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Term Paper: Financial Management

Company’s Name Godrej Industries Ltd.

Industry Chemicals

Submitted By Submitted To Gagandeep Singh Dr. Renuka SharmaCUN110551008 Associate Professor (Financial Markets)MBA-A

Chitkara Business SchoolChitkara University, Punjab

(March 2012)

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I express my sincerest gratitude and thanks to, Dr. Renuka Sharma, for whose kindness I got the opportunity to undergo on the Financial Management project of Godrej Industries Ltd. Under her brilliant guidance I could complete the project being under taken on the “ topic of financial management applied on Godrej Industries Ltd.” successfully in time. Her meticulous attention and invaluable suggestion have helped in simplifying the problem involved in the work. I would also like to thank the overwhelming support of all the people who gave me an opportunity to learn and gain knowledge about the various aspects of the financial management.

I would like to thank to all my friends who gave their valuable help in completing this project.

I would also like to thank to Chitkara Business School whose excellent faculty guides me to the right path.

GAGANDEEP SINGH

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Industry Profile

History

Godrej industries a part of Godrej group, is India's leading manufacturer of oleochemicals and makes more than a hundred chemicals for use in over two dozen industries. Godrej Group was established in year 1897, it entered in security equipment & soaps segment and is now a $1.875 billion conglomerate.

Godrej group is engaged in chemicals, vegoils & Real Estate. It delivers international quality product, exports its products to North America, South America, Asia, Europe, Australia, and Africa. The company was earlier called Godrej Soaps, then it got de-merged with godrej consumer products & residual and became part of Godrej industries.The company has its manufacturing plant located at facility at Vikhroli, Mumbai, and Maharashtra .It has the capabilities of Fat splitting, Fatty Acid distillation, Fatty Acid fractional distillation, Hydrogenation of Fatty Acids, Sweet water evaporation, Glycerin distillation and Alfa Olefin Sulphonation. It also has a Co- generation plant which satisfies partially its requirements of power and steam.

The greatest advantage Godrej Industries (Chemicals Division) enjoys, thanks to the Vikhroli complex, is a high level of operational flexibility to meet customers' requirements with a short lead time. The facility is well equipped to deliver the products of superior Quality, in time and at competitive price.

The company also has a modern, integrated manufacturing facility at Valia in the Indian state of Gujarat. This faculty uses vegetable oils as the raw material to manufacture Fatty Acids, Glycerin, Fatty Alcohols & Surfactants such as Sodium Lauryl Sulphate, Sodium Lauryl Ether Sulphate & Alpha Olefin Sulphonate. The installed capacity for Fatty Alcohols is 65000 MT per annum which includes a dedicated Export Oriented Unit of 30000 MT.

Type Public

Traded as BSE: 500164 NSE: GODREJIND

Industry Chemicals

Founded 1963

Headquarters Mumbai, Maharashtra, India

Key people A.B. Godrej (Chairman)

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Services Oleo-chemicals, their precursors and derivatives, bulk edible oils, estate management and investment activities

Revenue Rs. 4,589 crore (US$1.01 billion) (2011)

Profit Rs. 292 crore (US$64.24 million) (2011)

Parent Godrej Group

Website www.godrej.com

Background

Associate Companies:

Godrej Properties: The Company is India’s leading manufacturers of oleo chemicals and over hundreds of different industrial chemicals. With its global reach spreading wings across 40 countries, the company was conferred the prestigious exports award by Chemexcil for 3 consecutive years in 1998-99, 1999-00 and 2000-01.The products in its portfolio are used in a variety of applications: cosmetics, tyres, detergents, pharmaceuticals, cigarettes, toothpaste and more.

Godrej Consumer Products: Godrej Properties was incepted in 1990 with an aim of providing ultra-modern townships to discerning customers at affordable prices. It adheres to a simple philosophy of providing exemplary service based on the optimal use of available resources.

Godrej Hershey: Godrej Hershey is one of the most respected business conglomerates established in 2006 with a prime focus on the food division. The range of products from the house of Godrej Hershey covers a number of popular products in the segment of Confectionery, Non Carbonated Beverages, Cooking Aids, Packet Tea and Edible Oil. Godrej Agrovet: Godrej Agrovet, formerly a division of Godrej Soaps  was reformed in 1971 with a focus on the agricultural sector. Over the years this division has developed a close relationship with farmers with its innovative offerings in the form of animal feed, oil palm plantations, agrochemicals and poultry

Divisions:

Chemicals-- Godrej continues its century old tradition of innovation with the manufacture of oleochemicals for the first time in India (Since 1963). Godrej Industries (Chemicals Division) is the market leader in a range of Oleochemicals in India. It is also the market leader in the product category of Alpha olefin Sulphonate. It is also a major player in the field of Glycerin & Surfactants such as Sodium Lauryl  Sulphate (SLS) and Sodium Lauryl Ether Sulphate (SLES).

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Godrej Industries (Chemicals Division) exports it’s products to more than 60 countries

Vegoil-The company’s vegoil division produces edible oils, vanaspati and bakery fats. The plant has technology that modifies fat to cater to varied customer tastes and requirements, from grainy products to votatorised specialty fats. It contributes 17% share in revenue.

The Real Estate division of the company manages and invests in real estate properties, as well as provides area on lease to corporate customers for business operations. It contributes 7%  share in revenue.

Godrej has joint ventured with The Hershey Company of North America to cater in Foods and Beverages segment. Under this it has launched brands like Nutrine, Jumpin, Godrej Xs, Tomato Puree, Godrej Tea, Sofit-Soymilk, etc .

Godrej Industries has recently launched its latest soap variant - Godrej No 1 Saffron and Milk Cream soap. The latest launch in Godrej No.1 franchise, Saffron & Milk cream soap comes in a premium white color enriched with richness of Saffron and milk cream combined with Natural oils to give its users soft skin with a natural glow.

Accreditations:

GIL has been accredited with ISO 27001 for its Information Security Management System by BSI, a global certifying agency.

Godrej Industries (GIL) has received a 'Lifetime Achievement Award ' for their outstanding track record in Chemicals Exports, from CHEMEXCIL.

Management

Adi Godrej Non-Executive Chairman of the Board

Tanya DubashPresident - Marketing, Whole-time Director

Mathew EipePresident - Chemicals, Executive Director

V. Srinivasan

Executive Vice President - Finance & Estate, Compliance Officer, Company Secretary

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Nadir GodrejManaging Director, Executive Director

Vijay CrishnaNon-Executive Director

Jamshyd GodrejNon-Executive Director

Saleem AhmadullahNon-Executive Independent Director

Jimmy BilimoriaNon-Executive Independent Director

Amit ChoudhuryNon-Executive Independent Director

Kersi DasturNon-Executive Independent Director

Naushad ForbesNon-Executive Independent Director

K. PetigaraNon-Executive Independent Director

F. SarkariNon-Executive Independent Director

Products

Alpha Olefin and its Precursors Fatty Acids

Synthetic Detergent

Glycerine

Refined Oils & Vanaspati

Company’s Relative Position in the Industry

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Top Market PositionGodrej holds a top market position in Oleo-chemicals & Surfactants, Animal feed, Oil Palm plantations, Hair color, Household insecticides, Liquid detergents, Soya milk and Processed Chicken. Followed by a # 2 position in Soaps and # 3 in Sugar Confectionaries.

Basket full of SectorsGIL represents a unique opportunity to participate in several high growth sectors in India while remaining de-risked from the vagaries of any single industry. With a presence in industries that are cyclical (Properties) and more stable (FMCG); businesses that are rural (Agrovet) and urban (Properties); businesses that are global (FMCG) and domestic (Properties), GIL offers a multifaceted opportunity to participate in the India growth story

The Most Important PartGodrej & Boyce the holding company of all Godrej group companies, owns ~3,200 acres in Vikhroli (Mumbai). It plans to commercially develop around ~500 acres over the next 10-15 years. Currently, various Godrej group cos have operating plants, workers' housing colonies & corporate offices at Vikhroli.,The Group's plan is to relocate most operations to other low cost areas and commercially develop this land. The monetization process of Vikhroli land has already started with the first MoU with GPL for developing ~36.5 acres. Approx 3mn sq ft of prime property to be developed in Vikroli Mumbai by the JV between GIL & Godrej Properties Ltd. (GPL). The Project will start in 2010 & last phase of the project will be completed by 2017. The JV is on profit sharing basis and GIL will effectively be beneficiary of 81.6% of profits through its direct 40% share in profits plus its 69.4% stake in GPL.

Divisions

ChemicalsThe Chemicals Division caters to following business segments viz. Fatty alcohols, fatty acids, glycerin & surfactants, Key ingredients for personal care, home care & specialized consumer products. For Q1FY11, revenue from the chemical division was up by 22% to 2.18 bn, out of which exports stood at 0.81 bn, up by 28%. The Division accounts for 38% of the chemical business turnover. PBIT was at 0.20 bn, up 39%. Fatty acid grew by 17%, fatty alcohol by 32% and surfactants by 10%. The board has approved setting up of new oleochemicals manufacturing facility at Ambernath, near Mumbai at an outlay of 2.3 billion which will be operational by FY13.

Agrovet (75.2% Holding)

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The Godrej Agrovet Division caters to following business segments viz. Animal Feeds -cattle, layer, poultry & aqua feed, Oil Palm plantations & Agrochemicals, Poultry & processed meats. The consolidated total revenue of this segment rose by 13% in Q1FY11. PBIT grew 130% to 0.17 bn. Going ahead, the company expects improvement in revenue and margin. It is looking at setting up 4-5 animal feed units at an investment of 0.10 - 0.15 bn each in Maharashtra, UP and south India. Animal feed contributes around 50% of the total revenue of Godrej Agrovet (` 15 bn) and the company expects a 15-20% growth in this fiscal.

Properties (69.4% Holding)The Godrej Properties Ltd. (GPL) division caters to construction of Townships, Residential & Commercial projects with its new launch in NCR it has marked its presence in 11 cities and has approx. 82 mn sq ft development area. It develops Townships, Residential & Commercial projects. GPL revenue was up by 290% to ` 730 mn and net profit grew by 653% to 0.22 bn in Q1FY11.

Vikroli Property Development LLP (40% Holding)Godrej Group owns about 5,000 acres of land in Vikhroli, a part of which has been used for residential and commercial purposes. The company plans to develop approx 3 mn sq ft of property development in the prime Mumbai suburb. The project would have mixed use development with best-in-class design & green buildings. Project will start in 2010 & last phase of the project would be completed by 2017. GIL & GPL has JV on profit sharing basis.

FMCG (GCPL 23.4% Holding, GHL 43.4% Holding)The Division caters to following businesses Home care, Personal Care , Foods & beverages, Insecticides & Hair color segment, Soaps, & confectionery and has third of its revenues coming from international market. The segment recently concluded the acquisition of the remaining 51% stake in Godrej Sara Lee Ltd. (GSLL). For fiscal year 2009-10, the GSLL business generated revenue of 9.65 bn (up 20% vs a year ago) and PAT of 1.37 bn (31% growth over the previous year).

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Organisation structure

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Whether company is listed or not?

Yes, the company is listed on NSE by the name of GODREJIND and the current market price is

Rs. 253.

The company is also listed on BSE by the name of 500164 and the current market price is Rs.

250.

Investment Theme

A 113 year old brand, GIL is on strong growth path. Its diversified business provides a hedge over adverse phases in any of its particular industry. GIL is expecting better quarters ahead on good monsoons. It will provide adequate impetus to its agri-business segment. Godrej Properties also has been on a high performance spree with strong growth expected both in top line and bottom-line. The company is also expanding its operations and has earmarked Rs.3 bn for agri and chemical businesses. With so much Diverse business holding GIL is like actually holding a fairly diverse Portfolio or may be like a Mutual Fund Unit.

Analysis and Interpretation of Share Price in Last 5 years

Interpretation for year 2007

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At the starting of year, the price was around Rs175 Then from march to June the price floated around Rs150 Price rose above Rs200 in July and august In November the price started rising and it almost touched Rs500 in December

Interpretation for year 2008

This was the year of global recession In mid of January the price started decline From February to June the price floated between Rs250 and Rs300 From July to September the price floated between Rs150 and 200 After September the price started decline constantly and at the end of year the price was

around Rs75

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Interpretation for year 2009

From January to April the price remained between Rs50 and Rs100 Then from April the price started rising and there was a tremendous growth in the price In November the price suddenly fell from Rs210 to Rs160 Then after rising again to Rs210, the price at the end of the year was Rs175

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Interpretation for year 2010

In February the price was Rs150 after falling from Rs190 From February to July the price floated around Rs150 In July the price started rising and it was Rs200 in September In September the price sharply rose to Rs250 then it again fell down to Rs225 in October

and it floated at this price till November In November the price started declining and at the end of year it was Rs180

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Interpretation for year 2011

The starting price in January was Rs200 and then it started felling From February to April the price floated between Rs180 and Rs150 From April to July the price floated around Rs190 Then after price rose to Rs230 and it again fell to Rs180 and then it floated between

Rs180 to Rs210 At the end of year the price was Rs170

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Share Price v/s Sensex

For year 2007

For year 2008

17

For year 2009

For year 2010

18

For year 2011

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BETA Value of the company for last 5 years

Year Beta Value

2007 1.28999073

2008 2.413413199

2009 1.908079255

2010 1.749917039

2011 -0.013799036

OVERALL= 1.625842838

In 2007, the Beta Value of the company was around 1.29 which means the share price changed 1.29 times the change in sensex.

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In 2008, the Beta Value of the company was around 2.4 which is around double the value in 2007.

In 2009, the Beta Value fell down again to 1.9 In 2010, the Beta Value continued felling down and it was 1.74 In 2011, the Beta Value became negative i.e -0.014

Thus the overall Beta Value of the company for last five years is 1.625

Standard deviation

Year Standard Deviation

2007 65.68081

2008 97.29293

2009 54.29891

2010 28.78937

2011 15.8969

It shows how much variation exists from the average (mean, or expected value). A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data points are spread out over a large range of values.

The SD in 2007 was 65 which was high Then in 2008, at the time recession, the value went to 97 which means that the value of

the share was deviating to double or half the price.

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Then after it the SD slowly started declining and in 2011, it came to 15 which is quite low which means that the expected value is nearly around to market value of share.

Coefficient of Variation

Year Coefficient of Variation

2007 41.25979

2008 82.02215

2009 47.59753

2010 24.77045

2011 12.63815

 

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The coefficient of variation allows you to determine how much volatility (risk) you are assuming in comparison to the amount of return you can expect from your investment. In simple language, the lower the ratio of standard deviation to mean return, the better your risk-return tradeoff.

In year 2007 the COV was around 41 Then in 2008 it gets doubled to 82 which means the risk involved was very high during

this period Then COV started declining and in 2011 it came down to 12, so nowadays the risk

involved in these shares are quite low as compared to its previous conditions.

Profitability of the company for last five years

Year Mar ’07 Mar ’08 Mar ’09 Mar ’10 Mar ’11

Operating Profit Margin(%)

3.49 11.31 -3.63 1.64 4.13

Profit Before Interest And Tax Margin(%)

0.18 7.43 -6.29 -1.71 1.33

Gross Profit Margin(%)

0.20 7.80 -6.89 -1.84 1.39

Net Profit Margin(%)

10.68 14.00 2.09 9.22 12.04

Return On Net Worth(%)

20.54 10.32 1.85 8.01 12.36

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Gross profit = Net sales - Cost of goods sold. Operating Profit = Gross Profit - Total operating expenses EBIT = Revenue – Operating expenses (OPEX) + Non-operating income Net income = Gross profit – Total operating expenses – taxes – interest.

Gross Profit Margin

Gross profit is what is left after the cost of goods sold have been subtracted from net sales. Company’s gross margin is a very important measure of its profitability, because it looks at your company’s major inflows and outflows of money. In general, company’s gross profit margin ratio should be stable.

So here the company’s gross profit margin is highly fluctuating as it goes at 7.80 in 2008 from 0.20 in 2007. Then due to effect of recession it decreases to -6.89 in 2009. After it, it started increasing and in 2011 its value was 1.39.

Operating Profit Margin

The operating profit margin is an indicator of your company’s earning power from its current operations. This is the core source of your company’s cash flow, and an increase in the operating profit margin from one period to the next is considered a sign of a healthy, growing company. In general, the operating profit margin is an indicator of management skill and operating efficiency. It measures the company’s ability to turn sales into pre-tax profits. It is a ratio that can be used to compare our company’s competitive position to others in the same industry.

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So here the company’s operating profit in 2007 was 3.19 then it grew to 11.31 in 2008. Due to effects of recession, it declined to -3.63 in 2009. By company’s management skills, it again grew and the value in 2011 was 4.13.

Net Profit Margin

The net profit margin indicates the earnings per unit of Rupee. So the company’s net profit margin in 2007 was 10.68 and then it grew to 14.00 in 2008. It fell down to 2.09 in 2009 due to effects of recession. Again it started growing and in 2011 its value was 12.04 which means that on every 1 Rupee spent, the company earned 12.04 paise on it.

Capital Structure of the Company

Proportion of Debt-Equity

Year Debt-Equity ratio

2007 1.19

2008 0.42

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2009 0.59

2010 0.54

2011 0.51

Proportion of Equity-Preference

The company has not allotted any preference shares so this ratio cannot be determined.

Proportion of Equity-Preference-Debt

As company has not allotted any preference shares so this ratio cannot be determined also.

A measure of a company’s financial leverage calculated by dividing its total liabilities by stockholder’s equity. It indicates what proportion of equity and debt the company is using to finance its assets.

In 2007 the company’s debt/equity ratio was 1.19 which means more than 2/3rd portion of the company’s finance was debt and remaining was equity. But the company reduced it and in 2011, it was 0.51. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. The data shows that the company is not aggressive in financing its growth with debt.

Dividend Policy of the Company

Year Dividend(%)

2007 100

2008 125

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2009 125

2010 150

2011 175

The company believes in paying high dividends to its shareholders. Generally, higher dividend increases the market value of the share and vice versa. Shareholders preferred current dividend to future income so, dividend is considered as an important factor which determines the shareholders’ wealth. This is normally true in case of salaried individuals, retired pensioners and others with limited incomes. Dividend has information content and the payment of dividend indicates that the company has a good earning capacity. The wealth of the shareholders is greatly influenced mainly by five variables viz., Growth in Sales, Improvement of Profit Margin, Capital Investment Decisions (both working capital and fixed capital), Capital Structure Decisions, Cost of Capital (Dividend on Equity, Interest on Debt) etc.

As far as the dividend paying companies are concerned, there is a significant impact of dividend policy on shareholders’ wealth in Organic Chemical Companies. Whereas, as far as the Inorganic Chemical Companies are concerned, the shareholder’s wealth is not influenced by the dividend payout.

By analyzing the data we can see that the company increases its dividends percentage by every year. In 2007, it was 100% and in 2011 it was 175%. So the investor who invested Rs 100 in company in 2010, the company gave him Rs 175 on it which is quite handsome income.

Liquidity position of the company

2011 2010 2009 2008 2007

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in Rs. Cr.

Liquidity Position = Cash + available revolving credits - short term debt - current portion of long term debt

The liquidity position of the company is quite high and has been increasing since 2007. In 2007 the company’s total assets were worth of Rs. 878.31 cr. In 2011 it has been increased to worth of Rs. 1644.38 cr. Which is 2 times from the past five years. There are various factors for this high growth in liquidity position of the company.

The company has increased its inventories in 5 years to the worth of Rs. 185.09 cr. Cash & bank balance, total current assets has also increased. Total current assets of the company in 2007 were Rs. 384.28. They get increased to Rs. 815.76 cr. Then due to recession they again get decreased to Rs. 450.67 cr. The company recovered it and in 2011 the amount of total current assets were Rs. 560.89 cr.

As per by the data, the company also reduced its miscellaneous expenses to Rs 0.00 by the year 2009 and till 2011 they were nil. So this also helped company to increase the liquidity position of the company.

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Inventory Position of the Company

Year Rs. Cr.

2007 156.15

2008 197.71

2009 93.56

2010 134.77

2011 185.09

Inventory position is a quantity used to measure the current inventory level. It is equal to the sum of on-hand inventory and inventory on order minus backorders.

The company’s inventory position is quite high but the growth in inventories is low as compared to the growth in net current assets. In 2007, the inventory was worth of Rs. 156.15 cr. and the company’s net current assets were Rs. 787.31 cr. The inventory position of the company increased in years and in 2011 it was Rs. 185.09 cr. and company’s net current assets were worth Rs. 1644.38

Credit Rating

Godrej Industries Ltd has informed BSE that ICRA Ltd. Has reaffirmed the following:

1. Rating for Commercial Paper Programme:

ICRA has reaffirmed the “[ICRA]A1+ (pronounced as ICRA A one plus) rating to the Commercial Paper Programme of Rs. 260 crore (enhanced from Rs. 160 crore) – with Rs. 200 crore to be issued on a standalone basis.

Instruments with [ICRA]A1 rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk. Within this category certain instruments are assigned the rating of [ICRA]A1+ to reflect their relativity stronger credit quality.

2. Rating for Long term loan, fund based limits and non-fund based limits:

ICRA has reaffirmed the long term rating of [ICRA]AA (pronounced ICRA double A) to:

-the term loans of Rs. 400 crore (enhanced from Rs. 350 crore)

-fund based limits of Rs. 90 crore

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-non-fund based limits of Rs. 50 crore (enhanced from Rs. 30 crore)

The long term rating carries a stable outlook.

- Rating for short term loans and non-fund based limits

ICRA has reaffirmed the short term rating of “[ICRA]A1+ (pronounced as ICRA A one plus) on:

- short term loan of Rs. 300 crore (enhanced from Rs. 225 crore)

- non- fund based limits of Rs. 450 crore ( enhanced from Rs. 370 crore)

IPO issued by Company

Godrej Properties Limited (GPL) successfully completed its IPO in Dec 2009

• Issue Size: 94.3 lac shares. Issue subscribed about 3.6 times.• Priced at Rs. 490 per share of face value Rs. 10.• Shares listed on BSE and NSE on Jan. 5, 2010.

Competitor

Tata Chemicals is the major player in the chemical industry. Its current share price is Rs. 350.45 and the share price of Godrej Industries is Rs. 240.25. The company is one of the largest chemical companies in India with significant operations in India and Africa. Tata Chemicals is a subsidiary of Tata Group conglomerate.

Close Price

For year 2007

30

For year 2008

For year 2009

31

For year 2010

For year 2011

32

Thus we can see that in 2007 the share price of Tata Chemicals was Rs. 220 At the end of year it increased to Rs. 425 Then due to recession in 2008, the price fell to Rs. 160 In 2009 the price again rose to Rs 325 which was quite high and they recovered it in short

time In 2010 the price touched Rs. 445 but at the end of year it was Rs. 405 In 2011 the price again fell below Rs. 300 and at the end of year it was Rs. 310 The current share price of Tata Chemicals is Rs. 350.45

So we can see that the price of share is highly volatile. It floated around between Rs. 300 and Rs. 440 in five years and in between the daily price is also highly volatile.

Standard Deviation

Year SD

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2007 49.942632008 77.927132009 60.094332010 42.634742011 24.0092

It shows how much variation exists from the average (mean, or expected value). A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data points are spread out over a large range of values.

The SD in 2007 was 49 which was high Then in 2008, at the time recession, the value went to 77 which means that the value of

the share was deviating to 3/4th the price. Then after it the SD slowly started declining and in 2011, it came to 24 which is high as

compared to the SD of Godrej Industries.

So the risk involved in the share price of Tata Chemicals is high as compared to the risk involved in share price of Godrej Industries.

Profitability of the company

Year 2011 2010 2009 2008 2007

Net Profit Margin(%) 6.41 7.83 5.32 22.77 10.84

The net profit margin of Tata Chemicals in less than Godrej Industries. In 2007, NPM of Tata Chemicals was 10.84 and NPM of Godrej Industries was 10.68 Then the NPM of Tata Chemicals started declining after 2008 which was 22.77 and in

2011 it was 6.41 but NPM of Godrej Industries rose after felling down in 2008 and in 2011 it was 12.04 i.e double the NPM of Tata chemicals.

Dividend Policy of the company

Year Dividend(%)2007 80

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2008 902009 902010 902011 100

The dividend payout is good but it is less than the dividend payout by Godrej Industries.

In 2007 the dividend payout was 80%, whereas the dividend payout of Godrej Industries was 100%

In 2011 the dividend payout was 100%, whereas the dividend payout of Godrej Industries was 175%

So the company believes in maximization of shareholder’s wealth by increasing the retained earnings thus by increased value of share price which is opposite to Godrej Industries.

Liquidity position of company

Year Total Assets(Rs. Cr.)2007 3434.612008 5916.962009 7298.012010 7221.582011 7716.62

The Liquidity Position of Tata Chemicals is very high as compared to Godrej Industries.

In 2007, the total assets of Tata Chemicals were worth of Rs. 3434.61 cr. which are very high as compared to total assets of Godrej Industries i.e Rs. 878.31 cr.

In 2011, the total assets of Tata Chemicals were worth of Rs. 7716.62 cr. and of Godrej Industries they were worth of Rs. 1644.38 cr. which are around 5 times less than of Tata Chemicals.

Important NEWS update by Godrej Industries

Godrej Industries reports net profit of Rs 16.91 crore in the December 2009 quarter.

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Godrej Inds sails against tide on turnaround show. The result was announced after market hours on Monday, 25 January 2010.

Godrej Industries recommends final dividend. The board of Godrej Industries in its meeting on 26 May 2010 has recommended final dividend at the rate of Rs 1.50 per share for the financial year.

Godrej Industries net profit rises 347.57% in the year ended March 2010. Net profit of Godrej Industries rose 103.01% to Rs 27.00 crore in the quarter ended March 2010 as against Rs 13.30 crore during the previous quarter.

Godrej Industries to set up oleo chemicals facility. The board of Godrej Industries at its meeting held on 27 July 2010 has approved capital expenditure of about Rs 230 crore for setting up an oleo chemicals facility at Thane, Maharashtra.

Godrej Industries board approves formation of limited liability partnerships.The board of Godrej Industries at its meeting held on 27 July 2010 has approved formation of limited liability partnerships with Godrej Properties.

Godrej Industries net profit rises 2210.34% in the June 2010 quarter. Net profit of Godrej Industries rose 2210.34% to Rs 13.40 crore in the quarter ended June 2010 as against Rs 0.58 crore during the previous quarter.

Godrej Industries net profit rises 21.93% in the September 2010 quarter. Net profit of Godrej Industries rose 21.93% to Rs 44.42 crore in the quarter ended September 2010 as against Rs 36.43 crore during the previous quarter.

Godrej Industries board approves Employee Stock Grant Scheme 2011. Published on Oct 28, 2010. The board of Godrej Industries in its meeting on 27 October 2010 has approved the Employee Stock Grant Scheme 2011, subject to approval of shareholders. The scheme envisages creation and issue of fresh equity shares not exceeding 25 lakh of face value Re. 1 each to the eligible employees.

Godrej Industries net profit rises 21.93% in the September 2010 quarter. Net profit of Godrej Industries rose 21.93% to Rs 44.42 crore in the quarter ended September 2010 as against Rs 36.43 crore during the previous quarter.

The board of Godrej Industries in its meeting on 27 October 2010 has approved the Employee Stock Grant Scheme 2011, subject to approval of shareholders. The scheme envisages creation and issue of fresh equity shares not exceeding 25 lakh of face value Re. 1 each to the eligible employees.

Godrej Industries net profit rises 47.66% in the December 2010 quarter. Net profit of Godrej Industries rose 47.66% to Rs 24.97 crore in the quarter ended December 2010 as against Rs 16.91 crore during the previous quarter.

Godrej Industries to consider dividend. The board meeting of Godrej Industries will be held on 30 May 2011 to consider and approve the audited financial results for the year ended 31 March.

Godrej Industries net profit rises 87.56% in the March 2011 quarter.Net profit of Godrej Industries rose 87.56% to Rs 50.64 crore in the quarter ended March 2011 as against Rs 27.00 crore during the previous quarter.

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Godrej Industries grants stock options. Published on May 30, 2011. The committee of Godrej Industries in its meeting on 30 May 2011 has granted 3,61,797 stock options to the eligible employees of the company in terms of Employee Stock Grant Scheme 2011 (ESGS 2011).

Godrej Industries recommends final dividend . Published on May 30, 2011. The board of Godrej Industries in its meeting on 30 May 2011 has recommended final dividend at the rate of Rs 1.75 per share for the financial year 2010-11.Godrej Industries strengthens after upbeat Q4 results. The result was announced after market hours on Monday, 30 May 2011.Godrej Industries core business reported marked improvement in performance and concerted efforts are taken at derisking the oleo-chemicals business by improving contribution from specialty chemicals and a healthy growth reported by end-user industries have enabled such an enhanced performance. Agri-businesses have concluded the year with healthy results, contributing meaningfully to both revenues and profits and the focus for the coming year will be to accelerate oil palm cultivation and make inroads in drip irrigation, Godrej Industries said in a press release. In chemicals business, revenues rose 31% and profit before interest and tax increased 85% in the year ended March 2011 over the year ended March 2010. Specialty chemicals revenue accounts for 33% of chemicals business revenue while export revenues rose 34% in the year ended March 2011 over the year ended March 2010.

The company`s board of directors declared final dividend of Rs 1.75 per share for the year ended March 2011.

Godrej Industries to grant options. Published on Jul 30, 2011. The compensation committee of Godrej Industries has noted / approved lapse of 1,19,750 options under GIL ESOP I & II, due to resignation of employees.The compensation committee approved granting of 2,97,250 options to employees, in terms of GIL ESOP II. The options shall vest in the employees on 30 July 2014. Thereafter, the option grantees shall be entitled to exercise the options within a period of 2 years.The compensation committee has approved granting 2,07,813 stock grants to eligible employees of the company, in terms of employee stock grant scheme 2011 (ESGS 2011). In terms of the ESGS 2011, one stock grant represents one equity share of the company. The stock grants shall vest in the employees on 30 July 2012 or as may be determined by the compensation committee.

Godrej Industries net profit rises 30.22% in the June 2011 quarter.Net profit of Godrej Industries rose 30.22% to Rs 17.45 crore in the quarter ended June 2011 as against Rs 13.40 crore during the previous quarter.

Godrej Industries gains after strong Q1 outcome. Published on Aug 01, 2011.Godrej Industries` chemicals business revenues rose by 28% and PBIT rose by 6% (despite impact of shutdown expenses of Rs 6 crore) in Q1 June 2011 over Q1 June 2010. Revenue of specialty chemicals, which accounts for 34% of chemicals business revenue, grew by 22%. Export revenues, which accounts for 43% of division`s turnover, rose by 49% in Q1 June 2011 over Q1 June 2010.

Godrej Industries net profit rises 89.51% in the September 2011 quarter. Net profit of Godrej Industries rose 89.51% to Rs 84.18 crore in the quarter ended September 2011 as against Rs 44.42 crore during the previous quarter ended September 2010. Sales rose

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43.66% to Rs 348.86 crore in the quarter ended September 2011 as against Rs 242.83 crore during the previous quarter ended September 2010.

Godrej Industries net profit rises 14.18% in the December 2011 quarter. Net profit of Godrej Industries rose 14.18% to Rs 28.51 crore in the quarter ended December 2011 as against Rs 24.97 crore during the previous quarter ended December 2010. Sales rose 21.84% to Rs 339.81 crore in the quarter ended December 2011 as against Rs 278.90 crore during the previous quarter ended December 2010.

In the consolidated results, the company reported net profit after minority interest of Rs 84.73 crore in the quarter ended December 2011 as against Rs 60.86 crore during the previous quarter ended December 2010. Sales reported to Rs 1447.08 crore in the quarter ended December 2011 as against Rs 1019.16 crore during the previous quarter ended December 2010.

Godrej Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 03, 2012, inter alia, has approved a revised capital expenditure of Rs. 296 crore plus interest during construction and other charges. The capital expenditure is being incurred over a two year period. The increased capital expenditure is mainly on account of increased scope of plants, additional activities / expenses on account of creating facilities in low lying land area and inflation in material costs related to construction.

Bibliography

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http://www.godrej.com/godrej/GodrejIndustries/aboutgodrejindustries.aspx?id=12&menuid=1093

http://www.indiainfoline.com/Markets/News/Godrej-Industries/3100705454

http://www.indiainfoline.com/Markets/Company/Background/Company-Profile/Godrej-Industries-Ltd/500164

http://info.shine.com/company/Godrej-Industries-Limited/929.aspx

http://www.topstockresearch.com/INDIAN_STOCKS/CHEMICALS_INORGANIC/StockPerformance.html

http://www.google.co.in/url?sa=t&rct=j&q=position+of+godrej+industries+ltd&source=web&cd=4&ved=0CFIQFjAD&url=http%3A%2F%2Fwww.indiratrade.com%2Freports%2Finstitutional%2Fgil.pdf&ei=BHJGT4CoM6OuiQLz-IXaDQ&usg=AFQjCNFT-ncdmAXJX8wMJrZQkeq38n3dOA&sig2=Ly7JPEr9HS4A7xcFHG107Q

http://www.analytixinsight.com/Catalog/company/analysis-snapshot-500164-in-godrej-industries-ltd-chemicals-major-diversified.html

http://www.godrej.com/godrej/GodrejIndustries/investorrelations.aspx?id=12&menuid=1097

http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=496953

http://money.rediff.com/companies/godrej-industries-ltd/12520018

Glossary

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Time value of money:- with the duration of time the value of money decreased.

Net present value: - The difference between the present value of cash inflows and the present

value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an

investment or project. 

Cost of debt: - The measure can also give investors an idea as to the riskiness of the company

compared to others, because riskier companies generally have a higher cost of debt.

Annuity: - Annuities are primarily used as a means of securing a steady cash flow for an

individual during their retirement years.

Magnitude: - Quantum of time

Sensex: - Value of Top 30 Listed companies

Nifty: - Value of Top 50 Listed Companies

DebitA bookkeeping term for a sum of money owed by an individual or institution; a charge deducted from an account.

ATMAcronym for automated teller machine.

OverdraftA check written for more money than is currently in the account. If the bank refuses to cash the check, it is said to have "bounced."

CollateralAnything that a bank accepts as security against the debtor's not repaying a loan. If the debtor fails to repay the loan, the bank is allowed to keep the collateral. Collateral is most commonly in the form of real estate (e.g., a home).

MortgageA long-term loan obtained by individuals to buy a home that legally transfers ownership from the debtor to the creditor until the debt is paid.

Savings accountA bank account that accrues interest in exchange for use of the money on deposit.

Depositor

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An individual or company that puts money in a bank account.

Current accountA checking account or a savings account.

Joint accountA savings or checking account established in the names of more than one person (e.g., parent/child, wife/husband).

Pass bookA booklet given by the bank to the depositor to record deposits, withdrawals, and interest earned on a savings account.

WithdrawalAn amount of money taken out of an account.

Certificate of depositA savings account in which an individual promises to deposit the money for a set period of time, for which the bank pays higher interest than a regular savings account.

Checking accountAn account for which the holder can write checks. Checking accounts pay less interest than savings accounts, or none at all.

Cashier's checkA check issued by a bank, drawn on its own funds rather than on one of its depositor's funds.

Bounced chequeA check that a bank has refused to cash or pay because you have no funds to cover it in your account.

PayeeAn individual or company to whom a check is written; one who receives money as payment.

PayerAn individual or company who writes a check; one who gives money as payment.

Service chargeA fee charged by a bank or financial institution for providing a service.

TermsThe period of time and the interest rate arranged between creditor and debtor to repay a loan.

Debt service

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The amount of money a unit of government must spend to repay in full and on schedule the

principal and the interest owed on what it borrows from outside lendors.

Liquidity

The ability to convert an investment (of idle funds) quickly in order to meet obligations with

minimum loss of earning power.

General reserves

Revenues received but not needed until a future date in order to meet obligations; these revenues

can be invested in a variety of authorized ways to generate additional income. (The investment of

idle funds requires coordination between cash flow planning and budget planning.)

Management letter

A letter from the independent auditors that is usually a series of findings or recommendations on

ways the financial management policies and practices may be improved.

Restricted assets

An account set up to control monies or other resources, the use of which is restricted by legal or

contractual requirements

Zero-base budget A budgeting approach whereby the expenditure amount for each line item is

examined in its entirety each year, regardless of prior funding. Those items that cannot be

justified are subject to elimination.

Annexure

Balance Sheet

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Year 2011 2010 2009 2008 2007

Ratios

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Year 2011 2010 2009 2008 2007

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