares that is not a U.S. holder for U.S. Federal income tax purposes.

The Company believes that it will not be a passive foreign investment company, or PFIC, for U.S. Federal income tax purposes for the current taxable year. However, no assurance can be given that the Company will not be considered a PFIC in the current or future years. The determination whether or not the Company is a PFIC is a factual determination that is made annually based on the types of income it earns and the value of its assets. If the Company was currently or were to become a PFIC, U.S. holders of Equity Shares would be subject to special rules and a variety of potentially adverse tax consequences under the Code.

Taxation of Dividends

U.S. Holders. Subject to the PFIC rules referred to above, if you are a U.S. holder you must include in your gross income the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for U.S. Federal Income tax purposes). You should not include the amount of any Indian tax paid by the Company with respect to the dividend payment, as that tax is, under Indian law, a liability of the Company and not the shareholders, unless you are a U.S. corporation that owns 10% or more of the voting stock of the Company and also claims a foreign tax credit against your U.S. tax liability for your share of income taxes paid by the Company. The dividend is ordinary income that you must include in income when you receive the dividend, actually or constructively. Dividends received by an individual taxpayer during taxable years beginning before January 1, 2011 will be taxed at a maximum rate of 15%, where certain holding period and other requirements are satisfied, if such dividends constitute qualified dividend income. Qualified dividend income includes dividends paid by a Qualified Foreign Corporation, and we believe that we are, and will continue to be, a Qualified Foreign Corporation. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.

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Dividends received generally will be income from non-U.S. sources. Such non-U.S. source income generally will be “passive category income”, or in certain cases “general category income”, which is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you. You should consult your own tax advisor to determine the foreign tax credit implications of owning the Equity Shares.

The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the Indian rupee payments made, determined at the spot Indian rupee/U.S. dollar exchange rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. Dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.

Distributions in excess of current and accumulated earnings and profits, as determined for U.S. Federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the Equity Shares and thereafter as capital gain.

Proposed Legislation. On March 23, 2007, Ways and Means Select Revenue Measures Subcommittee Chairman Richard Neal introduced a bill (H.R. 1672) into the U.S. House of Representatives that would cause certain dividends paid by foreign corporations to be ineligible for the preferential rate of taxation currently applicable to dividends from US and certain foreign corporations received by individual shareholders in taxable years beginning before January 1, 2011. Under the bill, the preferential rate would not apply to any dividend from a foreign corporation, if the foreign corporation is exempt from or not subject to tax in the foreign country, the dividend payment is deductible in the foreign country, the corporation qualifies as a passive foreign investment company (even if also classified as a controlled foreign corporation) or the dividend is paid with respect to an instrument that is not treated as stock in the foreign country. The bill would generally apply to dividends received after the date of enactment. It is unclear whether Congress will pass the bill in its current form, will pass other legislation or refrain from passing any legislation addressing this issue, or whether any legislation passed by Congress will be signed into law by the President. U.S. holders should consult their own tax advisors with respect to the consequences to them, if any, of enactment of the bill in its current form or of any other future legislation that would limit the eligibility of dividends paid by foreign corporations for the current preferential rate of taxation. Non U.S. Holders. Dividends paid to non-U.S. holders generally will not be subject to U.S. income tax unless the dividends are “effectively connected” with your conduct of a trade or business within the United States, and the dividends are attributable to a permanent establishment (or in the case of an individual, a fixed place of business) that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis. In such cases you generally will be taxed in the same manner as a U.S. holder. If you are a corporate non-U.S. holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

Taxation of Capital Gains

U.S. Holders. If you are a U.S. holder and you sell or otherwise dispose of your Equity Shares, you will recognize capital gain or loss for U.S. Federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your Equity Shares. Prior to January 1, 2011, capital gains of a non-corporate U.S. holder are generally taxed at a maximum rate of 15% where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes, unless it is attributable to an office or other fixed place of business outside the United States and certain other conditions are met. Your ability to deduct capital losses is subject to limitations. Treasury Regulations Requiring Disclosure of Reportable Transactions Treasury Regulations require United States taxpayers to report certain transactions that give rise to a loss in excess of certain thresholds (“Reportable Transactions”). Under these regulations, a U.S. holder that disposes of the Equity Shares and recognizes a loss with respect to such disposition would be required to report the loss on IRS Form 8886 if the loss were to exceed the thresholds set forth in the Treasury Regulations. This loss threshold is US$10 million in any single taxable year or US$20 million in any combination of taxable years for corporations and US$2 million in any single taxable year or US$4 million in any combination of taxable

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years for most partnerships, individuals, S corporations or trusts. U.S. holders should consult with their tax advisors regarding any tax filing and reporting obligation that may apply in connection with acquiring, owning and disposing of the Equity Shares. Reporting of Purchase and Disposition of Equity Shares A U.S. holder generally will be required to file IRS Form 8865 if such U.S. holder purchases Equity Shares from the Company in an aggregate amount greater than US$100,000 over a 12-month period, or such U.S. holder purchases Equity Shares from the Company and owns directly or indirectly 10 percent or more of the Company after the purchase. A U.S. holder will also generally be required to file IRS Form 8865 if such US holder has a “reportable event.” A U.S. holder will generally have a reportable event if: (i) the U.S. holder acquires or disposes of Equity Shares and the U.S. holder’s direct interest in the Company has increased or decreased, respectively, by at least a 10 percent interest in the Company since the U.S. holder’s last reportable event, (ii) the U.S. holder’s direct proportional interest in Equity Shares changed in an amount equivalent to at least a 10 percent interest in the Company since the U.S. holder’s last reportable event, or (iii) the U.S. holder’s direct interest in the Company increases from below 10 percent to at least 10 percent or from at least 10 percent to below 10 percent. A U.S. holder may also be required to file IRS Form 8865 if the U.S. holder held 10 percent or more of the Equity Shares at any time during the Company’s taxable year.

Non-U.S. Holders. If you are a non-U.S. holder, you will not be subject to U.S. Federal income tax on gain recognized on the sale or other disposition of your Equity Shares unless:

• the gain is “effectively connected” with your conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment (or in the case of an individual, a fixed place of business) that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis; or

• you are an individual, you are present in the United States for 183 or more days in the taxable year of the sale and certain other conditions exist.

In the first case, the non-U.S. holder will be taxed in the same manner as a U.S. holder. In the second case, the non-U.S. holder will be subject to U.S. Federal income tax at a rate of 30% on the amount by which such the non-U.S. holder’s U.S.-source capital gains exceed such non-U.S.-source capital losses.

If you are a corporate non-U.S. holder, “effectively connected” gains that you recognize may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to dividends in respect of Equity Shares or the proceeds received on the sale, exchange or redemption of Equity Shares paid within the United States (and, in certain cases, outside the United States) to U.S. holders other than certain exempt recipients, such as corporations, and backup withholding tax may apply to such amounts if the U.S. holder fails to provide an accurate taxpayer identification number (or otherwise establishes, in the manner provided by law, an exemption from backup withholding) or to report dividends required to be shown on the U.S. holder’s U.S. Federal income tax returns. Backup withholding is not an additional income tax, and the amount of any backup withholding from a payment to a U.S. holder will be allowed as credit against the U.S. holder’s U.S. Federal income tax liability provided that the appropriate returns are filed.

A non-U.S. holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status to the payor, under penalties of perjury, on IRS Form W-8BEN.

The foregoing does not purport to be a complete analysis of the potential tax considerations relating to

the Issue, and is not tax advice. Prospective investors should consult their own tax advisors as to the

particular tax considerations applicable to them relating to the purchase, ownership and disposition of

the Equity Shares, including the applicability of the U.S. Federal, state and local tax laws or non-tax

laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

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LEGAL PROCEEDINGS

Except as described below, the Company is not involved in any legal proceedings, and no proceedings are threatened, which may have, or have had, a material adverse effect on the business, properties, financial condition or operations of the Company. The Company believes that the number of proceedings in which the Company is involved is not unusual for a company of its size in the context of doing business in India. GIL

1. The Commissioner of Income Tax filed an appeal (Income Tax Appeal (Lodging) No 386 of 2006)

before the High Court of Judicature at Bombay against Godrej Industries Limited under section 260A of the I T Act against the order of the Income Tax Appellate Tribunal, Mumbai dated November 8, 2004 for the assessment year 1996-97. For the assessment year 1996-97, our Company filed its return of income on which the assessing office completed his assessment whereby the following were added (a) sum of Rs. 270,615,000 being non-compete fees received in respect of non compete agreement, (b) sum of Rs. 368,640 paid to Municipal Corporation for change of user and (c) legal fees paid in relation to the proposed joint venture with a Dutch company for establishment of retail outlets. Our Company has stated that the assessing officer was erroneous in determining the taxable income.

2. The Assistant Commissioner of Income Tax, Mumbai has filed an appeal (ITA 7370/M/02) before the Income Tax Appellate Tribunal, Mumbai against Godrej Soaps Limited (the name was later changed to Godrej Industries Limited) challenging the order of the Commissioner of Income Tax (Appeals) in relation to the assessment year 1998-99. The issues that arise in the appeal are that the assessing officer has allocated interest and expenditure to the earning of dividend income and thereafter held that the Company is not entitled to any exemption under Section 10(33) of the I T Act.

3. Godrej Soaps Limited (the name has been changed to Godrej Industries Limited) has filed an appeal before the Chief Controlling Revenue Authority at Pune. The matter relates to payment of stamp duty by the Company. The background of the case is that Godrej Properties and Investments Limited were the shareholders of Tahir Properties Private Limited, Pirojshanagar, Eastern Express Highway, Vikhroli, Mumbai – 400 079 (“TPPL”). By way of three agreements, all dated March 29, 1996 Godrej Properties and Investments Limited agreed to sell to Godrej Soaps Limited 93,376 Convertible Preference shares of TPPL at an aggregate consideration of Rs. 109,996,928. Under the said agreements Godrej Soaps Limited had agreed to pay stamp duty, legal expenses and all other costs, charges and expenses in relation to the said agreement. Both Godrej Properties and Investments Limited and Godrej Soaps Limited filed three Form 37-I as required to be filed under chapter XXC of the I T Act, 1961. The share capital of TPPL consisted of several classes of shares. It was mentioned in Form 37-I that on conversion of the 93,376 convertible preference – Class B shares of TPPL to convertible preference – Class C shares, the holder will get the rights as set out in the Articles of Association of TPPL in respect of Flat Nos. 3, 4, 5 in the building proposed to be constructed on their immovable property located at the proposed structure of TPPL situated at Plot No. 1, Maulana Abdul Gaffar Khan Road, Worli, Bombay. The Deputy Inspector General of Registration and Deputy Controller of Stamps required Godrej Soaps Limited to pay a sum of Rs. 13,801,000/- on account of alleged deficient stamp duty and fine of 2% per month from the date of the said Agreement till payment of stamp duty. The shares have not been converted till the date of filing of the appeal. Godrej Soaps Limited contended that the agreement entered into is only for the purchase of shares of a company and not for purchase of any immovable property. The matter is now pending before the Chief Controlling Revenue Authority, Pune. The total amount demanded along with interest is Rs 18,222,744.

4. Godrej Soaps Private Limited (the name was later changed to Godrej Industries Limited) has filed a writ petition (W.P. No. 790 of 1976) in the High Court of Judicature at Bombay with respect to an issue relating to the payment of excise duty on account of the post-manufacturing expenses and profits that were included in the real value of the goods. Godrej Soaps Private Limited has prayed that the excise duty be calculated after excluding the post manufacturing costs and expenses from the price of the goods. The issue relates to the time period from 1976 to 1999. The total amount demanded along with interest is Rs. 58,222,195. The case is currently pending before the High Court.

146

5. Gujarat – Godrej Innovative Chemicals Limited (the name was later changed to Godrej Industries Limited) has filed a writ petition (WP No. 2626 of 1991) in the High Court of Judicature at Bombay with respect to an issue relating to the payment of customs duty. Gujarat – Godrej Innovative Chemicals Limited for the purpose of setting up an industrial plant had imported various capital goods, raw materials, components etc. Such imports were eligible for concessional rate of customs duty under the Customs Tariff Act, 1975. Gujarat – Godrej Innovative Chemicals Limited had not received the benefit of the concessional rate of customs duty at the time of import and same has now been challenged by it before the High Court. The total amount demanded along with interest is 57,086,329. The case is currently pending before the High court.

6. Godrej Soaps Limited (the name was later changed to Godrej Industries Limited) has filed a special leave petition before the Supreme Court of India (SLP No 21259 of 2002) against the order dated May 2, 2002 of the High Court of Judicature Bombay. The dispute is relating to the classification of the hair dye manufactured by the Company as a result of which the company was directed to pay higher excise duty. The High Court of Judicature Bombay had dismissed the writ petition. The total amount demanded along with interest is Rs 31,689,390. The case is currently pending before the Supreme Court.

7. Godrej Soaps Limited (the name was later changed to Godrej Industries Limited) has filed a writ petition (WP No 1740 of 1989) before the High Court of Judicature at Bombay. The excise department has demanded excise duty on the total value of the goods instead of limiting it to the job work provided by the company. Hence, the Company has filed this writ alleging that it is liable to pay duty only on the value of the job work charges and not on the value of the goods. The total amount demanded along with interest is Rs 10,842,070. The case is currently pending before the High court.

8. Godrej Soaps Limited has filed an appeal before the Small Causes Court, Mumbai under Section 27 of the Bombay Municipal Corporation Act, 1989. The issue relates to the levy of octroi duty on import of palm stearine oil under Item No. 20 of Schedule H to the Bombay Municipal Corporation Act, 1989 which relates to “inedible vegetable oils”. The company states that palm stearine is not a vegetable oil and it is a fat derived from palm oil and since oil and fat are distinct products, Item No. 20 of Schedule H is not applicable for the purpose of octroi duty and thus the Municipal Corporation of Greater Bombay erred in levying and recovering octroi duty on palm stearine. The levy of octroi duty was challenged by way of a writ petition in High Court of Judicature at Bombay. The interim relief prayed for by the Company was refused and an appeal was filed. In the appeal the division bench allowed the company to clear their consignment of the imported goods without paying octroi duty but the court also directed the Company to furnish a bank guarantee to the Municipal Commissioner amounting to Rs. 500,000 plus interest at the rate of 24% from the date of clearance till the date of duty payment. The Court also directed that such a guarantee shall also be given in respect of future consignments. The Company has been issuing such bank guarantees in view of the direction given by the Court. For the purpose of deciding the issue relating to the levy of octroi duty, the High Court directed the company to file proceeding under Section 27 of the Bombay Municipal Corporation Act, 1989 before the Small Causes Court, Mumbai.

9. For the Assessment Year 1998-1999, the assessing officer had added the amount of MODVAT on

closing stock to our taxable Income. Commissioner of Income Tax (Appeals) had deleted the said addition. Against the order of the Commissioner of Income Tax (Appeals), the Income Tax Department has filed an appeal before the Income Tax Appellate Tribunal (Appeal No ITA 7370/12/12) on December 24, 2002 stating that said addition should not be deleted.

10. Our Company had advanced a sum of Rs 103,300,000 to certain individuals against the pledge of the

shares of Gharda Chemicals Limited. The individuals have defaulted in repaying this loan and our Company has enforced the security and lodged the shares for transfer in our Company’s name. However, the transfer application has been rejected by Gharda Chemicals Limited. Our Company has filed an appeal before the Company Law Board against the rejection. The recoverability of the advanced amount along with interest accrued is contingent upon the transfer and disposal of the shares pledged with our Company.

11. The property of our Company situated at Pirojshanagar, Eastern Express Highway, Vikhroli (East),

Mumbai, has been leased by Godrej and Boyce Manufacturing Company Limited. A portion of land being the subject matter of one of the lease deeds alongwith some additional land is subject to

147

acquisition by the State of Maharashtra by order no. C/ULC/D-5/6(1)/SR/11/99 dated December 27, 2006 passed by the Additional Collector and the Competent Authority, (Urban Land Ceiling), Brihanmumbai, stating that a part of land admeasuring 155,439.9 square metres shall be acquired by the State of Maharashtra with effect from January 9, 2007 under the Urban Land (Ceiling and Regulation) Act, 1976. Our Company has filed a writ petition (W.P. No. 2228 of 2007) before the High Court of Judicature at Bombay, inter alia, challenging the said order and has prayed before the High Court to issue a writ setting aside the abovementioned order. The next date of hearing of the petition is in or around December 2007.

Godrej Agrovet Limited

1. The Agriculture Produce Market Committee (“APMC”) has filed a writ petition (WP No. 8509 of 2004) before the High Court of Judicature at Bombay challenging the order of the Director of Marketing, Maharashtra dated November 29, 2003. APMC has been constituted under the Maharashtra Agriculture Produce Marketing (Regulation) Act, 1963. The background of the case is that GAVL was undertaking sales of poultry at Taloja. GAVL was not willing to pay the marketing fees and supervision charges as provided under the abovementioned Act. GAVL stated that poultry is not an agricultural produce under the abovementioned Act and that the company is breeding chickens outside the specified market area and bringing it in the specified market area for the purpose of processing only. Therefore, GAVL was not liable to pay the market fees and supervision charges under the abovementioned Act. Based on these grounds GAVL filed an appeal on April 4, 2003 before the Director of Marketing, Maharashtra who in its order dated November 29, 2003 held that chicken are not included in poultry. GAVL was allowed to claim a refund of the amount paid by it. Subsequently, GAVL filed an appeal dated February 27, 2004 before the Director of Marketing, Maharashtra claiming a refund of the amount paid by it which is currently pending. The total amount claimed is Rs. 14,166,947.

2. GAVL has filed appeal (A.P. Nos. 59, 171 and 172 of 1999) before the Appellant Assistant

Commissioner (CT) VI, Chennai. The issue relates to a claim made on GAVL under the Central Sales Tax, 1956. The question to be decided in the appeal is whether the stock of cattle feed transferred by GAVL from their branch at Coimbatore to Palghat are only stock transfers or inter-state sales. GAVL has contended that the stocks which were transferred were not in pursuance of any contract of sale and therefore not taxable under the provisions of the Central Sales Tax Act, 1956. The total amount claimed is Rs. 19,500,000. The case is currently pending before the Appellant Assistant Commissioner (CT) VI, Chennai.

Godrej Properties Limited

1. GPL has referred to arbitration a dispute with Grentex Wools Private Limited (“Grentex”) arising out of a development agreement entered into with Grentex with respect to property situated at Village Kirol, LBS Marg, Ghatkopar, Mumbai. The parties had entered into the development agreement dated December 30, 1997 wherein GPL in its capacity as the project manager was required to extend co-operation and provide services, finance and expertise in relation to the project to be developed. During the execution of the project certain dispute arose between the parties in relation to the sharing and division of the revenue received for the sale of the flats in the project. The matter is currently pending before the arbitral tribunal.

2. GPL, alongwith its directors and other employees, has filed a criminal writ petition (WP No. 1360 of

2006) challenging the order passed by the sessions judge dated May 5, 2006 in Criminal Revision Application No. 386 of 2006 whereby the judge refused to quash the proceedings initiated by Grentex in Criminal Case No. 388/M/2004 filed before the Metropolitan Magistrate. The matter in the criminal complaint filed before the metropolitan magistrate relates to the development agreement dated December 30, 1997. In the complaint Grentex has alleged offences relating to misappropriation of funds and falsification of accounts by GPL. The magistrate referred the dispute for investigation under the section 202 of the Criminal Procedure Code, 1908 and based on the report issued process against GPL by its order dated February 1, 2006. Thus, GPL has filed the writ petition for setting aside the criminal complaint as well as the orders passed by the magistrate and the sessions judge. GPL has also filed a criminal application (No. 2133 of 2006) for quashing the criminal case pending

148

before the metropolitan magistrate and the order of the magistrate issuing process. The matters are currently pending.

3. Mr. Gaymond Bharucha has filed a consumer complaint (Complaint No. 147 of 1998) against the

company before the National Consumer Disputes Redressal Commission, New Delhi. The complaint has been filed on the grounds of deficiency in services provided by GPL. The amount in dispute is Rs. 4,191,656. The matter is currently pending before the National Consumer Disputes Redressal Commission, New Delhi.

GPL is also facing other minor litigations relating to consumer disputes before various other forums such as the High Court of Judicature at Bombay, State Consumer Disputes Redressal Commission and District Consumer Disputes Redressal Commission.

149

INDEPENDENT ACCOUNTANTS

Our audited consolidated financial statements for the three years ended March 31, 2007, 2006 and 2005 and our unaudited consolidated financial statement for the three month period ended June 30, 2007 were prepared in accordance with the accounting standards and generally accepted accounting principles followed in India and which were so included in reliance on the reports of Kalyaniwalla & Mistry, independent chartered accountants.

150

GENERAL INFORMATION

1. Our Company was incorporated in Gujarat on March 7, 1988 as Gujarat – Godrej Innovative Chemicals Limited, under the Companies Act, 1956. On January 6, 1995 the name of our Company was changed to Godrej Soaps Limited. The registered office of our Company was also shifted from the State of Gujarat to Maharashtra on March 1, 1996. Subsequently on April 2, 2001, pursuant to our corporate restructuring undertaken by the Company, the name of our Company was changed to Godrej Industries Limited.

2. The Issue was authorized and approved by our Board of Directors on July 27, 2007, and approved by

the shareholders through postal ballot the results of which were declared on September 10, 2007. 3. We have applied and have received in-principle approval to list the Equity Shares on the BSE and the

NSE. 4. Copies of our Memorandum and Articles of Association will be available for inspection during usual

business hours on any weekday (except Saturdays and public holidays) at our registered office. 5. We have obtained all consents, approvals and authorizations required in connection with this Issue. 6. There has been no significant change in our financial position since June 30, 2007, the date of our last

published interim financial results. 7. Except as disclosed in this Placement Document, there are no major litigation or arbitration

proceedings against or affecting us or our assets or revenues, nor are we aware of any pending or threatened litigation or arbitration proceedings, which are or might be material in the context of this Issue of Equity Shares.

8. Our Company’s auditors are Kalyaniwalla & Mistry, Chartered Accountants who have audited and

reviewed the accounts for March 31, 2007, 2006 and 2005 and have consented to the inclusion of their reports in the Preliminary Placement Document and this Placement Document.

9. Our Company confirms that it is in compliance with the minimum public shareholding requirements

as required under the terms of the listing agreements with the Stock Exchanges. 10. The Floor Price for the Issue is Rs. 197 per Equity Share of face value of Rs. 1 each. The Floor price

calculated as per clause 13A.3 of the SEBI Guidelines.

151

AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS

To The Board of Directors Godrej Industries Limited. Mumbai In terms of the appointment for the purpose of certification of the financial information of Godrej Industries Ltd. (‘the Company’) annexed to this report, which is required to be prepared in accordance with Chapter XIII-A read with Schedule XXIA of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (‘the Guidelines’), issued by Securities and Exchange Board of India (‘SEBI’) on 19 January 2000 in pursuance of section 11 of the Securities and Exchange Board of India Act, 1992, as amended from time to time, we state as follows:

1. The financial statements referred to in this report are proposed to be included in the Placement

Document of the Company in connection with the proposed issue of shares to Qualified Institutional Buyers. (‘QIBs’)

2. The summary financial statements have been extracted from the Financial Statements for the years ended March 31, 2007, March 31, 2006 and March 31, 2005, which were audited by us and from the Financial Statements for the quarter ended June 30, 2007, which were subjected to a review by us.

3. The financial statements have been prepared by the management of Godrej Industries Limited in

accordance with the requirements of Accounting Standard (AS) 21 – Consolidated Financial Statements, Accounting Standard (AS) 23 – Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS) 27- Financial Reporting of Interests in Joint Ventures, issued by the Institute of Chartered Accountants of India.

4. (a) We did not review/audit the financial statements of certain subsidiaries and joint ventures, whose financial statements reflect the Group’s share of total assets of Rs. 1561 million as at June 30, 2007, (Rs.1168 million as at March 31, 2007, Rs. 733 million as at March 31, 2006 and Rs. 643 million as at March 31, 2005) and the Group’s share of total revenues of Rs. 5061 million for the three months ended June 30, 2007, (Rs. 17297 million for the year ended March 31, 2007, Rs. 2535 million for the year ended March 31, 2006 and Rs. 2730 million for the year ended March 31, 2005) and net cash inflows / (outflows) amounting to Rs. (67) million for the three months ended June 30, 2007, (Rs. (144) million for the year ended March 31, 2007, Rs. ( 4) million for the year ended March 31, 2006 and Rs. 5 million for the year ended March 31, 2005) as considered in the consolidated financial statements. These financial statements have been reviewed/audited by the other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included in respect of the subsidiaries, joint ventures and associates is based solely on the report of the other auditors.

(b) As stated in Note 2 of Schedule 21, the financial statements of a Jointly controlled entity, whose

financial statements reflect the Group’s share of total assets of Rs. (26) million as at June 30, 2007, (Rs. (28) million as at March 31, 2007 and Rs. 70 million as at March 31, 2006) and the Group’s share of total revenue of Rs. 40 million for the three months ended June 30, 2007, (Rs. 85 million for the year ended March 31, 2007, and Rs. 24 million for the year ended March 31, 2006) and net cash inflows / (outflows) amounting to Rs. (34) million for the three months ended June 30, 2007, (Rs. (26) million for the year ended March 31, 2007 and Rs. 7 million for the year ended March 31, 2006) are not audited and have been included in the consolidated financial statements on the basis of unaudited management accounts.

(c) As stated in Note 2 of Schedule 21, the financial statements of certain associates whose financial statements reflect the Group’s share of associates’ profit /(loss) of Rs. (67) million up to June 30, 2007 (Rs. (58) million up to March 31, 2007, Rs. (51) million up to March 31, 2006 and Rs. (43) million up to March 31, 2005) and the share of profit/ (loss) of Rs. (9) million for the three months ended June 30, 2007, (Rs. 24 million for the year ended March 31, 2007, Rs. 6 million for the year ended March 31, 2006 and Rs. 6 million for the year ended March 31, 2005) has been included in the consolidated financial statements on the basis of unaudited management accounts.

152

5. In accordance with Chapter XIII-A read with Schedule XXIA of SEBI (Disclosure and Investor Protection) Guidelines, 2000, we have examined the following:

a. the Consolidated Balance Sheets of Godrej Industries Limited and its subsidiaries as at June 30, 2007, March 31, 2007, March 31, 2006 and March 31, 2005

b. the Consolidated Profit and Loss Accounts and Consolidated Cash Flow Statements for the three months ended June 30, 2007 and the years ended March 31, 2007, March 31, 2006 and March 31, 2005

c. the accompanying notes to accounts along with accounting policies for the three months ended June 30, 2007 and the years ended March 31, 2007, March 31, 2006 and March 2005.

6. The Company’s management is responsible for the preparation of the financial statements. Our responsibility is to report based on the work done. We have performed such tests and procedures, which, in our opinion, were necessary for our reporting to you. These procedures include comparison of the annexed financial information with the Company’s audited financial statements for the years ended March 31, 2007, March 31, 2006 and March 31, 2005 and the reviewed financial statements for the three months ended June 30, 2007. Based on such procedures carried out by us and review of the records produced to us and the information and explanations given to us by the Company’s management, and our comments in the foregoing paragraphs, we confirm that nothing has come to our attention to show non-compliance with the SEBI Guidelines.

7. We draw attention to the following qualification forming part of our review report for the three months ended June 30, 2007 and our audit reports on consolidated financial statements for the years ended March 31, 2007, March 31, 2006 and March 31, 2005:

Reference is invited to Note No 10 of Schedule 21- Notes to Accounts, regarding the recoverability of advances given to certain individuals amounting to Rs. 103 million being contingent upon the transfer and/or disposal of the shares pledged against the loan. The said shares were lodged for transfer which application was rejected and the Company has preferred an appeal to the Company Law Board. The investee company has in the meanwhile moved the Bombay High Court and the matter is awaiting hearing. The impact thereof on the profit for the year could not be ascertained.

8. This report is intended solely for your information and for the Company to comply with the provisions of the Chapter XIII-A read with Schedule XXIA of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 and may not be suitable for any other purpose. The report is not to be used, referred to or distributed for any other purpose without our prior written consent.

For and on behalf of Kalyaniwalla and Mistry

Chartered Accountants

Viraf R. Mehta

Partner Membership No. 32083 Mumbai Date: November 1, 2007

153

FINANCIAL STATEMENTS

BALANCE SHEET As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05

Schedule Rs. Million Rs. Million Rs. Million Rs. Million

SOURCES OF FUNDS

1 Shareholders' Funds

(a) Share capital 1 291.85 291.85 291.85 291.26

(b) Share application money

- - 600.00 -

(c) Reserves & surplus 2 4,746.68 4,435.30 3,348.15 3,217.71

5,038.53 4,727.15 4,240.00 3,508.97

2. Minority Interest 303.56 313.96 362.54 339.10

3 Loan Funds

(a) Secured loans 3 4,478.52 5,071.03 2,998.25 2,797.04

(b) Unsecured loans 4 4,251.65 4,065.25 2,714.05 1,229.55

8,730.17 9,136.28 5,712.30 4,026.59

4. Deferred tax liability 489.27 511.76 387.61 240.99

TOTAL 14,561.53 14,689.15 10,702.45 8,115.65

APPLICATION OF FUNDS

5. Fixed Assets 5

(a) Gross block 8,880.91 8,772.99 7,765.97 6,700.52

(b) Less: Depreciation / Impairment

3,983.91 3,902.34 3,299.73 3,252.32

(c) Net block 4,897.00 4,870.65 4,466.24 3,448.20

(d) Capital work-in-progress

170.40 260.44 227.49 181.96

5,067.40 5,131.09 4,693.73 3,630.16

6. Goodwill (on consolidation)

2,639.29 2,763.12 1,127.60 1,096.80

7. Investments 6 1,953.32 1,937.25 2,410.09 1,747.95

8. Current Assets, Loans and Advances

(a) Inventories 7 4,857.87 4,636.22 2,850.10 2,261.70

(b) Sundry debtors 8 4,943.03 4,564.00 2,305.27 2,074.48

(c) Cash and bank balances

9 459.23 888.16 910.66 534.32

(d) Other Current Assets 2.48 0.94 2.49 -

(e) Loans and advances 10 2,921.74 2,730.76 1,721.23 1,632.07

13,184.35 12,820.08 7,789.75 6,502.57

154

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05

Schedule Rs. Million Rs. Million Rs. Million Rs. Million

Less : Current Liabilities and Provisions

(a) Liabilities 11 7,779.68 7,484.98 4,927.87 4,330.22

(b) Provisions 12 654.46 643.63 612.80 545.56

8,434.14 8,128.61 5,540.67 4,875.78

Net Current Assets 4,750.21 4,691.47 2,249.08 1,626.79

9.

Miscellaneous Expenditure

13

151.31

166.22

221.95

13.95

(To the extent not written off or adjusted)

TOTAL

14,561.53

14,689.15

10,702.45

8,115.65

Significant Accounting Policies

20

Notes to Accounts 21

155

PROFIT AND LOSS ACCOUNT

Schedule Apr-Jun07 2006-07 2005-06 2004-05

Rs.

Million

Rs.

Million

Rs.

Million

Rs.

Million

INCOME

Turnover (gross) 6,763.30 24,386.48 20,981.63 20,099.92

Less: Excise duty 116.82 596.77 551.91 586.37

Turnover (net) 6,646.48 23,789.71 20,429.72 19,513.55

Other Income 14 414.82 867.26 631.97 478.18

7,061.30 24,656.97 21,061.69 19,991.73

EXPENDITURE

Materials consumed and cost of sales 15 5,014.71 17,778.74 15,016.44 14,223.18

Expenses 16 1,522.41 5,498.02 4,676.31 4,386.61

Inventory change 17 (112.56) (458.11) (222.07) (78.42)

Interest and financial charges (net) 18 202.10 650.07 452.84 349.65

Depreciation 117.54 428.03 376.68 336.05

6,744.20 23,896.75 20,300.20 19,217.07

Profit Before Tax 317.10 760.22 761.49 774.66

Provision for taxation

- Current Tax 14.32 86.72 119.75 135.99

- Deferred Tax (21.47) 20.46 124.28 (71.88)

- Fringe benefit tax 19.73 19.74 11.48 -

Profit for the year after taxation 304.52 633.30 505.98 710.55

Prior Period adjustments (net) 19 6.88 (6.51) (1.45) 0.42

311.40 626.79 504.53 710.97

Share of profit/(Loss) in Associates (9.04) 2.45 (7.81) (13.77)

Profit before Minority Interest 302.36 629.24 496.72 697.20

Share of Minority Interest / (Loss) 9.70 (40.43) (6.74) (50.49)

Profit after Minority Interest 312.06 588.81 489.98 646.71

Surplus brought forward 2,639.13 1,822.03 1,791.38 1,531.72

Adjustment for opening profit of subsidiaries/JV (Net)

9.70 873.78 - -

Profit Available For Appropriation 2,960.89 3,284.62 2,281.36 2,178.43

156

Schedule Apr-Jun07 2006-07 2005-06 2004-05

Rs.

Million

Rs.

Million

Rs.

Million

Rs.

Million

APPROPRIATIONS:

Dividend on Equity Shares

- Interim - 87.36 10.60 20.90

- Final - 291.85 255.23 204.49

Tax on distributed profits - 115.48 68.33 54.71

Transfer to General Reserve 5.97 150.79 125.16 106.96

Surplus carried forward 2,954.92 2,639.14 1,822.04 1,791.37

TOTAL 2,960.89 3,284.62 2,281.36 2,178.43

Basic & Diluted Earnings per share (Face Value Rs. 1 per share) (refer note 17)

1.07 2.02 1.68 2.01

Significant Accounting Policies 20

Notes to Accounts 21

157

CONSOLIDATED CASH FLOW STATEMENT Apr-Jun07 2006-07 2005-06 2004-05


A

.

Cash Flow from operating

activities :

Profit before tax 317.10 760.22 761.49 774.66

Adjustments for : Depreciation 117.54 419.06 376.68 336.06 Foreign exchange (35.81) 1.02 11.94 94.65 Profit on sale of investments (311.77) (451.00) (229.96) (345.81) Profit on sale of fixed assets 0.26 (57.02) (37.38) 18.22 Dividend income (28.92) (101.86) (129.98) (58.03) Interest income (74.76) (141.53) (94.58) (74.66) Interest expense 214.63 666.85 435.21 321.47 Voluntary retirement compensation paid

- (3.87) (268.51) (10.04)

Deferred expenditure written off

16.35 59.65 70.40 20.92

Provision for diminution in value of investments written back

- (30.00) (36.48) 53.18

Provision for doubtful debts and sundry balances written off (net)

(0.11) (41.89) (0.60) (9.99)

Others 15.89 4.26 26.50 (27.34)

Operating profit before working capital changes

230.40 1083.89 884.73 1093.29

Adjustments for : Inventories (227.77) (1,898.72) (582.90) 104.33 Trade and other receivables (789.27) (2,667.50) (711.56) (254.59) Trade payables 363.88 2,466.35 825.73 259.02

Cash generated from /(used in) operations

(422.76) (1015.98) 416.00 1202.05

Direct taxes paid (34.91) (257.97) (155.43) (139.25) Direct taxes refund received 5.69 45.11 12.58 14.01

Net Cash from / (used in)

operating activities

(451.98) (1228.84) 273.15 1076.81

B. Cash Flow from investing

activities :

Purchase of fixed assets (89.14) (964.05) (1,614.40) (527.10) Proceeds from sale of fixed assets

0.86 291.61 152.31 68.77

Acquistion of new businesses - - (124.61) - Purchase of investments (1,530.87) (7,109.47) (5,758.78) (5,607.65) Proceeds from sale of investments

1,916.56 6,195.64 5,426.57 5,342.52

Intercorporate deposits / Loans (net)

49.88 (236.65) 128.93 45.71

Interest received 63.37 110.98 95.38 79.53 Dividend received 28.92 101.86 128.42 58.32

Net Cash from / (used in)

investing activities

439.58 (1610.08) (1566.18) (539.90)

158

Apr-Jun07 2006-07 2005-06 2004-05


C

.

Cash Flow from financing

activities :

Proceeds from share capital 48.16 132.30 657.94 - Proceeds from issue of debentures

- 17.15 115.45 -

Proceeds from borrowings 767.73 5,516.38 5,568.54 2,581.21 Repayments of borrowings (514.73) (3,796.52) (3,749.84) (2,193.52) Bank overdrafts (net) (489.70) 2,060.64 (213.55) (338.00) Repayment of finance lease liabilities

- - - -

Interest paid (225.10) (673.68) (458.79) (322.79) Dividend paid - (339.02) (203.61) (157.18) Tax on distributed profits - (120.20) (46.76) (44.88) Net Cash from / (used in)

financing activities

(413.64) 2797.05 1669.38 (475.16)

Net increase in cash and cash equivalents

(426.04) (41.87) 376.35 61.75

Cash and cash equivalents (Opening Balance)

888.16 910.66 534.31 472.56

Add : Opening Cash and cash equivalents – subsidiaries / joint venttures added

(2.89) 19.37 - -

Adjusted Cash and cash equivalents (opening balance)

885.27 930.03 534.31 472.56

Cash and cash equivalents (Closing Balance)

459.23

888.16

910.66

534.31

Notes : 1. Cash and Cash equivalents.

Cash on hand and balances with banks

459.29 888.17 911.38 534.32

Effect of exchange rate changes

(0.06) (0.01) (0.72) (0.01)

Cash and cash equivalents

459.23 888.16 910.66 534.31

2. The above cashflow statement includes share of cashflows from jointly controlled entities as under: a. Net cash from operating activities

(96.00)

177.20 68.07

116.34

b. Net cash used in investing activities

(10.72)

(1,411.15)

(64.29)

(4.81)

c. Net cash used in financing activities

55.79

(1,236.15)

(35.34)

96.56

159

SCHEDULES FORMING PART OF THE ACCOUNTS

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05

Rs.

Million

Rs.

Million

Rs.

Million

Rs.

Million

SCHEDULE 1 : SHARE CAPITAL

Authorised:

800,000,000

Equity shares of Rs.1 each

800 800 800 800

(As on 31/03/05 & 31/03/06: 13,33,33,333 Equity Shares of Rs. 6/- each)

10,00,00,000

Unclassified Shares of Rs.10 each

1000 1000 1000 1000

1,800.00 1,800.00 1,800.00 1,800.00

Issued, Subscribed and Paid Up:

291,851,652

Equity shares of Rs.1 each fully paid

291.85 291.85 291.85 291.26

(As on 31/03/05 & 31/03/06: 4,86,41,942 Equity Shares of Rs. 6/- each)

291.85 291.85 291.85 291.26

Of the above, 18,72,02,388 (As on 31/03/05 & 31/03/05 - 3,12,00,398) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company

160

SCHEDULE 2 : RESERVES AND SURPLUS

(Rs. Million)

As on As on As on As on

30.06.2007 31.03.2007 31.03.2006 31.03.2005

Securities Premium Account 265.70 265.70 109.92 109.93

Capital Investment Subsidy Reserve 8.04 8.04 8.04 8.04

Revaluation Reserve 178.92 182.57 229.14 303.18

Special Reserve u/s. 451C of RBI Act, 1934 13.37 13.23 11.74 0.00

Capital Redemption Reserve 312.50 312.50 312.50 312.50

General Reserve 840.13 840.06 756.15 630.99

Foreign Exchange Fluctuation Reserve 2.45 2.88 3.56 1.22

Total - 1,621.11 1,624.98 1,431.05 1,365.86

Profit & Loss Account 2,954.92 2,639.13 1,822.03 1,791.38

Share in Jointly Controlled Entities 170.65 171.19 95.07 60.47

Total Reserves - 4,746.68 4,435.30 3,348.15 3,217.71

161

SCHEDULE 3 : SECURED LOANS

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


Term loans from financial institutions

239.20 73.50 56.57 115.60

Term loans from banks

3,127.51 3,066.22 2,757.73 2,330.32

Bank overdrafts 418.78 1,103.89 176.85 341.50

Share in jointly controlled entities 693.03 827.42 7.10 9.62

4,478.52 5,071.03 2,998.25 2,797.04

SCHEDULE 4 : UNSECURED LOANS

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


Fixed deposits 15.50 16.90 15.86 47.15

Intercorporate deposits 604.31 244.31 182.81 366.31

Short term loans from banks 3,202.31 3,553.21 2,177.79 769.14

Other loans from banks 335.00 147.00 233.72 -

Sales tax deferment facility 7.66 62.79 - 31.64


4,251.65 4,065.25 2,714.05 1,229.55

162

SCHEDULE 5 : FIXED ASSETS Rs. Million

ASSETS GROSS BLOCK DEPRECIATION / IMPAIRMENT NET BLOCK

As on As on As on As on Upto Upto Upto Upto As on As on As on As on

30.6.2007 31.03.2007 31.03.2006 31.03.2005 30.6.2007 31.03.2007 31.03.2006 31.03.2005 30.6.2007 31.03.2007 31.03.2006 31.03.2005

Tangible Assets

Land - Freehold

160.12 160.12 113.77 130.39 - - - - 160.12 160.12 113.77 130.39

- Leasehold

24.13 24.12 24.64 - 3.50 3.37 3.08 6.05 20.63 20.75 21.56 (6.05)

Buildings

1,131.85 1,129.50 1,143.71 1,143.06 330.58 320.40 305.11 298.90 801.27 809.10 838.58 844.16

Plant & Machinery

5,460.41 5,321.95 5,169.84 4,384.96 2,654.80 2,586.42 2,408.77 2,463.64 2,805.61 2,735.53 2,761.07 1,921.32

Research Centre

15.04 15.04 15.04 15.04 7.05 6.94 6.43 5.93 7.99 8.10 8.61 9.11

Furniture & Fixtures

184.87 186.67 160.85 148.34 89.87 89.69 89.65 83.19 95.00 96.98 71.20 65.14

Office & Other Equipments

192.26 187.31 118.77 140.39 74.63 71.74 53.11 73.32 117.63 115.57 65.66 67.08

Vehicles 139.61 136.37 134.82 126.46 59.16 56.53 65.54 63.16 80.45 79.84 69.28 63.30

Trees Development Cost

45.47 45.47 45.47 45.47 27.83 26.99 23.96 20.92 17.64 18.48 21.51 24.55

Intangible Assets

Goodwill

160.36 160.36 111.60 - 43.60 35.56 18.27 - 116.76 124.80 93.33 -

Trademarks 292.09 292.09 350.97 321.20 135.41 130.08 110.65 99.58 156.68 162.01 240.32 221.62

Technical Knowhow Fees

20.00 20.00 20.00 20.00 20.00 20.00 20.00 19.57 0.00 0.00 0.00 0.43

Software 122.48 97.19 71.87 - 77.56 70.06 62.56 - 44.92 27.13 9.31 -

ASSETS ACQUIRED UNDER FINANCE LEASE

Plant & Machinery

105.00 108.27 49.44 5.23 13.52 13.79 2.26 - 91.48 94.48 47.18 5.23

Vehicles 25.17 24.90 31.20 27.43 16.39 16.18 17.66 11.71 8.78 8.72 13.55 15.72

Share in jointly controlled entities

802.08 863.64 204.00 192.56 430.02 454.59 112.68 106.35 372.06 409.05 91.32 86.21

TOTAL - This Year

8,880.91 8,772.99 7,765.97 6,700.52 3,983.91 3,902.34 3,299.73 3,252.32 4,897.00 4,870.65 4,466.24 3,448.20

Capital Work in-Progress

- - - - - - 170.40 260.44 227.49 181.96

TOTAL 5,067.40 5,131.09 4,693.73 3,630.16

163

SCHEDULE 6 : INVESTMENTS

Investee Company /

Institutions

Qty. as on

30.06.07

Qty. as on

31.03.07

Qty. as on

31.03.06

Qty. as on

31.03.05

As on

30.6.07

As on

31.03.07

As on

31.03.06

As on

31.03.05

Number Number Number Number Rs.

Million

Rs.

Million

Rs.

Million

Rs.

Million

LONG TERM INVESTMENTS :

At Cost

A. TRADE

INVESTMENTS

Equity Shares :

Fully Paid

Bharuch Eco-Aqua Infrastructure Ltd.

10 440,000 440,000 440,000 440,000 4.40 4.40 4.40 4.40

Preference Shares

: Partly paid

Godrej Commodities Ltd. (Formerly Godrej Foods Limited)

10 5,000,000 5,000,000 5,000,000 5,000,000 45.00 45.00 45.00 45.00

(8% 10 year Redeemable Cumulative Preference Shares, 2012) Tahir Properties Ltd

(Class A) 100 25 25 25 25 0.00* 0.00* 0.00* 0.00*

B. OTHER

INVESTMENTS

Equity Shares :

Fully Paid

Quoted : Godrej Consumer

Products Ltd. 1 23,136,108 23,136,108 26,936,108 29,296,108 921.63 921.63 1,073.00 1,167.01

Godrej Commodities Ltd. (Formerly Godrej Foods Limited)

- - - 1,484,864 -

-

-

1.37

Others 0.09 0.09 0.12 0.11

Unquoted : Associate

Compnaies

Godrej Upstream Ltd.

10 9,000,000 9,000,000 9,000,000 9,000,000 14.60 24.11 45.71 59.19

Swadeshi Detergents Ltd.

10 209,370

209,370

209,370 209,370

5.49 5.53 5.03 4.95

Creamline Diary products Ltd.

10 2,390,911

2,390,911

2,390,911

2,390,911

120.94 116.23 101.42 97.19

Creamline Nutrien ts Limited

10 351,352

351,352

351,352

351,352

13.54 12.10 9.60 9.08

Polychem Hygiene Laboratories P. Ltd

10 455,000

455,000

455,000

455,000

17.92 17.49 17.10 17.87

Personalitree Academy Ltd

10 389,269

389,269

389,269

389,269

6.82 6.82 6.82 6.82

Compass BPO Ltd. (Formerly Compass Connections Ltd.)

£0.25

13,692

13,692

13,692

13,692

15.92 15.92 15.92 14.30

Other Companies Avestha Gengraine

Technologies Pvt Ltd.

10

185,744 185,744

175,744

105,500

88.33 88.33 76.71 45.03

Gharda Chemicals Ltd.

100 114

114

114

114 1.16 1.16 1.16 1.16

Tahir Properties Ltd (Partly paid)

100 25

25 25

25

0.00* 0.00* 0.00* 0.00*

Karox Technologies

10 250,000

250,000 250,000 250,000

10.05 10.05 10.05 10.05

164

Investee Company /

Institutions

Qty. as on

30.06.07

Qty. as on

31.03.07

Qty. as on

31.03.06

Qty. as on

31.03.05

As on

30.6.07

As on

31.03.07

As on

31.03.06

As on

31.03.05


Million

Rs.

Million

Rs.

Million

Rs.

Million

Limited Kritika agro Farm

Chemicals & Engg. Inds. Ltd

10 -

-

7,600

-

- - 0.08 -

Others 5.00 - - - Common

Stock/Membership

Units:

Unquoted : CBaySystems

holdings Ltd. $0.10

9,624,540

-

-

-

421.43

Boston Analytics LLC

$1

1,133,841

1,067,754 781,250 -

65.56 65.05 25.88 -

Verseon LLC - Class A Units

$1.90

1,315,789

1,315,789 1,315,789 -

114.23 114.23 114.23 -

Newmarket limited

83.23 88.33 - -

CBay Systems Ltd.

$0.01

4,586,073

4,586,073 4,586,073 1,398,798

25.35 449.76 543.01 217.72

Convertible

Debentures :

Unquoted :

Avestha Gengraine Technologies Pvt Ltd.

- - - 3 - - - 30.00 -

Government

Securities

Unquoted : National Savings

Certificates 0.18 - 0.14 0.09

Indira Vikas Patra 0.00* 0.00* 0.00* 0.00* Kisan Vikas Patra - - - 0.03

Optionally

convertible Loan

notes :

Unquoted : Compass BPO Ltd.

(Formerly Compass Connections Ltd.)

$1,000

97

97

-

- 8.32 8.32 - -

Shares in Co-

operative Society :

Fully Paid

Unquoted : The Saraswat Co-

op Bank Ltd. 10 1,000 1,000 2,000 2,,000 0.01 0.01 0.02 0.02

Sachin Industrial Co-operative Society

3

3

-

-

0.00*

0.00*

Investment in the

capital of

Partnership Firm :

View Group LP

-

-

-

- 0.00* 0.00* 136.80 80.24

1,989.20 1,994.56 2,262.20 1,781.64

165

Investee Company /

Institutions

Qty. as on

30.06.07

Qty. as on

31.03.07

Qty. as on

31.03.06

Qty. as on

31.03.05

As on

30.6.07

As on

31.03.07

As on

31.03.06

As on

31.03.05


Million

Rs.

Million

Rs.

Million

Rs.

Million

CURRENT

INVESTMENTS

Units of Mutual

Fund

Quoted

Templeton India Treasury Fund

- - - 16.03 20.06

Kotak Liquid Scheme

- - 6.35 3.03

Franklin Templton Mutual Fund

- - - 0.07

Prudential ICICI Super IP

21.50 - 0.20 -

Grindlay Floating Rate Fund

- - 180.00 -

Magnum Institutional Income Fund

- - - 2.30

National Savings certificates

- - - -

Indira Vikas Patra - - - - LIC Mutual Fund 0.17 0.27 - - Total

2010.87 1994.83 2467.08 1804.78

Less : Provision

for diminution in

value of

Investments

(57.55) (57.58) (56.99) (56.84)

1,953.32 1,937.25 2,410.09 1,747.95

Aggregate book value of Investments

Quoted 943.13 921.63 1,073.11 1,168.48 Unquoted 1,010.19 1,015.62 1,336.98 579.47

1,953.32 1,937.25 2,410.09 1,747.95

Market Value of Quoted Investments

3,282.54 3,402.17 4,887.56 2,295.81

* - amounts less than Rs. 0.01 mio

166

SCHEDULE 7: INVENTORIES

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


(at lower of cost and net realisable value)

Stores and spares 168.54 153.38 159.43 67.08

Raw materials 1,626.00 1,556.79 1,282.93 1,030.64

Construction work-in-progress 1,225.72 1,170.59 231.61 192.83

Work-in-progress 553.44 689.37 360.77 150.97

Finished Goods 964.40 744.44 713.48 689.29


4,857.87

4,636.22

2,850.10

2,261.70

167

SCHEDULE 8: SUNDRY DEBTORS

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


(Unsecured)

Debts outstanding over six months

Considered good 83.09 380.98 211.52 149.23

Considered doubtful 65.85 55.97 52.29 53.62

148.94 436.95 263.81 202.85

Other debts

Considered good 4,717.33 4,031.36 2,045.03 1,900.16

4,866.27 4,468.31 2,308.84 2,103.01

Less: Provision for doubtful debts (65.85) (55.97) (52.29) (53.62)

4,800.42 4,412.34 2,256.55 2,049.39


4,943.03 4,564.00 2,305.27 2,074.48

168

SCHEDULE 9: CASH AND BANK BALANCES

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


Cash and cheques on hand 40.98 52.56 21.88 13.85

Balances with scheduled banks

- on current accounts

189.97 339.14 291.75 168.55

- on deposit accounts

72.72 270.42 529.51 252.85


155.56 226.04 67.52 99.07

459.23

888.16

910.66

534.32

169

SCHEDULE 10: LOANS AND ADVANCES

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


(Unsecured and considered good unless

otherwise stated)

Loans and Advances (refer note 10 )

949.01

857.24

415.27

216.65

Loan to GIL ESOP Trust 297.20

297.20

74.20

-

Advances recoverable in cash or in kind or for value to be receivd (net

of provision for doubtful advances) 933.29 1,007.56 864.23 854.55

Intercorporate deposits

- Associate companies 13.50 3.50 4.18 214.87

- Others 6.77 10.00 - 5.58

Deposits and balances with

- Customs & excise authorities 167.49 163.73 85.09 100.87

- Others 323.30 173.62 183.47 195.19

Advance payment of taxes 128.58 89.38 15.38 -

(Net of provision for tax)


102.60

128.53

79.41

44.36

2,921.74

2,730.76

1,721.23

1,632.07

170

SCHEDULE 11 : CURRENT LIABILITIES

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


Acceptances 375.62 475.53 384.32 617.64

Sundry creditors 3,564.38 3,287.52 2,798.31 2,496.64

Advances from customers 2,719.87 2,299.74 917.46 523.17

Sundry deposits 144.80 225.67 186.59 204.91

Investor Education & Protection Fund

- - - -

- Unclaimed Dividend 4.77 4.78 4.63 5.17

- Unpaid Matured Deposits 1.68 1.57 6.52 13.92

- Interest accrued on above - - 0.02 5.87

Other liabilities 537.42 698.56 450.46 287.64

Interest accrued but not due on loans

32.32 18.55 16.82 10.78


7,779.68 7,484.98 4,927.87 4,330.22

171

SCHEDULE 12 : PROVISIONS As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


Proposed dividend 291.85 291.85 265.84 204.49

Provision for tax on distributed profits 62.72 49.60 47.32 30.58

Provision for taxation - - - 2.34

Provision for retirement benefits 270.25 269.42 286.94 302.89


654.46 643.63 612.80 545.56

172

SCHEDULE 13: MISCELLANEOUS EXPENDITURE

As on

30/06/07

As on

31/03/07

As on

31/03/06

As on

31/03/05


( To the extent not written off or adjusted)

Deferred revenue expenditure

- Voluntary retirement compensation

143.92

160.27

221.95

12.63

- Preliminary expenses

- - - 0.96

- Others - - - 0.36


7.39

5.95

-

-

151.31

166.22

221.95

13.95

173

SCHEDULE 14: OTHER INCOME

Apr - Jun

07

For 2006-

07

For 2005-

06

For 2004-

05


Interest :

- Government Securities -

- - 1.69

- Debentures -

3.30

0.96

-

- Income tax refund 1.80

11.48

14.08

0.81

- Deposits (refer note 15) 38.30

36.72

48.65

5.31

Dividend 28.92

101.86

123.73

58.03

Profit on sale of fixed assets (Net) 0.26

57.02

37.38

-

Profit on sale of long term investments (refer note 15)

311.78

451.00

229.96

345.81

Provision for depletion in value of long term investments

written back -

- 36.49

-

Provision for doubtful debts and advances written back

-

- - 0.31

Bad debts recovered -

65.00

- -

Miscellaneous income (refer note 15) 29.21

109.42

125.30

53.82


31.46

15.40

12.40

414.82

867.26

631.97

478.18

174

SCHEDULE 15 : MATERIALS CONSUMED AND COST OF SALES

Apr - Jun

07

For 2006-07 For 2005-06 For 2004-05


Raw materials consumed :

Stocks at the commencement of the year 1,560.12

1,282.93

1,030.64

1,161.06

Less: Stock adjustment for subsidiaries deleted

-

(108.56)

- -

Add : Purchases (net) 4,074.39

13,955.68

12,510.62

12,149.48

5,634.51

15,130.05

13,541.26

13,310.54

Less : Stocks as at the close of the year 1,626.00

1,560.11

1,282.93

1,030.64

Raw Materials consumed during the year

4,008.51

13,569.94

12,258.33

12,279.90

Cost of Sales - Property Development

Stocks at the commencement of the year 1,172.04

231.61

192.83

240.65

Add : Construction Expenditure during the year

267.72

1,698.83

464.03

213.54

1,439.76

1,930.44

656.86

454.19

Less : Stocks as at the close of the year 1,225.72

1,172.04

231.61

192.83

214.04

758.40

425.25

261.36

Purchase of goods for resale 436.30

1,977.56

1,808.56

1,198.16

-

- - -


1,472.84

524.30

483.77

5,014.71

17,778.74

15,016.44

14,223.18

175

SCHEDULE 16: EXPENSES

Apr - Jun 07 For 2006-07 For 2005-

06

For 2004-

05

Rs. Million Rs. Million Rs. Million Rs.

Million

Salaries, wages and allowances 371.90 1,158.62 1,031.88 999.59

Contribution to provident fund and other funds

20.46 70.44 60.19 60.87

Employee welfare expenses 27.96 91.23 98.18 82.63

Stores and spares consumed 40.47 159.68 124.21 152.65

Power and fuel 186.32 705.02 598.81 506.82

Processing charges 127.61 419.65 379.52 383.82

Rent (refer note 15) 37.41 78.27 72.88 52.70

Rates and taxes 14.41 63.94 56.08 69.24

Repairs and maintenence

- Machinery 16.61 85.06 104.69 136.34

- Buildings 9.05 65.50 29.46 26.16

- Other assets 11.88 44.08 51.98 45.35

Insurance 7.90 26.53 24.32 22.20

Freight 105.71 429.86 353.50 271.86

Commission 8.86 299.37 335.58 310.77

Discount 83.70 49.75 46.76 20.31

Advertisement and publicity 24.93 76.68 146.51 142.76

Sales promotion 12.06 58.66 30.38 28.05

Selling and distribution expenses 29.22 147.14 146.58 81.96

Bad debts written off 4.10 35.86 62.03 63.09

Provision for doubtful debts and advances

13.02 18.61 4.08 -

Provision for depletion in the value of long term investments

- - 0.01 45.00

Loss on Sale of Fixed Assets 0.66 - - 18.22

176

Apr - Jun 07 For 2006-07 For 2005-

06

For 2004-

05

Rs. Million Rs. Million Rs. Million Rs.

Million

Excise duty on inventory change - (6.14) 28.50 (5.07)

Foerign Exchange loss 7.23 27.46 18.26 80.91

Miscellaneous expenses 157.31 670.69 565.49 386.43


1,522.41 5,498.02 4,676.31 4,386.61

177

SCHEDULE 17 : INVENTORY CHANGE

Apr - Jun

07

For 2006-07 For 2005-06 For 2004-05


Stocks at the commencement of the year

Finished goods 722.93 713.48 689.29 613.79

Work-in-progress 689.37 360.77 150.97 134.05


149.81 63.84 75.75 89.75

1,562.11 1,138.09 916.01 837.59

Less: Stock adjustment for subsidiaries deleted

- 34.09 - -

Less: Stocks at the close of the year :

Finished goods 964.40 722.93 713.48 689.29

Work-in-progress 553.44 689.37 360.77 150.97


156.83 149.81 63.84 75.75

1,674.67 1,562.11 1,138.09 916.01

(Increase) / Decrease in Inventory

(112.56)

(458.11)

(222.07)

(78.42)

178

SCHEDULE 18 : INTEREST AND FINANCIAL CHARGES (Net)

Apr - Jun

07

For 2006-07 For 2005-06 For 2004-05


Interest paid

- on debentures and fixed loans 121.95 284.11 229.00 101.94

- on bank overdrafts 30.40 164.34 44.19 75.56

- on Inter corporate deposits 4.46 21.02 19.01 17.64

- other interest 41.21 132.345 109.36 77.03

198.02 601.82 401.56 272.17

Less: Interest during construction period capitalised

-

-

26.55

1.43

Less: Interest received

- on loans & deposits 2.29 2.52 3.92 28.59

- on Customer balances, etc 0.86 0.00 1.81 4.37

- projects and landlords 24.55 73.64 22.52 33.58

- others 6.96 13.88 2.63 0.32

34.66 90.04 30.88 66.86

Net Interest 163.36 511.78 344.13 203.89

Other financial charges 16.61 65.03 60.21 50.72

Foreign exchange (gain) / loss - (2.09) 45.77 92.74


202.10 650.07 452.84 349.65

179

SCHEDULE 19 : PRIOR PERIOD ADJUSTMENTS

Apr - Jun 07 For 2006-07 For 2005-06 For 2004-05


Excess provision for Income -tax 6.88 (6.51) 3.57 0.42

Provision for pension payments - - (11.25) -

Dividend for previous year - - 6.24 -

Share in jointly controlled entities - - - -

6.88 (6.51) (1.45) 0.42

180

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON JUNE 30, 2007.

SCHEDULE 20: SIGNIFICANT ACCOUTING POLICIES:-

a) Accounting Convention

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

b) Fixed Assets

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

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

c) Intangible Assets

For Period : April to June 2007 and April 06 to March 07 The group has evaluated the useful lives of the intangible assets – goodwill, trademarks, non compete fees, Acquisition value of contracts, etc based on the nature of business, growth rates and estimated discounted cash flows. The intangible assets are amortised over the estimated useful lives as follows.

Particulars Estimated useful lives

Goodwill 8 – 10 years Trade marks 8 – 15 years Non compete fees 7 – 8 years

Acquisition costs of contracts 3 years Trees Development cost 15 years Computer software 6 years For Financial Year 2005-06 The cost of acquisition of trade mark is amortised equally over a period of four to fifteen years depending on the expected utilisation

d) Asset Impairment

The Group reviews the carrying values of tangible and intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceed its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value based on appropriate discount rates.

e) Borrowing Costs

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

f) 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

181

long term investment is ascertained with reference to its market value, the investee's assets and results and the expected cash flows from the investment.

Current investments are carried at lower of cost and fair value.

g) Inventories

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

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

h) Provisions and Contingent Liabilities

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

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

i) Foreign Exchange Transactions

For Period April to June 2007, April 06 to March 07 and April 05 to March 06

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the period end exchange rates. Forward exchange contracts, remaining unsettled at the period end, backed by underlying assets or liabilities are also translated at period end exchange rates. Premium or discount on forward exchange contracts is amortised over the period of the contract and recognized as income or expense for the period. Exchange gains / losses are recognised in the Profit and Loss Account except for exchange differences relating to fixed assets acquired from a country outside India, which are adjusted in the cost of the asset. Non Monetary foreign currency items like investments in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.

For Financial year 2004-05

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

j) Revenue Recognition

Sales are recognised where goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duty. Income from processing operations is recognised on completion of production / dispatch of the goods, as per the terms of contract. Export incentives receivable under the Duty Entitlement Pass Book Scheme and the Duty Drawback Scheme are accounted on accrual basis.

Revenue from construction activity is recognized on “Percentage of Completion Method” of accounting. As per this method, revenue in Profit & Loss Account at the end of the accounting year is

182

recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.

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

Dividend income is recognised when the right to receive the same is established. Interest income is recognised on a time proportion basis.

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

k) Depreciation

Leasehold land is amortised equally over the lease period. Leasehold improvements are amortised over five years.

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

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

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

l) Retirement Benefits

Retirement benefits to employees comprise payments under defined contribution plans like provident fund and family pension as well as payments under defined benefit schemes like leave encashment benefit on retirement and gratuity to eligible employees. Payments under defined contribution plans are charged to revenue. The liability in respect of defined benefit schemes is provided on the basis of an actuarial valuation at the end of each financial year.

m) Deferred Revenue Expenditure

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

n) Hedging

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

o) Taxes on Income

Current tax is the amount of tax payable on the assessable income for the year determined in accordance with the provisions of the I T Act, 1961.

183

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

p) Segment Reporting

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

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON JUNE 30, 2007.

SCHEDULE 21: NOTES TO ACCOUNTS:-

1. Principles of Consolidation:

The consolidated financial statements relate to Godrej Industries Limited, the holding company, its majority owned subsidiaries, Joint ventures and Associates (collectively referred to as Group). The consolidation of accounts of the Company with its subsidiaries has been prepared in accordance with Accounting Standard (AS) 21 ‘Consolidated Financial Statements’. The financial statements of the parent and its subsidiaries are combined on a line by line basis and intra group balances, intra group transactions and unrealized profits or losses are fully eliminated. In the consolidated financial statements, ‘Goodwill’ represents the excess of the cost to the Company of its investment in the subsidiaries and/or joint ventures over its share of equity, at the respective dates on which the investments are made. Alternatively, where the share of equity as on the date of investment is in excess of cost of investment, it is recognised as ‘Capital Reserve’ in the consolidated financial statements.

Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the respective dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investment as stated above.

Investments in Joint Ventures are dealt with in accordance with Accounting Standard (AS) 27 ‘Financial Reporting of Interests in Joint Ventures’. The Company’s interest in jointly controlled entities are reported using proportionate consolidation, whereby the Company’s share of jointly controlled assets and liabilities and the share of income and expenses of the jointly controlled entities are reported as separate line items.

Investments in Associates are dealt with in accordance with Accounting Standard (AS) 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India. Effect has been given to the carrying amount of investments in associates using the ‘Equity method’. The Company’s share of the post acquisition profits or losses is included in the carrying cost of investments.

2. The financial statements of the subsidiaries, joint ventures and associates used in the consolidation

are drawn upto the same reporting date as of the Company i.e. quarter ended June 30, 2007, except in respect of Personalitree Academy Ltd, an associate company whose accounts for the quarter ended June 30, 2007 have not been received till date. The investment not being significant and fully provided for in the previous year, there is no impact on the profit & loss account.

184

The accounts of Al Rahba International Trading Ltd. and ACI Godrej Agrovet Pvt. Ltd. joint venture companies with Godrej Agrovet Ltd, have not been audited for the quarter ended June 30, 2007 as of date and have been consolidated on the basis of the accounts as certified by their respective management.

3. Information on subsidiaries, joint ventures and associates:

(a) The subsidiary companies considered in the consolidated financial statements are:

Name of the company Country of

Incorporation

April -

June 07

2006-

2007

2005-

2006

2004-

2005

1 Godrej Agrovet Ltd. India 70.30 % 70.30 % 57.80 % 57.78 %

2 Goldmohur Foods & Feeds Ltd.

India 70.30 % 70.30 % 57.80 % 57.78 %

(100% subsidiary of Godrej Agrovet Ltd.)

3 Golden Feed Products Ltd. India 70.30 % 70.30 % 57.80 % 57.78 % (100% subsidiary of Godrej Agrovet Ltd.)

4 Godrej Acquafeed Ltd India 70.30 % 70.30 % - - (100% subsidiary of Godrej Agrovet Ltd.)

5 Adhar Retailing limited India 70.30% 70.30% - - (100% subsidiary of Godrej Agrovet Ltd.)

6 Godrej Oil Palm Ltd. India 70.30% - - - (100% subsidiary of Godrej

Agrovet Ltd.)

7 Godrej Properties Ltd. India 82.88 % 82.88 % 82.88 % 82.85 % 8 Girikandra Holiday Homes &

Resorts Ltd. India 82.88% 82.88% 82.88% 82.85%

(100% subsidiary of Godrej Properties Ltd.)

9 Godrej Realty Pvt. Ltd. India 42.27% 42.27% 42.27% - (51% subsidiary of Godrej Properties Ltd.)

10 Godrej Waterside Properties Pvt. Ltd.

India 42.27% 82.88% 82.88% -


11 Godrej Developers Pvt Ltd India 82.88% 82.88% - - (100% subsidiary of Godrej Properties Ltd.)

12 Godrej Real Estate Private Limited

India 82.88% 82.88% - -


13 Godrej Seaview Private Limited

India 82.88% 82.88% - -


14 Godrej Hicare Ltd. India 85.91% 85.91% 85.91% 86.44% Godrej Remote Services Limited

India - - - 99.99%

15 Ensemble Holdings & Finance Ltd.

India 99.95% 99.95% 99.95% 99.95%

16 Godrej International Ltd., UK U.K. 100.00% 100.00% 100.00% 100.00% 17 Godrej Global Mid-East FZE, U.A.E. 100.00% 100.00% 100.00% 100.00%

185


Incorporation

April -

June 07

2006-

2007

2005-

2006

2004-

2005

UAE (100% subsidiary of Godrej International Ltd.)

18 Godrej Hershey Foods and Beverages Ltd

India - - 70.00% 70.91%

(Formally known as Godrej Beverages & Foods Ltd )

19 Godrej Global Solutions Ltd. India 100.00% 100.00% 100.00% 100.00% 20 Godrej Global Solutions

(Cyprus) Ltd. Greece 100.00% 100.00% 100.00% -

(100% subsidiary of Godrej Global Solutions Ltd.)

21 Godrej Global Solutions Inc U.S.A. 100.00% 100.00% 100.00% - (100% subsidiary of Godrej Global Solutions Ltd.)

(b) Interests in Joint Ventures:

(c) Investments in Associates:


Incorporation

April -

June 07

2006-

2007

2005-

2006

2004-

2005

1 Godrej SaraLee Ltd. India 20.00% 20.00% 20.00% 20.00% 2 Godrej SaraLee Bangladesh Pvt.

Ltd. Bangladesh 20.00% 20.00% 20.00% 20.00%

3 Godrej SaraLee Sri Lanka Pvt. Ltd.

Sri Lanka 20.00% 20.00% 20.00% 20.00%

4 Al Rahba International Trading Limited

U.A.E. 45.00% 45.00% 70.00% -

(held by Godrej Agrovet Ltd.) 5 ACI Godrej Agrovet Pvt. Ltd. Bangladesh 50.00% 50.00% 50.00% 50.00% (held by Godrej Agrovet Ltd.) 6 Godrej Acqafeed Ltd India 49.00 % 49.00 % - -

(held by Godrej Agrovet Ltd.)

7 Godrej Hershey Foods and Beverages Ltd

India 43.00 % 48.00 % - -

8 Nutrine Confectionery Ltd India 43.00 % 48.00 % - -

(100% subsidiary of Godrej Beverage and Foods Limited)


Incorporation

April -

June 07

2006-

2007

2005-

2006

2004-

2005

1 Swadeshi Detergents Ltd. India 41.08% 41.08% 41.08% 41.08% 2 Godrej Upstream Ltd. India 40.43% 40.43% 40.43% 40.43%

(held by Godrej Global Solutions Ltd.)

3 Personalitree Academy Ltd. India 26.00% 26.00% 26.00% 26.00% (held by Ensemble Holdings & Finance Ltd.)

4 Boston Analytics LLC USA 22.70% - - - 5 Compass Connections Limited U.K. - - 20.74% 21.16% 6 Creamline Dairy Products Ltd. India 26.00% 26.00% 26.00% 26.00%

(held by Godrej Agrovet Ltd.) 7 Creamline Nutrients Ltd. India 26.00% 26.00% 26.00% 26.00%

(held by Godrej Agrovet Ltd.) 8 Polychem Hygiene India 26.00% 26.00% 26.00% 26.00%

186

4. The accounting policies of certain subsidiaries, joint ventures & associates especially regarding the

method of depreciation, amortization of technical knowhow and accounting for retirement benefits are not in consonance with the group accounting policies. No effect has been given in the consolidated financial statements on account of such differing accounting policies, where the impact is not expected to be material.

5. The break-up of Investment in Associates is as under:

Rs. Million

Cost of

Acquisition

Goodwill

included in

cost of

acquisition

Share in

profits / (loss)

of associates

post

acquisition

Provision for

diminution in

the value of

investments

Carrying cost

of

Investments

1 Swadeshi

Detergents Ltd.

- April-June 07 19.134 9.148 (13.649) 5.485 -

- 2006-2007 19.134 9.148 (13.604) 5.530 -

- 2005-2006 19.134 9.148 (14.105) 5.028 -

- 2004-2005 19.134 9.148 (14.180) 4.954 -

2 Godrej

Upstream Ltd.

- April-June 07 90.225 9.527 (66.119) - 24.106

- 2006-2007 90.225 9.527 (66.119) - 24.106

- 2005-2006 90.000 9.527 (44.294) - 45.706

- 2004-2005 90.000 9.527 (30.814) - 59.186

3

Personalitree

Academy Ltd.

- April-June 07 11.028 4.284 (4.204) 6.824 -

- 2006-2007 11.028 4.284 (4.204) 6.824 -

- 2005-2006 11.028 4.284 (4.204) 6.824 -

- 2004-2005 11.028 4.284 (4.204) 6.824 -

4 Boston

Analytics LLC

- April-June 07 70.411 - (4.854) 65.557

- 2006-2007 - - - - -

- 2005-2006 - - - - -

- 2004-2005 - - - - -

5 Compass

Connections

Ltd.

- April-June 07 - - - - -

- 2006-2007 - - - - -

- 2005-2006 12.454 8.056 3.463 - 15.917

- 2004-2005 12.454 7.966 1.845 - 14.299

6

Creamline

Dairy Products

Ltd.

- April-June 07 95.016 36.453 34.486 - 1,29.502

- 2006-2007 95.016 36.453 21.244 - 1,16.260

- 2005-2006 95.016 36.453 6.407 - 1,01.423

- 2004-2005 95.016 35.884 2.172 - 97.188

Laboratories Pvt. Ltd. (held by Godrej Agrovet Ltd.)

187

Cost of

Acquisition

Goodwill

included in

cost of

acquisition

Share in

profits / (loss)

of associates

post

acquisition

Provision for

diminution in

the value of

investments

Carrying cost

of

Investments

7 Creamline

Nutrients Ltd.

- April-June 07 8.784 3.389 5.984 - 14.768 - 2006-2007 8.784 3.389 3.311 - 12.095

- 2005-2006 8.784 3.389 0.812 - 9.596

- 2004-2005 8.784 2.840 0.295 - 9.079 8 Polychem

Hygiene Lab

Pvt. Ltd.

- April-June 07 16.275 8.899 2.468 - 18.743

- 2006-2007 16.275 8.899 1.216 - 17.491 - 2005-2006 16.275 8.899 0.823 - 17.098

- 2004-2005 16.275 8.740 1.597 - 17.872 9 Total - April-June 07 310.873 71.925 (45.888) 12.308 252.676

- 2006-2007 240.462 71.700 (58.156) 12.354 169.952

- 2005-2006 252.691 79.756 (51.098) 11.852 189.740

- 2004-2005 252.691 78.389 43.289 11.778 197.624

6. Contingent Liabilities

Amt Rs: Million

April -

June 07

2006-

2007

2005-

2006

2004-

2005

a) Claims against the Company not acknowledged as debts:

i) Excise duty demands relating to disputed classification, post manufacturing expenses, assessable values, etc. which the Company has contested and is in appeal at various levels.

154.409 154.409 153.741 338.652

ii) Customs Duty demands relating to less charge, differential duty, classification, etc.

85.694 85.694 84.453 10.665

iii) Sales Tax demand relating to purchase tax on Branch Transfer / Non availability of C Forms, etc at various levels.

71.702 215.474 51.237 53.221

iv) Octroi demand relating to classification issue on import of Palm Stearine and interest thereon.

95.825 93.805 84.446 72.201

v) Stamp duties claimed on certain properties which are under appeal by the Company

18.223 18.223 18.223 18.223

vi) Income Tax demands against which the company has preferred appeals

171.428 177.717 178.583 72.695

vii) Industrial relations matters under appeal 18.285 59.511 51.806 48.608 viii) Others 65.157 88.611 70.418 64.969 b) Guarantees issued by banks, excluding guarantees

issued in respect of matters reported in (a) above 66.020 66.003 206.214 220.742

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

1411.410 1412.110 1526.959 1485.5

d) Uncalled liability on partly paid shares/debentures 38.164 38.164 67.397 53.485 e) Share in Jointly Controlled Entities 37.594 32.911 20.702 26.235

188

7. Capital Commitments

Amt. Rs: Million

April -

June 07

2006-

2007

2005-

2006

2004-

2005

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

73.123 43.592 68.861 310.592

Share in Jointly Controlled Entities 5.237 5.309 0.248 0.052

8. Investments

For 2006-2007 CBay Systems Limited, USA (CBay USA) carried out an organizational restructuring in Oct 2005, consequent to which, all businesses of CBay group have been consolidated under CBay Systems Limited, India (CBay India), a wholly owned subsidiary. Under the scheme, the stockholders of CBay USA are entitled to receive one additional share of CBay India for every two stocks in CBay USA. The shares in CBay India were distributed to all stockholders except Indian Shareholders of CBay USA, pending Indian regulatory approvals. The shares of CBay India, pending distribution to Indian shareholders, are held in trust by CBay USA. In the meanwhile, CBay group decided on a further organizational restructuring, wherein CBay Systems Holdings Limited (“CBay BVI”), a company incorporated in the British Virgin Islands, would be the holding company of the CBay Group. As per the scheme the company is now entitled to four shares in CBay BVI for every share it was entitled to in CBay India. The company has been allotted the shares in CBay BVI on 15th May 2007.

For 2005-2006 a) CBay Systems Limited, USA (CBay USA) has carried out an organizational restructuring

during the year, consequent to which, all the businesses of CBay Group have been consolidated under CBay Systems Limited, India (CBay India), a wholly owned subsidiary. The Shares of CBay India have been distributed in specie on a pro-rata basis to all the stockholders of CBay USA under the above scheme. The Indian Stockholders will be allotted the shares in CBay India on receipt of approval from the Reserve Bank of India (RBI). No effect has been given to the aforesaid scheme in the accounts, pending approval of RBI and allotment of shares in CBay India.

b) As per the share purchase agreement dated 29th October, 2004, the Parent Company had

agreed to sell its entire holding (7712642 equity shares) in Godrej Remote Services Limited, a subsidiary company to CBay Systems Limited, USA for a consideration of Rs. 84.281 million, to be satisfied by issue of 704691 common stock of CBay Systems Limited, USA (par value USD 0.01 per common stock) valued at USD 2.6 per common stock. The agreement was conditional upon receipt of approval from Foreign Investment Promotion Board (FIPB) and the Reserve Bank of India (RBI). The sale of the subsidiary company was completed during the year on receipt of the necessary approvals in July 2005. The profit on sale amounting to Rs. 7.1 million is included under Profit on sale of long term investments, an exceptional item.

9. Deferred Tax:

Major components of Deferred Tax arising on account of timing differences are:

Amt Rs: Million

April - June 07 2006-2007 2005-2006

2004-2005

Assets

Provision for retirement benefits 38.700 35.100 32.414 80.600 Provision for doubtful debts / advances 38.263 32.744 29.509 39.924 Business Losses 37.263 30.691 133.833 112.350

189

April - June 07 2006-2007 2005-2006

2004-2005

VRS Expenses 22.800 15.600 7.700 (4.500) Others 14.310 24.235 34.620 33.495

Share in Jointly Controlled Entities 3.553 6.017

151.336 138.370 241.629 267.886 Liabilities Depreciation 627.382 631.218 621.453 500.547 Deferred Revenue Expenditure 5.200 - 2.134 - Share in Jointly Controlled Entities 8.031 18.916 5.655 8.320

640.613 650.134 629.242 508.867

Net Deferred Tax Liability 489.277 511.764 387.613 240.981

10. Loans & Advances: Loans and Advances include Rs. 103.3 million advanced by the Company to certain individuals against pledge, by way of deposit, of equity share of Gharda Chemicals Ltd. The Company has enforced its security and lodged the shares for transfer in its name, however, the transfer application has been rejected by Gharda Chemicals Ltd. and the Company has filed an appeal before the Company Law Board. Gharda Chemicals Ltd has, in the meanwhile, moved the Bombay High court and the matter is awaiting hearing. Interest on the aforesaid loans and advances amounting to Rs. 31.5 million was accrued upto March 31, 2000 and has been fully provided for, no interest is being accrued thereafter. The recoverability of the advance is contingent upon the transfer and/ or disposal of said shares. In the opinion of the management, the value of the said shares is greater than the amount of the loans and advances.

11. Employee Stock Option Plans

For April – June 2007 In December 2005, the Group had instituted an Employee Stock Option Plan (GIL ESOP) approved by the Board of Directors and the Shareholders, which provides for the allotment of 1,500,000 options convertible into 1,500,000 equity shares of Rs. 6 each to eligible employees of participating companies. In view of the sub-division of equity shares into face value of Rs 1 each, the total number of options stands automatically increased to 9,000,000 options convertible into 9,000,000 equity shares of Rs. 1 each.

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

The Group decided to extend the benefits of the ESOP scheme to other levels of management as approved by the Compensation Committee. During the year, in preparation to extend the scheme to other levels of management, the participating companies provided finance to the ESOP Trust and the ESOP Trust purchased 2,625,000 additional shares during the year.

No. of options Wt. average exercise price

Options outstanding at the beginning of the year 2,100,000 65.39 (plus interest) Options granted 2,625,000 152.84 (plus interest) Less: Exercised - - Less: Forfeited / expired - - Options outstanding at the year end 4,725,000 113.97 (plus interest)

The options granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting. The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at

190

the grant date is the same / less than the exercise price of the option, the intrinsic value therefore being Nil. Had the fair value method of accounting been used, the employee compensation cost would have been Rs. 23.729 million. For 2006-2007 In December 2005, the Group had instituted an Employee Stock Option Plan (GIL ESOP) approved by the Board of Directors and the Shareholders, which provides for the allotment of 15,00,000 options convertible into 15,00,000 equity shares of Rs. 6 each to eligible employees of participating companies. In view of the sub-division of equity shares into face value of Rs 1 each, the total number of options stands automatically increased to 90,00,000 options convertible into 90,00,000 equity shares of Rs 1 each The scheme is administered by an independent ESOP Trust which purchases from the market shares equivalent to the number of options granted by the participating companies. The Group decided to extend the benefits of the ESOP scheme to other levels of management as approved by the Compensation Committee. During the year, in preparation to extend the scheme to other levels of management, the participating companies provided finance to the ESOP Trust and the ESOP Trust purchased 2,625,000 additional shares during the year.

No. of options Wt. average exercise price

Options outstanding at the beginning of the year 2,100,000 65.39 (plus interest) Options granted - - Less: Exercised - - Less: Forfeited / expired - -

Options outstanding at the year end 2,100,000 65.39 (plus interest)

The options granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting. The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at the grant date is the same / less than the exercise price of the option, the intrinsic value therefore being Nil. Had the fair value method of accounting been used, the employee compensation cost would have been Rs. 20.4 million For 2005-2006 The Parent Company has during the year instituted an Employee Stock Option Plan (GIL ESOP) approved by the Board of Directors and the shareholders on 24th October, 2005 and 1st December, 2005 respectively. The Plan provides for the allotment of 1,500,000 options convertible into 1,500,000 equity shares to eligible employees of the participating companies. The compensation committee comprising independent members of the Board of Directors administers the plan. The scheme is administered by an independent ESOP Trust which has purchased shares equivalent to the number of options granted from the market, out of the finance provided by the participating companies to the Trust. The number and weighted average exercise price of options granted, exercised and forfeited are as under:

No. of Options Wt. average exercise price

Options outstanding at the beginning of the year - - Options granted 350,000 392.35

(plus interest)

191

No. of Options Wt. average exercise price

Less: Exercised - - Forfeited / expired - - Options outstanding at the year end 350,000 392.35

(plus interest) The options granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting. The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at the grant date is the same / less than the exercise price of the option, the intrinsic value being Nil. Had the fair value method of accounting been used, the employee compensation cost would have been Rs. 20.4 million.

12. Leases:

a) The group has entered into leave and licence agreements in respect of its commercial and residential

premises. These are not non-cancelable and range between 12 months to 33 months and are renewable by mutual consent on mutually acceptable terms. Leave and licence arrangements being similar in substance to operating leases, the particulars of the premises under leave and licence arrangement are as under:

Amt Rs: Million

April - June 07 2006-2007 2005-2006

2004-2005

Gross carrying amount of premises 178.470 178.470 335.779 425.385

Accumulated depreciation 90.676 89.297 99.581 96.530 Depreciation for the period 1.407 5.830 11.571 12.058

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

For April – June 07

Period Minimum future lease

rentals

Jointly controlled

entities

Rs. Million Rs. Million

Within one year 52.993 2.682 Later than one year and not later than five years

197.226 2.741

Later than five years 280.632 0.115

Total 530.851 5.538

Amount recognized during the year 42.194 4.094 For 2006-2007


rentals

Jointly controlled

entities

Rs. Million Rs. Million Within one year 55.38 4.397

192


rentals

Jointly controlled

entities

Later than one year and not later than five years

199.870 3.441

Later than five years 280.632 0.155

Total 535.882 7.993

Amount recognized during the year 43.506 10.664

For 2005-2006


rentals

Jointly controlled

entities

Rs. Million Rs. Million Within one year 17.734 0.535 Later than one year and not later than five years

22.107 5.746

Later than five years - 0.240

Total 39.841 6.521


For 2004-2005


rentals

Jointly controlled

entities

Rs. Million Rs. Million Within one year 10.953 5.659

Later than one year and not later than five years

6.411 7.023

Later than five years - 0.371

Total 17.364 13.053


c) Finance Leases:

The group has acquired vehicles under Finance Lease. Liability for minimum lease payment is secured by hypothecation of the vehicles acquired under the lease. The minimum lease payments outstanding as on June 30, 2007, in respect of vehicles acquired under lease are as under:

Period Total minimum lease

payments outstanding as on

June 30, 2007

Un-matured

Interest

Present value of

minimum lease

payments

Rs. Million Rs. Million Rs. Million Within one year 6.033 1.865 5.679 Later than one year

193

Period Total minimum lease

payments outstanding as on

June 30, 2007

Un-matured

Interest

Present value of

minimum lease

payments

and not later than five years

12.444 2.483 9.744

18.477 4.348 15.423

For 2006-2007

Period Total minimum lease payments

outstanding as on March 31,

2007

Un-matured

Interest

Present value of

minimum lease

payments

Rs. Million Rs. Million Rs. Million

Within one year 6.351 1.782 5.848 Later than one year and not later than five years

11.936 2.479 9.272

18.287 4.261 15.120

For 2005-2006



2006

Un-matured

Interest

Present value of

minimum lease

payments

Rs. Million Rs. Million Rs. Million Within one year 8.687 1.306 8.176 Later than one year and not later than five years

6.559 0.974 5.472

15.246 2.280 13.648

For 2004-2005



2005

Un-matured

Interest

Present value of

minimum lease

payments

Rs. Million Rs. Million Rs. Million

Within one year 8.680 1.820 8.169 Later than one year and not later than five years

11.319 1.369 9.432

19.999 3.189 17.601

13. Hedging

a. Reserve Bank of India has permitted the group to hedge its exposure on Crude Palm Oil on offshore

exchanges to the extent of its imports. Accordingly, the group is hedging import of crude palm oil on the Malaysian Commodities Exchange by way of futures contracts. The particulars of the futures contracts for the year are as under:

Apr-Jun 07 2006-07 2005-06 2004-05

Details Purchase Sale Purchase Sale Purchase Sale Purchase Sale

Total number of contracts entered

-

-

-

-

2

2

12

11

194

Apr-Jun 07 2006-07 2005-06 2004-05


during the year Number of units (25 MT per unit) under above contracts

-

-

-

-

60

60

595

595

Future contracts not settled as on March 31, 2007

-

-

-

-

-

-

-

-

Number of units under above contracts

-

-

-

-

-

-

-

-

b. The Group uses forward exchange contracts to hedge its foreign exchange exposure in accordance

with its forex policy as determined by a Forex Committee. The particulars of the forward exchange contracts for the year are as under:

Apr – Jun 07 2006-07 2005-06 2004-05


Total number of contracts entered during the year

19

11

163

113

179

77

184

36

Foreign currency value covered

US Dollar (million)

Euros (million)

10.76 -

6.00

2.50

66.90

0.30

7.29

9.18

103.30 -

33.68

3.36

105.48 -

20.59

0.18 Total number of contracts outstanding as at the year end

18

9

34

16

54

20

39

12

Foreign currency value

US Dollar (million)

Euros (million)

9.85 -

3.70

2.14

19.33 -

2.00

4.12

37.30 -

13.00

0.94

39.61 -

5.84 -

Uncovered Foreign exchange exposure as at the year end

US Dollar (million)

Euros (million)

12.47 -

3.32 -

15.14

0.35

5.54

1.90

15.10 -

- -

17.50 -

0.20 -

14. Turnover

Amt Rs Million

Turnover includes: April - June

07

2006-

2007

2005-

2006

2004-

2005

i) Processing charges 35.263 112.499 200.393 212.586 ii) Export Incentives 5.515 34.520 55.442 57.327 iii) Licence fees and service charges 120.720 391.014 256.111 219.175 iv) Project / Development Management

Fees 39.308 312.131 76.740 51.502

v) Claims & Compensation 4.096 - - -

v) Share in jointly controlled entities 561.658 2381.859 930.870 975.750

195

Turnover includes: April - June

07

2006-

2007

2005-

2006

2004-

2005

766.560 3232.023 1519.555 1516.340

15. Exceptional Items

Amt : Rs. Million

April -

June 07

2006-

2007

2005-

2006

2004-

2005

i) Included under Other Income

- Profit on sale of long term investments - 438.256 2,11.981 342.222 - Reversal of provision for claims payable on

culmination of disputes - -

17.500 -

- Interest received on deposit placed against above claim on execution of decree

- - 30.700

-

Bad debt recovered - 65.000 - - ii) Payment to Mumbai Port Trust for

regularization of lease (included in Rent paid).

- - 8.900 -

iii) Share in jointly controlled entities - (8.640) - -

16. Profit & Loss Account

The amount of exchange loss on account of fluctuation of the rupee against foreign currencies and the net charges for forward foreign exchange contracts added to the carrying amount of fixed assets during Apr – June 2007 is Rs. 0.135 million, during 2006-07 is Rs: 7.598 million, during 2005-06 is Rs: 0.042 million and during 2004-05 is Rs: 0.090 million. The exchange difference included in the Profit & Loss Account during Apr-june 07 is a loss of Rs. 7.225 million, during 2006-07is a loss of Rs:25.371 million, during 2005-06 is loss of Rs: 66.994 million and during 2004-05 is loss of Rs: 180.629 million. The exchange difference in respect of forward exchange contracts to be recognised in subsequent accounting periods for Apr- June 07 is Rs. 0.707 million, for 2006-07 is Rs: 2.702 million, for 2005-06 is Rs: 2.468 million and for 2004-05 is Rs: 73.948 million.

196

17. Earnings Per Share

Apr-Jun 07 2006-07 2005-06 2004-05

a. Calculation of weighted average number of equity shares

Number of shares at the beginning of the year

Nos. 291,851,652 291,851,652 48,542,952 48,542,952

Number of equity shares outstanding at the end of the year

Nos. 291,851,652 291,851,652 48,641,942 48,542,952

Weighted average number of equity shares outstanding during the year

Nos. 291,851,652 291,851,652 48,570,344 48,542,952

Weighted average number of equity shares for the previous year adjusted for the share split into 6 shares of Re 1 each

Nos. 291,851,652 291,851,652 291,422,064 291,257,712

b. Net profit after tax available for equity shareholders

Rs Million

312.06 588.81 489.98 646.71

c. Basic and diluted earnings per share of Rs.1 each

Rupees 1.07 2.02 1.68 2.22

197

18 Related Party Disclosures

a) Names of related parties and description of relationship:

(i) Parties where control exists

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

Fellow Subsidiaries:

Godrej Commodities Ltd. Godrej Infotech Ltd. Godrej Appliances Ltd. Godrej (Malaysia) Sdn. Bhd Godrej (Singapore) Pvt. Ltd. Mercury Mfg. Co. Ltd. J.T. Dragon Pte Ltd. Godrej (Vietnam) Co. Ltd.

(ii) Other related parties with whom Compnayhad transactions during the year Associate/Joint Ventrue Companies Godrej Sara Lee Ltd. Godrej Hershey Foods & Beverages Ltd. Godrej Upstream Ltd. Godrej Aquafeed Ltd. Nutrine Confectionery Company Ltd.

198

DECLARATION

Our Company certifies that all relevant provisions of Chapter XIII-A of the SEBI Guidelines have been complied with and no statement made in this Placement Document is contrary to the provisions of Chapter XIII-A of the SEBI Guidelines and that all approvals and permissions required to carry on our business have been obtained, are currently valid and have been complied with. We further certify that all the statements in this Placement Document are true and correct. N B Godrej

MANAGING DIRECTOR November 15, 2007

199

ISSUER

GODREJ INDUSTRIES LIMITED

REGISTERED OFFICE OF THE ISSUER

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

THE GLOBAL COORDINATOR AND BOOK RUNNER

KOTAK MAHINDRA CAPITAL COMPANY LIMITED

3rd Floor, Bakhtawar 229, Nariman Point Mumbai 400 021

DOMESTIC LEGAL ADVISERS TO THE ISSUE

AMARCHAND & MANGALDAS & SURESH A. SHROFF & CO.

Peninsula Chambers Peninsula Corporate Park

Ganpatrao Kadam Marg, Lower Parel Mumbai 400 013

India

INTERNATIONAL LEGAL ADVISERS TO THE GLOBAL COORDINATOR AND BOOK

RUNNER

JONES DAY

30 Cecil Street, #29-01 Prudential Tower Singapore 049712

AUDITORS

KALYANIWALLA & MISTRY

€¦ · GODREJ INDUSTRIES LIMITED (Incorporated in the Republic of India with limited liability...

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