Godrej

Godrej Report
CHAPTER 1
Introduction
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Godrej Report
CHAPTER 1
INTRODUCTION
TOPIC:
Analysis on Godrej Industries Ltd and their Business Valuation using SOTP – Sum of
the parts valuation.
Introduction to the topic:
Godrej industries is a conglomerate and it is difficult to completely valuate the

company as a whole, hence this topic is about how godrej industry carries on its
business valuation in order to get to know their overall position as a conglomerate
organisation.
This topic deals with the following:
1. Godrej industries
2. Various businesses under godrej industries
3. The business valuation technique it uses
4. How it uses such a valuation technique
The actual intention of this research project is to analyse godrej industries as well as
find out the type of valuation done by Godrej industries and how effective it is based
on secondary research. This research project would help in finding out about the kinds
of valuation which can used by companies who have a number of businesses and own
a percentage of each of them.
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The following things are covered in the report they are:

1. Analysis on Godrej industries.
2. Different types of businesses of Godrej industries.
3. Analysis on the type of business valuation used in the valuation of godrej
industries.
4. Clear picture of how the valuation is done.
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INTRODUCTION TO THE INDUSTRY
Godrej Industries is into a number of businesses and they include:
Vegoils industry:
The vegetable oil processing industry involves the extraction and processing of oils
and fats from vegetable sources. Vegetable oils and fats are principally used for
human consumption but are also used in animal feed, for medicinal purposes,and for
certain technical applications. The oils and fats are extracted from a variety of
fruits,seeds, and nuts. The preparation of raw materials includes husking, cleaning,
crushing, and conditioning.The extraction processes are generally mechanical (boiling
for fruits, pressing for seeds and nuts) or involve the use of solvent such as hexane.
After boiling, the liquid oil is skimmed;after pressing, the oil is filtered; and after
solvent extraction, the crude oil is separated and the solvent is evaporated and
recovered. Residues are conditioned (for example, dried) and are reprocessed to yield
by-products such as animal feed. Crude oil refining includes degumming,
neutralization,bleaching, deodorization, and further refining.
Chemicals industry:
Chemical industry is one of the oldest in industries in India which contributes
significantly towards industrial and economic growth of the nation. It is highly
science based and provides valuable chemicals for various end products such as
textiles, paper, paints and varnishes, leather etc., which are required in almost all
walks of life. The Indian Chemical Industry forms the backbone of the industrial and
agricultural development of India and provides building blocks for down stream.
India also produces a large number of fine and specialty chemicals, which have very
specific uses and are essential for increasing industrial production. These find wide
usage as food additives and pigments, polymer additives, anti-oxidants in the rubber
industry, etc.
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Real estate industry:

The Indian real estate sector plays a significant role in the country's economy. The
real estate sector is second only to agriculture in terms of employment generation and
contributes heavily towards the gross domestic product (GDP). Almost five per cent
of the country's GDP is contributed to by the housing sector. Almost 80 per cent of
real estate developed in India is residential space, the rest comprising of offices,
shopping malls, hotels and hospitals. The real estate sector is also likely to get a boost
from Real Estate Mutual Funds (REMFs) and Real Estate Investment Trusts (REITs).
In fact, according to a CRISIL paper, the REITs would have the potential to hold at
least 5 per cent share of the total global real estate market by 2010, the size of which
would turn to US$ 1400 billion in the next 3 years. The paper titled ‘Indian REITs;
Are We Prepared', says that by 2010, REITs alone would hold a market size of US$
70 billion of the total real estate market as its concept is gaining ground in countries
like India and other developing nations.
FMCG industry:
FMCG is the acronym of Fast Moving Consumer Goods which is also known as
Consumer Packaged Goods (CPG). Fast moving consumer goods are products that
have a quick turnover, and relatively low cost. FMCG generally include a wide range
of often purchased consumer products such as toiletries, soap, cosmetics, teeth
cleaning products, shaving products and detergents, as well as other non-durables
such as glassware, bulbs, condoms, batteries, paper products and plastic goods. The
purchasers usually put less thought into the purchase of FMCG than they do for other
durable products such as electronic items. In comparison with other industries such as
automobiles, computers, and airlines, FMCG business has a steady rate of growth, for
it does not suffer from huge recession and layoffs every time the economy starts to
dip. In FMCG business absolute profit made on the products is relatively small. Since
they generally sell in large numbers, the overall profit on such products can be huge.
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INTRODUCTION TO THE COMPANY
HISTORY
Godrej Industries was incorporated in 1988 under the name of Gujarat – Godrej
Innovative Chemicals Limited. The business and undertaking of the erstwhile Godrej
Soaps Limited was transferred to the company under a scheme of amalgamation in
1994 and the company’s name was changed to Godrej Soaps. Subsequently, under a
scheme of arrangement the Consumer Products division of the company was
demerged in 2001 into a separate company. Godrej Consumer Products Limited
(GCPL) and the vegetable oils and processed foods manufacturing business of Godrej
Foods was transferred to the company in 2001. Godrej Industries businesses were
originally part of Godrej Soaps Limited, which also had a consumer products
division.That division was de-merged, and Godrej Soaps renamed as Godrej
Industries, in 2001. The de-merger of the manufacturing business of Godrej Foods
Limited (GFL), together with its marketing, sales, finance and other related functions
into Godrej Industries Limited (GIL), was completed in 2003. In 2003, Godrej
Industries' launched Godrej Sunshakti - a new brand of 100% refined sunflower
cooking oil in Maharashtra, Karnataka and Andhra Pradesh. Godrej Industries' food
division terminated its alliance with Karnataka Cooperative Milk Producers
Federation (KMF) in 2004, which allowed it to distribute KMF's Nandini brand of
ghee. In April 2008, GCPL, a subsidiary of the company, acquired a 100% stake in
Kinky Group Proprietary, South Africa. The company appointed Pirojsha A Godrej as
its Executive Director in November 2008. In January 2009, the company appointed
Jimmy Bilimoria, Naushad Forbes, and Arun Maira as its Directors.
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COMPANY PROFILE
BUSINESS DESCRIPTION
Godrej Industries is manufacturer of oleochemicals, edible oils, vanaspati and bakery
fats as well as operates businesses in medical diagnostics and real estate. The
company operates through four business segments: chemicals, vegoils, estate, finance
and investments, and others. The chemicals division manufactures oleochemicals,
such as fatty acids, glycerine and fatty alcohols, and surfactants, such as alpha olefin
sulphonate. It has a distribution network in India and abroad, and caters to a wide
range of industries, including detergents, cosmetics, pharmaceuticals and plastics. The
vegoils segment manufactures a range of edible oils, vanaspati, bakery fats and
margarine. The estate segment comprises the business of giving premises on leave
and license basis. The finance and investments segment comprises of investment in
subsidiaries, associate companies and other investments. The others operations
includes energy generation through windmills and medical diagnostics business. The
company has modern, integrated chemical factories at Valia in the Indian state of
Gujarat, and at Vikhroli in suburban Mumbai. Godrej Industries controls an important
part of the Indian market in the production of fatty acids, fatty alcohols and AOS.
Products from the Godrej Industries portfolio are used in a variety of applications:
cosmetics, tyres, detergents, pharmaceuticals, cigarettes, toothpaste and more.The
company's products are exported to 40 countries in North and South America, Asia,
Europe, Australia and Africa, and it leads the Indian market in the production of fatty
acids and fatty alcohols.
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INDIVIDUAL COMPANY PROFILES
1. Godrej & Boyce Mfg. Co. Ltd.

Godrej and Boyce is 112 years old company which deals with various range of
products, from locks to personal care, from appliances to air care and from furniture
to construction. offer an entire spectrum of industrial solutions from storage to
material handling to process equipment.
PRODUCTS OF GODREJ & BOYCE:

1. CONSUMER PRODUCTS
I. APPLIANCES:
• Refrigerators
• Washing machine
• Air conditioners
• Microwaves
• DVD players
II. LOCKS
• Locks
• Shakthi locks
• Cartini
III. FURNITURE
• Home furniture
• Office furniture
• Special solutions
IV. SECURITY EQUIPMENT
• Physical Security Products
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• Currency Handling Products

• Electronic Security Systems
• Home Safes
• Premises Security Solutions
• Marine Products
• Fire Doors
• Godrej Entranza Doors
V. AUDIO VISUAL SOLUTIONS

VI. TYPE WRITERS
VII. VENDING MACHINES
2. INDUSTRIAL PRODUCTS
I. STORAGE SOLUTIONS
II. AUTOMATED WAREHOUSING
III. MATERIAL HANDLING EQUIPMENT
IV. PROCESS EQUIPMENT
V. PRECISION COMPONENTS AND SYSTEMS
VI. MACHINE TOOL SERVICES
VII. ELECTRICAL AND ELECTRONICS
VIII. TOOLING
IX. CONSTRUCTION MATERIAL AND SERVICES
X. LAWKIM MOTORS GROUP
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2. GODREJ CONSUMER PRODUCTS LTD
Godrej Consumer Products Ltd.(GCPL) is a major player in the Indian FMCG market
with leadership in personal, hair, household and fabric care segments. The company
employs 950 people and has three state-of-the-art manufacturing facilities at
Malanpur (M.P.) Guwahati (Assam) and Baddi ( H.P.).
Godrej has well known brands such as

Cinthol
Fairglow
Godrej no.1
Leader in hair colour products:

Godrej renew coloursoft liquid hair colours
Godrej powder and liquid hair dyes
Godrej Keshkala oil
Nupur based hair dyes
etc..
Liquid detergent brand

Ezee
toilet detergent soaps
Godrej consumer products deals with:

Soaps
Detergents
Hair care
Household care
Fabric care
Keyline brand
Rapidol brands
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3. GODREJ INDUSTRIES LTD
Godrej Industries Limited is India's leading manufacturer of oleochemicals and makes

more than a hundred chemicals for use in over two dozen industries. It also
manufactures edible oils, vanaspati and bakery fats. Besides, it operates real estate.
GIL is a member of the Godrej Group, which was established in 1897 and has since
grown into a US$1.875 billion conglomerate.The company was called Godrej Soaps
Limited until March 31, 2001. Thereafter, the consumer products division got de-
merged into Godrej Consumer Products Limited and the residual Godrej Soaps
became Godrej Industries Limited. This led to the formation of two separate corporate
entities: Godrej Consumer Products and Godrej Industries.
Besides its three businesses, Godrej Industries also runs four divisions — Corporate
Finance, Corporate HR, Corporate Audit and Asurance and Research and
Development — which operate on behalf of the entire Godrej Group.
GIL has built a strong manufacturing base capable of delivering international quality
products at competitive prices. It operates two plants, one at Valia in the Indian state
of Gujarat and a second at Vikhroli in suburban Mumbai. The company's products are
exported to 40 countries in North and South America, Asia, Europe, Australia and
Africa, and it leads the Indian market in the production of fatty acids, fatty alcohols
and AOS.
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4. GEOMETRIC LTD
Geometric is a specialist in the domain of engineering solutions, services and

technologies. Its portfolio of Global Engineering services and Digital Technology
solutions for Product Lifecycle Management (PLM) enables companies to
formulate,implement, and execute global engineering and manufacturing strategies
aimed at achieving greater efficiencies in the product realization lifecycle.
5. GODREJ INFOTECH LTD
Godrej Infotech Ltd. is in the business of software Development, e-solutions

Development,ERP Implementation, Customisation & ERP Consulting Services,
Database Outsourcing & Consultancy services. An SEI-CMM Level 4 Company, it
also has to its credit ISO-9001:2000 Quality Systems Certification for Design and
Development and Development of Commercial application software, ERP
Consultancy Services and Operations and Technology. Godrej Infotech, formerly a
division of Godrej & Boyce Mfg. Co. Ltd., commenced operations as a separate
corporate entity on April 1, 1999. Godrej Infotech is a part of the diversified GODREJ
group, established in India in 1897.
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6. GODREJ AGROVET LTD
Godrej Agrovet was formerly a division of Godrej Soaps Limited. It was set up as a
separate company with focus on the agri-sector. Over the years, the company has
developed and nurtured a close relationship with farmers. Providing them with
innovative Products, as well as educating them on world-class farming practices.
Together with its subsidiaries Goldmohur Foods and Feeds Limited and Golden Feed
Products Limited , Godrej Agrovet has revenues close to Rs 1000 Crores (US $ 250
million - FY 2007). The activities of the company are vast : Compound Animal feeds,
Agricultural Inputs, Integrated Poultry Business, Oil Palm Plantations, Plant Biotech,
Retailing of Fresh Farm Produce in urban areas, and rural retailing of a wide range of
products including Agricultural inputs. Godrej Agrovet acquired Goldmohur Foods
and Feeds Limited from Hindustan Lever, a Unilever subsidiary in India, in 2001.
Goldmohur Foods and Feeds Limited enjoys strong brand equity due to its poultry
and cattle feed brands. Goldmohur Foods and Feeds Limited has a state-of-the-art
R&D centre in Bangalore named 'ANIC' (Animal Nutrition Innovation Centre). This
centre is devoted to development of innovative animal feed products. Today, Godrej
Agrovet together with its subsidiaries has manufacturing facilities spread over 40
strategic locations and a network of over 10,000 distributors, dealers and C&F agents.
In its journey of growth, Godrej Agrovet has set new standards of corporate
performance, reliably delivering quality products and services to all its customers at
competitive prices.
Godrej Agrovet – The real India opportunity Godrej Agrovet (GAVL) was set up as
a separate company with focus on the agri-sector. It is in this company that GIL has
investments in some of the interesting ‘India’ opportunities. We see tremendous
opportunities in oil palm plantations, poultry and marketing of shrimp feed.
Meaningful alliances and useful investments are expected to provide impetus to the
company’s growth
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Cattle feed: Cattle feed, GAVL’s flagship business, is a high-volume, low-margin

business with PAT margins of 4-5%. With cattle feed comprising around 50%-60% of
milk production cost, the company faces competition from unorganised players and
co-operatives. However, with innovation and better feed mix, Gogrej Agrovet has
been able to establish itself as the market leader in organised cattle feed business with
the segment contributing around Rs4.36bn to Godrej Agrovet’s FY08 topline. Godrej
Oil Palm Plantations: GIL ventured into palm oil plantations to bridge the gap
between the demand and production of edible oils in India. Godrej Oil Palm
Plantations is the leader amongst the private players in the plantation business. The
business recorded 80% YoY topline jump Rs573mn in FY08 and is expected to clock
14% CAGR to Rs790mn in FY11E with ~24,000 hectares of palm plantation area and
another 10,000 hectare block addition in the cultivated land area in the current
year.The main raw material, Fresh Fruit Bunch (FFB), cost is typically 40% of the
overall costs thus implying a high return business, operating margins upward of 30%,
with huge scope for use in the edible oil industry, soaps, alternate fuel etc. The waste
created from the production of palm oil from fresh fruit bunches can be used for
manufacture of bio-fuels, biomass and bio-products thus making this venture even
more profitable in the long run. The company has invested in Indonesia through one
of its subsidiaries to secure better technological knowhow and improved planting
materials. Godrej Oil Palm Plantation currently operates at the yield of ~2.2tonnes
FFB per hectare as against the Malaysian average of 3.5-4 tonnes/hectare. We expect
that with the improvement in plantation inputs and vintage of the crop, company’s
yield would be closing on the average of 3.5 tons/hectare.
The margins are pretty much hedged from the volatility of palm oil prices as the price
of FFB is approximated at ~1/3rd of the previous quarter price of crude palm oil
(CPO) while the company generates CPO from FFB at yield of 17%-19%. The high
growth potential of 14% with robust operating margins around 32% and net margins
around 20% make us sanguine of the investment rationale behind this business.
Godrej Tyson: Godrej’s poultry business is an integrated business vertical which

involves every activity of poultry management from breeding to retailing. The 49:51
JV with Tyson Foods produces retail fresh chicken under the Real Good Chicken
brand and further processed chicken under the Yummiez brand and expects to
capitalise on growth with increasing protein rich food content in Indian food basket.
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Sales from Godrej fresh chicken primarily consist of 40% retail and 60% bulk food
service while the Yummiez brand, frozen veg and non-veg consumables, is entirely
retail driven. The company currently operates through approximately 2000 of such
Fresh outlets. The poultry business recorded 34% revenue CAGR over FY03-08 to
Rs1.9bn. The high growth potential of the business and the shift towards higher
protein intake in Indian food augurs well for the future of the business. We expect this
business to register 15.1% revenue CAGR over FY08-11E to Rs2.89bn.
Godrej Goldcoin: The shrimp feed business, which contributes around 1-2% to the
company’s topline, is expected to outpace GAVL’s other businesses. The total market
size for this vertical including export is Rs35bn (~80,000 tonnes) as of FY08.
The business runs with high gross margins due to cost of product limited around 15%
of sales therefore the company enjoys healthy net margins in the range of 15-20%
with branding and pricing power.
Nature’s Basket: Nature’s Basket works in the field of retail selling products
ranging from vegetables, fruits and herbs, both local and exotic, meats and seafood,
cooking sauces, oils, bakery products and dairy products. In addition, the store also
retails various types of readymade cuisines and wines and beer. Nature’s Basket
currently operates at 8 locations in Mumbai.
Trading business: GIL’s subsidiary Ensemble Holdings & Finance Ltd is a

registered non-banking financial company (NBFC). The company, however, does not
accept any deposits. Investments done by the company in other companies (listed and
unlisted) and the income earned from dividends from such companies and interest
income are the primary sources of income for the company.
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7. GODREJ SARA LEE LTD
Godrej Sara Lee is a joint venture company between the Godrej Group, India and
Sara Lee Corporation, USA. They are the world's largest manufacturers of home
insecticides. The company is committed to the research and manufacture of quality
household insecticides, and holds a substantial market share in the domestic market,
with some of the most popular brands like GoodKnight, Jet, Hit and Banish, which
have become generic with mosquito repellants today. With values and traditions that
stem from the principles on which the foundations of two great conglomerates, Godrej
and Sara Lee, were laid, its able to offer world-class products and services to the
Indian and global consumer.
HOUSEHOLD INSECTISIDES
Its the world's largest manufacturers of home insecticides. The company is committed
to the research and manufacture of quality household insecticides, and holds a
substantial market share in the domestic market, with some of the most popular
brands like GoodKnight, Jet and Hit , which have become generic with mosquito
repellants today.
AIRCARE
Godrej Saralee’s endeavour to help you enjoy your lives better drives it to bring in a
new product range in air care – The Ambi Pur Range. Ambi Pur helps you to
‘Fragrance Your Imagination!!’
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8. GODREJ HICARE LTD
Godrej Hicare Ltd (GHCL) is an initiative by Godrej Group to introduce professional

pest control services in India by utilizing its strengths. For instance, Godrej’s
internationally acclaimed R & D facility for development of over the counter pest
control products. here to give the business of Pest control a professional touch and
international standards. For eg. We have introduced an odourless and highly technical
way of pest control to meet the requirements of the customers. Godrej HiCare Limited
was born out of desire to be in the business of providing Safe Healthy Environment to
the customers and build a profitable business around the existing opportunities and
inherent strengths. Godrej Hicare operates in the field of pest management services
catering to both domestic and industrial clients. The services range from termite
control services to bed bug management services. GIL holds 76% stake in the firm.
The company has an in-house research and development facility with expertise in
development and data generation for household and public health products. Hicare
provides Quality Services for customer with a superior value proposition in the Pest
Management Services through franchisees. It deals with:
Rodex
Termin-8
Intelligel
Wood borer management
Bedbugs management
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9. GODREJ EFACEC AUTOMATION AND ROBOTICS LTD
The Godrej Group is one of the largest groups in India in the Engineering industry
and the Godrej Storage Solutions Group has been a market leader for more than 40
years in providing efficient storage solutions. It is the first Storage system
manufacturing unit, which has been accredited with the prestigious ISO 9001
certification in India. With a view toward providing the latest Warehousing Solutions,
Godrej has formed a Joint Venture with Efacec of Portugal, the leading manufacturers
of Automated Storage and Retrieval Systems in Europe, who have to their credit more
than 90 installations the world over. Efacec is also an ISO 9001 company. It deals
with:
Solutions
Products
Design consultancy
Safety and maintenance
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10. GODREJ PROPERTIES
Godrej Properties was established in 1990 as a real estate development company

within the Godrej Group of businesses. The company was originally incorporated as
Sea Breeze Constructions and Investments Private Limited on February 8, 1985. The
company's name was changed to Godrej Properties and Investments Private Limited
on July 2, 1990 and subsequently to Godrej Properties Limited on November 23,
2004. Since 1897, customers have trusted Godrej to deliver innovation and excellence
across a broad spectrum of services and products. The promise to deliver value drives
the organization at every stage of operation. Firstly, the company evaluates the
potential of possible locations and is led by a team of qualified managers. Once a
location has been identified as a potential development zone, GPL works with only
the foremost architects, contractors, and project managers to bring the project to life.
GPL knows that its obligation to its customers and partners does not end upon the
completion of a project, and therefore, provides post-project professional and
accessible support also.
Godrej Properties adheres to a simple philosophy: providing exemplary service based

on the optimal use of available resources. The company has completed projects in
Mumbai and Pune and is currently developing residential towers such as the Planet
Godrej in central Mumbai and the Godrej Woodsman Estate in Bangalore. Godrej
Properties intends to leverage its established brand image to deliver property solutions
across major Indian metros.
Godrej Properties, the realty arm of GIL, has the potential to become one of India’s
largest property developers over the next decade backed by its unique low-risk JV
model which shields it against asset cycle risk and its focus on mid-income affordable
housing. Further, around 50% of its saleable area is concentrated in Ahmedabad, one
of India’s fastest growing cities and a key element of the Gujarat state government’s
‘Vibrant Gujarat’ programme. We value GIL’s stake in Godrej Properties at Rs91 per
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share, based on DCF-based NAV of existing land bank after providing a 50%
discount to the NAV and adjusting GIL’s 81.4% equity stake in Godrej Properties. In
May 2008, Godrej Properties had filed a Draft Red Herring Prospectus with Sebi for
an IPO to raise funds (then estimated at Rs6bn) for the company’s expansion. Though
the IPO was deferred because of unfavourable market conditions, we believe a
possible listing would unlock value.
11. OVERSEAS ESTABLISHMENTS
Godrej Malaysia
Godrej Singapore
Godrej Vietnam
Godrej Oman
Godrej Sharjah
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TOP COMPETITORS
The following companies are the major competitors of Godrej Industries Limited:
Reliance Industries Limited
DCW Limited
Deepak Nitrite Limited
Clariant Chemicals (India) Ltd.
Rallis India Limited
Colgate
P&G
Dabur
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REVIEW OF LITERATURE
ARTICLE 1
Company review: Larsen & Turbo
ABSTRACT:
Larsen & Turbo is another conglomerate handling a number of businesses in different

industries. Its results were far ahead of their expectations. Larsen & Turbo’s
standalone growth was around 23.6%, though its other divisions did have declines as
the value of standalone is higher they had an overall increase. Despite the challenging
times the growth of E&C in the financial year 2009 was around 28% and the overall
growth was 23%. L&T ended FY2009 with an overall order backlog of Rs70,319
crore, which provides extremely strong visibility to its earnings.
Basically this article talks about Larsen & Turbo one of the conglomerates like godrej
industries whose stock has seen a sharp run up in the recent times.
At the end of the article the required part is mentioned that is the valuation part. This
part shows how Sum of the parts valuation is done in order to find out the fair price of
the stock. Here in the article it is mentioned that the fair value of the stock is around
Rs.1522 which has ultimately become the target price of the stock. The sum of the
parts valuation resulted in valuing the standalone business at Rs.1254
and its subsidiaries at Rs.268.
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ARTICLE 2
Author : Priya Kansara Pandya, ET Bureau

27 Mar 2009
ABSTRACT :
The article talks about how companies using Sum of the parts valuation are still
trading at a discount. Many companies have a strategic stake in unrelated and
diversified business as compared to its core business.
9 out of 14 are trading at a discount –marginal or steep to their sum of the parts
valuation and a few companies are trading above 20%. 3 of these are in the banking
and financial services space as though they have gained more than 20% in the past 15
days still down by over 50% year on year.
As the analysis of large and diversified business had to be done , individual
businesses had been broken down and valuations were arrived at differently
depending upon the companies competitive position and applicable premium or
discount as compared to peers.
The Research company analysed companies like Grasim Industries, Sterlite
Industries, ITC, Larsen and Toubro, Mahindra and Mahindra, HDFC, Hindalco,
Reliance Industries, Kotak Mahindra Bank, Jaiprakash Associates, State Bank of
India, ICICI Bank, Aditya Birla Nuvo and Reliance Capital.
Market participants are bullish on selecting banking and financial services. SBI, ICICI
Bank, Kotak Mahindra Bank, Reliance Capital and HDFC have higher chances of
upsides with overall improvement in the market. These give good entry levels for
investing in the long term, say analysts.
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ARTICLE 3
Author: Mr. A.B. Godrej Chairman, Godrej Industries
ABSTRACT:
Indian economy has taken a positive turn during the quarter which is a very
encouraging sign for all their businesses. Godrej Industries has continued to invest in
a Brighter Future despite an uncertain, though improving, economic climate and has
seen investments in brands and people hold their ground and stand testament to the
fundamental strengths. Its operating chemicals business has stabilized and has
recorded steady performance in this quarter. The ‘Godrej’ brand which has been built
up over decades is one of India’s most well known and respected brand names. And
have strategically managed the brand across their product portfolio. Mr Adi godgrej is
happy to share that they have achieved historic highs in the ‘Brand Equity Most
Trusted Brands Survey 2009’ conducted by The Nielson Company on behalf of Brand
Equity/Economic Times. The effort to invest in their brand and grow its equity with
the help of a reality show which demonstrates the range of their brand’s offering to
position it as an enabler of a brighter lifestyle in a manner that will benefit all the
brands within their fold. Godrej industries have a well diversified business model
within which Properties, Agri-Oil Palm and FMCG segments as future growth drivers
for the Company. While the FMCG businesses are expected to maintain steady
momentum, the Properties and Agri-Oil Palm businesses have the potential to grow at
an exponential rate in the future.
These are the thoughts and comments of Mr Adi Godrej about Godrej industries. He
seems to be very happy with the results in Q1 of the financial year 2010 and has a
positive attitude about the companies future.
With a chair person like Mr Adi Godrej Godrej industries would definitely have a
positive influence.
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ARTICLE 4
Author: Korean herald, Sunday, February 14
ABSTRACT:
Basically this article talks about the conglomerate businesses. The bank bonuses have
reduced making the bankers feel the pinch while the other companies who are
conglomerates have been receiving a hearty bonus which are more than the expected
bonus.
A few of the companies like Hyundai motors gave out an extra 50%of the monthly
pay as well as a luxury price with an overall bonuses estimated at 1.2 to 1.3 trillion.
Hyundai employees at management level or above at will each take home about 4
million won at that week.
The mean average stood at 1.4 million won at the 76.6 percent of the companies that
pay Lunar new Year bonuses this year. The KEF's survey of 224 companies with
more than 100 employees said that the average has increased by 89,000 won from
2009.
Samsung Electronics is also known to have awarded its employees with as high as 2
trillion won of budget All departments at the group's flagship unit received 100
percent of their take home monthly pay just for the Lunar New Year.
Many more companies like LG did the same with their employees. This basically
proves that a conglomerate organisations have an edge over the others as they have a
variety of business and can back up on one if the other fails.
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ARTICLE 5
Author: Sunday Newspaper, 31 January 2010
ABSTRACT:
This article talks about a few companies with regard to the decline in the mining
sector . ENR(Eurasian Natural Resource) have fallen back due to fears of Chinese
monetary tightening. The whole mining sector is down about 15% from its peak. ENR
is mainly a play on iron ore and ferrochrome, both of which are used in steel
production. The group is also involved in electricity generation and aluminium.
Kazakh mining peer Kazakhmys owns a 26% stake in ENR, there is continual
speculation surrounding the future of the group. However, a Kazakhmys official told
Reuters that the firm had no current plans to exit its stake. The company is also using
its substantial cash reserves to expand abroad and diversify. It recently bought Camec,
the Aim-listed copper and cobalt producer with assets in the Democratic Republic of
Congo, Mozambique, Mali and Zimbabwe for £584m.
Shares in mobile phone giant Vodafone (134.55p) are at the bottom of a trading
range they have been in since August. There are two main reasons to hold shares in
the company. Firstly, the company throws off a significant amount of cash and the
shares are trading with a chunky yield of 6.3% for the year to March 2011. Secondly,
there is the prospect of the company disposing some of its stakes, which could trigger
an extra distribution of cash to shareholders. It owns 44% of France's second-largest
mobile operator, SFR, as well as 3% of China Mobile and 4% of India's Bharti Airtel.
The group also owns 45% of Verizon Wireless in the US. Analysts have been saying
that the sum-of-parts valuation of the business is much greater than the share price,
so there is pressure to break up the group unless shareholder value can be increased
by other methods. The company also has good exposure to emerging markets and
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there is great potential for growth in these businesses. The Sum of the parts valuation
always shows the price higher than that of the actual price and hence it is usually
considered to be the target price.
The next part of this article speaks about the Full-year results at professional
publishers Reed Elsevier which is unlikely to be pretty on 18 February, after the
sacking of Ian Smith as chief executive. Sales remain weak and margins are heading
south, with only its science and healthcare arm, Elsevier, still growing. Reed's shares
rallied 13% in December but have trailed the wider market by 26% in the past year.
Trading at 13 times this year's forecast earnings flatters its weak earnings profile.
Conglomerates only work when there is value being added from the top. Unless Erik
Engstrom, Smith's replacement, has some magic up his sleeve, Reed is a prime
example of a conglomerate that isn't working. Gourmet sausage maker, Cranswick,
on the other hand is one company bringing home the bacon. The City is expecting
double-digit sales growth- buoyed by bumper Christmas sales. The firm has a positive
outlook with the trend for supermarkets. This part of the article talks about the
conglomerates showing that not all of them are successful. It shows that Reed Elsevier
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ARTICLE 6
Author: By Thomas Kutty Abraham, February 01, 2010
ABSTRACT:
Godrej Agrovet Ltd., one of the businesses of Godrej industries which is India’s
biggest palm oil producer is planning to triple domestic output as demand for cooking
oil surges. Godrej will invest 1 billion rupees ($22 million) in the next five years
building refineries to process production from more than 100,000 hectares (247,000
acres) of palm trees. That may boost the Mumbai-based company’s output to more
than 75,000 metric tons.
India surpassed China as the biggest buyer of palm oil last year as rising incomes
increased demand for fried and processed food. The country imports almost all its
palm oil requirements. This shows the increase in demand and market in India. Palm
represents 80 percent of all cooking oil purchases. Imports would climb up this year
after drought across half of the country damaged crops and pushed food inflation near
to an 11-year high. Shipments will also increase after an import-tax waiver lowered
costs, the association said last month.
And this article hence talks about one of the important subsidiary of godrej industries
and the impact of the external factors on it. This is a very positive point for godrej
industries as a whole as the future for agrovet seems to be shining.
The company, a unit of Godrej Industries Ltd., has about 36,000 hectares of oil palms
in the south Indian states of Andhra Pradesh, Tamil Nadu and Goa, producing 25,000
tons of raw oil annually. The producer plans new plantations in Orissa in east India
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and Mizoram in the northeast and will consider acquisitions, to help increase the share
of sales from palm oil to 10 percent in five years from 7 percent now.
ARTICLE 7
Author: Unknown
ABSTRACT:
Godrej Inds sails against tide on turnaround show

This article talks about the financial growth of Godrej Industries which rose 5.15% to
Rs 160.40 at 9:08 IST after reporting a net profit of Rs 16.91 crore in Q3 December
2009 compared with a net loss of Rs 3.39 crore in Q3 December 2008.The result was
announced after market hours on Monday, 25 January 20. the BSE Sensex was down
142.48 points, or 0.85%, to 16,637.98. BSE, 83,832 shares were traded in the counter
as against an average daily volume of 3.43 lakh shares in the past one quarter.
The stock hit a high of Rs 161.05 and a low of Rs 154 so far during the day. The stock
had hit a 52-week high of Rs 218.95 on 3 December 2009 and a 52-week low of Rs
49.10 on 9 March 2009.The stock had underperformed the market over the past one
month till 25 January 2010, falling 14.37% as compared to the Sensex's 3.34% fall. It
underperformed the market in past one quarter, declining 27.04% as against 0.18%
decline in the Sensex.The mid-cap diversified company has an equity capital of Rs
31.76 crore. Face value per share is Rs 1.The current price of Rs 160.40 discounts the
company's Q2 September 2009, annualised EPS of Rs 4.59, by a PE multiple of
35.Sales rose 13.70% to Rs 203.68 crore in Q3 December 2009 over Q3 December
2008.On a consolidated basis, the net profit surged 769.04% to Rs 43.80 crore on a
8.97% increase in total income to Rs 874.61 crore in Q3 December 2009 over Q3
December 2008.Godrej Industries manufactures a variety of specialty chemical
products. The company also manufactures edible oils and processed foods and has
finance and investment activities as part of their operations.
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This shows the fluctuations in the stock market for Godrej Industries Ltd and how it
has increased over the year.
ARTICLE 8
Author: Unknown Agencies | 2010-01-25
ABSTRACT:
Godrej Industries Q3 net up at Rs 43.80 cr
Godrej industries have announced its quarterly results and has posted a net profit of
Rs 43.80 crore for the quarter ended December 31, 2009 where as the same was at Rs
5.04 crore for the quarter ended December 31, 2008. Total Income is Rs 874.61 crore
for the quarter ended December 31, 2009 where as the same was at Rs 802.55 crore
for the quarter ended December 31, 2008.
Godrej Properties Ltd, Ensemble Holdings & Finance Ltd, Nature's Basket Ltd,
Godrej Hygiene Care Ltd (upto May 31, 09) and Godrej International Ltd which are
subsidiaries of Godrej Industries Ltd. The results also include proportionate share of
Godrej Hershey Ltd as Joint Venture and Godej Consumer Products Ltd, Swadeshi
Detergents Ltd and Compass BPO Ltd as Associates. The financial results of certain
Joint ventures and Associates have been included in the consolidated results on the
basis of management accounts not reviewed by the auditors.
In view of change in the Company's shareholdings in some of the subsidiaries, joint

ventures and associates, as also business restructuring including acquisitions,
divestitures/ joint ventures in some of these Companies, the consolidated results for
the quarter are not strictly comparable with those of the previous quarter.
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ARTICLE 9
Author: Unknown
ABSTRACT:
Godrej Consumer Products Ltd, one of the subsidiaries of Godrej industries ltd is
slowly increasing its footprint in the country’s villages to garner larger sales from
rural areas.
The company has been looking to expand its direct reach to 50,000 villages and is
targeting to garner around 50 per cent sales from the rural markets of India in the next
two-three years.
Rural areas account for 42 per cent of the company’s sales now.
The company has also been focusing on smaller SKUs (stock keeping units) —the
smallest unit of a product that is bought and used by an individual — to tap a larger
customer base in the rural areas.
The company is increasingly introducing smaller SKUs as people in smaller towns

and rural areas are quite price sensitive. They aspire for a brand and its product but
the price points are above their purchasing capacity. Pricing at a lower price has been
much of an advantage to godrej consumer products ltd.In Tamil Nadu, the smallest
soap bar of Cinthol was priced at Rs 23, which was not able to give good sales
figures. However, after the company introduced Cinthol soap bars for Rs 6 it found its
support from the masses. The company is planning on similar lines in other markets
as well.
Hence this article specifies about the increase in demand of products in rural areas
because of the introduction of products with a lower price.
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ARTICLE 10
Author: Unknown
ABSTRACT:
Godrej Properties lists at 16% premium

Chennai, January 6, 2010: Godrej Properties Ltd. listed at Rs. 510, a premium of 16%
over the issue price of Rs 490 per share on the BSE.
Godrej Properties Limited a part of Godrej group of businesses had entered the capital
markets with its IPO of 9,429,750 shares with a price band of Rs. 490 – Rs. 530
aggregating up to Rs. 500 crore.
The great listing of Godrej properties once again shows that credibility of promoter
group coupled with leaving margin on the table for the IPO investors always works
wonder for post listing performance for any IPO.”
The IPO of Godrej Properties Limited received an overwhelming response as it got

subscribed four times. Godrej Properties currently has real estate development
projects in 10 cities in India, which are at various stages of development. The
proceeds of the issue will be used for acquisition of land development rights for
forthcoming projects; construction of forthcoming project and repayment of loans.
This article basically talks about how Godrej properties one of the major subsidiaries
of Godrej industries Ltd has been diversifying with a number of upcoming projects
and which would further add to the growth of the organisation.
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CHAPTER 2
Research Design
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CHAPTER 2
RESEARCH DESIGN
TITLE OF THE STUDY
Godrej industries and its business valuation method using SOTP- sum of the parts
Valuation.
OBJECTIVES OF THE STUDY
o To study about the Godrej industry

o To find out the business valuation method used
o To study about how the godrej industries can be valuated
o To get a clear idea of the working of Godrej industries
o To study about the divisions and about the other subsidiaries of Godrej
Industries
o And finally to recommend any necessary suggestions based on the findings.
o To understand the working of the valuation method in use
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TYPE OF RESEARCH
Secondary research
As the project is done based on facts which are already existing and not on primary
research it can be said that the type of research is primary research.
SCOPE OF THE STUDY
o The study is restricted to the valuation of the fair price of the stock.
o The study covers just the year 2009 and the stock price of the same.
o Covers the study of Godrej industries only
o The sum of the parts valuation is only considered.
SAMPLE SIZE AND SAMPLING METHOD
The sample size is based on the expected financial year 2010 which has been
calculated with the help of the previous few years that is 2004 to 2008 and hence the
sample size is the following Financial years.
o 2004-2005
o 2005-2006
o 2006-2007
o 2007-2008
o 2008-2009
o 2009E-2010E
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STATISTICAL TOOL USED
SOTP valuation model that is Some of the parts valuation model.

SOTP valuation method:
• SOTP is regarded as the best tool to value companies with diversified business
interests
• It evaluates each business or division of the company separately and assigns a value
to its contribution
• This valuation also captures future potential of the new ventures which are not
generating revenues right now
• At the end, the value of all the parts (including core business) are added up to arrive
at an approximate value of the company as a whole
• SOTP valuation indicates if the company’s value would be increased if it

was split into separate business units.
Let us go in detail:
A company may have businesses that are too varied for the application of a single
valuation method or ratio to all its businesses to be useful. This means, for example,
that applying EV/EBITDA to total EBITDA, or using CAPM with a single beta may
be not be the right approach.
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The solution is to value the different parts of the business separately and add the
values of the different parts of the business together. This is a sum of parts valuation.
A sum of parts valuation may be used to adjust a valuation method to suit different
parts of a business. For example, a company may have a growth business that
deserves a high PE and a mature business that deserves a low PE. A cyclical business
may require a higher discount rate when doing a DCF.
A sum of parts valuation also allows different valuation methods to be used for
different parts. Consider a company that has three businesses:
1. a subsidiary in which it owns a 50% stake and which is separately listed,

2. a new business in which it has invested heavily but which is not expected to
become profitable for several years,
3. a mature, stable, defensive business that produces dependable cash flows.
Applying a single PE or EV/EBITDA to this business would be difficult. A possible

approach using a sum of parts would be:
1. Value the separately listed subsidiary using the market value of its shares,
possibly with a premium for the fact that it is a controlling interest.
2. Use a DCF for the new start-up.
3. Use an EV/EBITDA for the stable business
Depending on how this is applied this will give you three numbers that can be added
together to give an EV for the whole company.
It may be necessary to adjust the total (usually by applying a smallish discount) for
the effect of the fact that the businesses are in fact combined.
It is an approach to valuing a company in which each business unit / operation is

valued based on either discounted free cash flows (DCF) or
peer multiples (Comparable companies analysis, CCA). The sum of these parts
makes up the total enterprise value (EV) of the company (value of operations).
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LIMITATION OF THE STUDY
o The most important factor which affects this study is that there has not been
any study regarding this kind earlier and hence it is a limitation.
o Another factor is that this study is mostly based on secondary data and not
primary data.
o The SOTP valuation which is used to calculate the fair price of a stock is very
difficult as the price of the stocks keeps fluctuating and it is hard to decide the
price for research.
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CHAPTER 3
Data Analysis & Interpretation
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CHAPTER 3
DATA ANALYSIS AND INTERPRETATION
The analysis of Godrej industries ltd has been explained with the help of SWOT
analysis:
SWOT Analysis
STRENGTHS:
1. Partnerships with world class corporations

GIL has successfully built credible and strong partnerships with world class
corporations like sara lee, Tyson, Gold coin and Hershey.
It has successfully leveraged the godrej brand to turn these partnerships into
successful businesses and aggressively scaled them up.
2. Leader in FMCG products in India.
The FMCG brands have attained industry leadership like goodknight, Brylcream
and Mahalacto.
3. Deep value pick:
as current valuations do not reflect the values embedded in its subsidiaries.
4. Established brand name: presence in the Indian
The “Godrej” brand is instantly recognisable amongst the populace in India due to
its long market.
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The diversified businesses in which the Godrej group operates and the trust it has
developed over 111 years of operations is reliable.
5. Land Reserves in strategic locations:
Land Reserves comprising 404 acres aggregating approximately 78.87 million sq.ft.
of Developable Area and 54.98 million sq. ft. of Saleable Area, located in or near
prominent and growing cities across India, such as Mumbai, Pune and Ahmedabad.
These include land parcels which is owned directly,and land parcels over which
godrej has development rights through agreements or memoranda of understanding.
6. Qualified and skilled employee base and human resource practices:
key managerial personnel are qualified professionals.
7. Stability in the market:
customers have been loyal and the sales have been considerably good, where as the
market price of its competitors have gone down.
8. Selective outsourcing:
the quality and effiency of operations is taken into consideration while outsourcing
activities such as design, architecture and construction.
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WEAKNESSES:
1. Low export levels of FMCG.

There is considerably less volumes of trade in FMCG products in Godrej.
2. "Me-too" products:
Products which illegally mimic the labels of the established brands, these products
narrow the scope of FMCG products in rural and semi-urban market.
3. Lower scope of investing in technology and achieving economies of scale,
especially in small sectors.
4. Dependent upon third party entities for the sourcing of land, market research and
development and sale of godrej properties projects:
face uncertainty of title to their lands.
Godrej enter into agreements with third party entities to source land, provide
market research, and to design, construct and sell their projects in accordance with
their specifications and quality standards and under the time frames provided by them.
May not be able to add to or replenish our Land Reserves by acquiring suitable
sites at reasonable cost which may adversely affect our business.
5. Business is dependent on the performance of, and the conditions affecting, the real
estate market in India.
Increase in prices of, shortages of, or delays or disruptions in the supply of
building materials could harm results of operations and financial condition.
cannot assure you that the demand for its projects will grow, or will not decrease,
in the future.
heavily dependent on the availability of real estate financing in India.
6. Inability to acquire ownership of or development rights over large contiguous
parcels of land may affect our future development activities.
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Paying premium amounts for land may limit the ability to fund other projects and
may adversely affect the business, financial condition and results of operations.
OPPORTUNITIES
1. Great potential:
Increased global demand.
growth in end-user industries.
Company's standing for consistent quality and product delivery customised to the
needs of the clients, provides good opportunity for growth for the Chemicals division.
2. Estate Management business has a potential to increase revenue by giving space on
leave and license by:
optimum re-sizing of the existing operational areas.
The factors that can aid further revenue growth include assured power supply,
upcoming infrastructural facilities like metro rail and better connectivity that reduces
travelling time.
3. Untapped rural market:
There are many rural areas which have not yet been explored by Godrej like in
godrej properties concentrates more on the major capital cities like ahmedabad,
bangalore etc and can further expand to smaller and rural cities in India.
4. Large domestic market:
India has a large market for FMCG as well as real estate which are the major
businesses of godrej.
Godrej is the largest producer og veg oils and is consumed by most of the people
in India.
5. Export potential.
Along with a huge domestic market there is a great demand for FMCG products
outside India.
Exports at a higher level would help in the growth of the business.
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6. High consumer goods spending.

The average amount of expenditure per person in India has been increasing and
that of other countries is more than 5 times that of India.
the opportunity is the large growing middle class medically aware consumer and
the increasing focus on medical insurance.
THREATS
1. New capacity addition in the industry is likely to increase competition from the
supply side.
The service sector who help godrej would have a lot of optons to choose from as
there is an increase in thenumber of competitors who would require the same sevices
as godrej giving the service providers an upper hand.
The consumers/customers also have too many choices which might affect the sales
of Godrej.
2. Problems in the Medical Diagnostics Division:
Threat could be obsolescence of technology/products which are more than 10
years old.
Problems in providing medicines at low price when expenses for it are huge.
3. increased cost of processing
in view of rising fuel oil costs
large unutilized refining capacities in the country resulting in uncompetitive
pricing.
4. Removal of import restrictions
resulting in replacing of domestic brands.
5. Slowdown in rural demand ,Tax and regulatory structure.
This would increase the constraints in the business and reduce sales.
6. Hurdles in ongoing projects and forthcoming projects:
There could be unscheduled delays and cost overruns in relation to Godrej's
Forthcoming Projects and Ongoing Projects.
Have not made applications or received approvals for many of godrej properties
Ongoing Projects and Forthcoming Projects.
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GODREJ PROPERTIES Ltd
Valuation of GIL’s stake in Godrej Properties
INR
Valuation of Godrej Properties on estimated NAV basis Mn
Commercial & Retail GAV 6,611
Residential GAV 11,303
Post-Tax GAV of Ongoing Projects 17,914
Valuation of Land Bank -
Total Value of Land & Ongoing Projects 17,914
Less : Net debt (as on 31st Mar'10) 4,900
Less : Balance due for purchase of land (as on 30th Sep'08) 0
Estimated NAV 13,014
No. of Shares (mn) 58
NAV/Share 224
Discount to NAV 50%
Target Price at 50% discount to NAV 112
Godrej Industries Share @ 81.4% 81.40% 91
Interpretation: From the total financials of Godrej properties ltd Godrej Industries
holds 81% and hence the value of the share of share of GIL has been calculated as
above showing that the price of share of GIL in Godrej Properties to be 91 after a
50% discount on NAV.
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Godrej Properties 81%

Balance Sheet
Y/E March (Rs. FY06 FY07 FY08 FY09E FY10E
Mn)
Share Capital 6 6
64 604 04 04
Reserves 1, 2,4 3,3
382 814 15 82
Shareholders' fund 2, 3,0 3,9
446 419 19 86
Minority Interest
4 7 7 7
Debt 1, 2, 4,2 5,7
384 731 31 31
Deferred Tax Liability
(Net) - - - -
Total Capital Employed 1, 5, 7,2 9,7
835 157 57 25
Gross Block 5 7
63 399 99 99
Accumulated depreciation
20 28 48 73
Net Block 5 7
42 370 50 25
Capital WIP
2 2 2 2
Total Fixed Assets 5 7
44 372 52 27
Investments
0 0 0 0
Inventories 1, 2, 3,8 6,1
172 848 83 05
Debtors 2, 4, 5,4 8,3
198 057 87 61
Cash and bank balances 3 8
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161 86 70 31
2, 3,7 5,9
Loans and Advances 904 854 99 72
4, 9, 13,5 21,2
Total current assets 435 845 39 69
Current liabilities and 2, 5, 6,8 12,2
provisions 648 064 38 76
1, 4, 6,7 8,9
Net current assets 786 781 01 93
Misc. Expenditure 4 4 4 4
1, 5, 7,2 9,7
Total Assets 835 157 57 25
Profit & Loss Account

Y/E March (Rs. Mn) FY07 FY08 FY09E FY10E
1, 2, 3,0 4,8
Revenues 372 274 81 44
3 5
Growth in revenues (%) 96.7 65.7 5.5 7.2
1,5 2,4
Raw materials 758 868 82 37
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5 5
% of Sales 55.3 38.2 1.3 0.3
Personnel expenses 1 2
69 98 54 42
% of Sales
5.1 4.3 5.0 5.0
Selling and other 1 2
expenses 41 109 54 42
% of Sales
3.0 4.8 5.0 5.0
EBITDA 1, 1,1 1,9
503 199 91 23
EBITDA Margin 3 3
36.7 52.7 8.7 9.7
Depreciation
7 9 20 25
PBIT 1, 1,1 1,8
496 190 71 98
Interest expenses 1
40 38 68 20
PBIT from operations 1, 1,1 1,7
456 152 03 77
Other non operating
income 0 1 - -
PBT before extra- 1, 1,1 1,7
ordinary items 456 153 03 77
Extra-ordinary income/
(expenses) - - - -
PBT 1, 1,1 1,7
456 153 03 77
Provision for tax 3 6
169 394 75 04
Effective tax rate 3 3
37.1 34.2 4.0 4.0
PAT 7 1,1
288 760 28 73
Adjusted PAT 7 1,1
288 760 28 73
Growth in PAT (%) 1 1 ( 6
37.6 63.8 4.2) 1.1
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2 2
PAT margin 21.0 33.4 3.6 4.2
GODREJ CONSUMER PRODUCTS Ltd
GCPL – Key Financials

Y/E March (Rsmn) FY07 FY08 FY09E FY10E
Revenue 9,515 11,040 13,697 15,359
Growth in revenue (%) 36 16 24.1 12.1
EBIDTA 1,797 2,159 2,085 2,745
Growth in revenue (%) 25.9 20.2 -3.4 31.6
EBIDTA Margin 18.9 19.6 15.2 17.9
Valuation of GIL stake in GCPL (based on FY10E)

GPCL FY10E sales (Rsmn) 15,359.0
Mcap/Sales (x) 2.0
Mcap (Rsmn) 30,908.0
MCap of GIL’s 20% stake(Rsmn) 6,182.0
Number of shares (mn) 320.0
Value per share for GIL (Rs) 19.3
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Interpretation: From the total financials of Godrej Consumer Products ltd Godrej
Industries holds 20% and hence the value of the share of share of GIL has been
calculated as above showing that the price of share of GIL in Godrej Consumer
Products Ltd to be 19.
GODREJ SARALEE
Sara Lee – Key

financials
Revenue 5,158.0 5,943.0 6,477.0 7,190.0
Growth in revenue (%) 15.2 9.0 11.0
EBIDTA 757.0 904.0 1,012.0 1,208.0
EBIDTA Margin 14.7 15.2 15.6 16.8
Valuation of GIL’s stake in GSL

(based in FY10E)
FY10E Sales (Rsmn) 7,190.0
EV/Sales 1.5
Implied EV (Rsmn) 10,785.0
Remove debt* (Rsmn) 0.0
Add cash* (Rsmn) 1,268.0
Implied EV for GIL’s 20% stake
(Rsmn) 2,411.0
Value per GIL share (Rs) 8.0
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Interpretation: Godrej Industries share of Godrej SaraLee is 20% and calculating the
share price based on this percentage comes upto Rs8.
Sara Lee 20%

Balance Sheet
Y/E March
(Rs. Mn) FY06 FY07 FY08 FY09E FY10E FY11E
Share Capital 102 102 102 102 102

1, 1, 2, 2,
Reserves 872 307 729 231 818
1, 1, 2, 2,
Shareholders' fund 974 409 832 333 920
Minority Interest - - - - -
Debt - - - - -
(Net) 16 30 30 30 30
Total Capital 1, 1, 2, 2,
Employed 991 439 861 363 950
1, 1, 1, 1, 1,
Gross Block 070 138 209 284 368
Accumulated
depreciation 626 675 766 869 981
Net Block 444 463 443 416 387
Capital WIP 25 8 8 8 8
Total Fixed Assets 469 471 451 424 395

Investments
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27 572 572 572 572
Inventories 516 570 761 827 934
Debtors 226 361 453 489 528

Cash and bank 1, 1,
balances 710 445 753 268 957
Loans and Advances 300 736 777 906 975

1, 2, 2, 3, 4,
Total current assets 752 112 745 490 394
Current liabilities and 1, 1, 1, 2, 2,
provisions 257 716 906 122 411
1, 1,
Net current assets 495 396 839 368 983
Misc. Expenditure - - - - -
1, 1, 2, 2,
Total Assets 991 439 861 363 950
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5, 6,4 7,1
Revenues 5,158 943 77 90
1
Growth in revenues (%) 15.2 9.0 1.0
3, 3,5 3,8
Raw materials 2,994 272 64 97
5 5
% of Sales 58.0 55.1 5.0 4.2
3 4
Personnel expenses 308 373 95 35
% of Sales 6.0 6.3 6.1 6.1

Selling and other 1, 1,5 1,6
expenses 1,099 394 06 50
2 2
% of Sales 21.3 23.5 3.3 3.0
1,0 1,2
EBITDA 757 904 12 08
1 1
EBITDA Margin 14.7 15.2 5.6 6.8
1
Depreciation 81 73 91 03
9 1,1
PBIT 676 831 22 05
Interest expenses 6 7 6 5
9 1,1
PBIT from operations 670 824 16 00
Other non operating
income 68 77 79 82
PBT before extra- 9 1,1
(expenses) - - - -
9 1,1
PBT 738 901 95 82
1 1
Provision for tax 71 106 19 42
Effective tax rate 9.6 1 1
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11.7 2.0 2.0

8 1,0
PAT 668 795 76 40
8 1,0
Adjusted PAT 668 795 76 40
1 1
Growth in PAT (%) - 19.1 0.2 8.8
1 1
PAT margin 12.9 13.4 3.5 4.5
GODREJ HERSHEY’S Ltd
Godrej Hershey’s – Key

financials
Revenue 1,755.0 2,045.0 2,280.0 2,554.0
EBIDTA (31.0) (82.0) (103.0) (61.0)
EBIDTA Margin (%) (1.8) (4.0) (4.5) (2.4)
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GIL’s stake valuation in Godrej

Hershey
FY10E Sales (Rsmn) 2,554.0
EV/Sales 1.5
Implied EV (Rsmn) 3,831.0
Remove debt* (Rsmn) 2,224.0
Add cash* (Rsmn) 246.0
Implied MCap contribution (20%)
(Rsmn) 797.0
Value per GIL share (Rs) 2.5
Interpretation: Godrej Hershey contributes Rs2.5 per share to Godrej Industries. This
Rs2.5 is contributed as Godrej Industries Ltd owns 77% of Godrej Hershey’s.
Hicare 77%
Balance Sheet
Y/E March
(Rs. Mn) FY06 FY07 FY08 FY09E FY10E
Share Capital 56 56 56 56
(
Reserves 116) (89) (83) (74)
Shareholders' fund (60) (33) (27) (18)
Minority Interest - - - -
1 1
Debt 153 173 73 73
(Net) - - - -
Total Capital 1 1
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Employed 94 140 46 55
Gross Block 20 33 38 43
Accumulated
depreciation 8 11 15 19
Net Block 12 22 23 24
Capital WIP - - - -
Total Fixed Assets 12 22 23 24
Investments 0 0 0 0
Inventories 27 31 36 39
1
Debtors 77 87 93 04
Cash and bank
balances 12 16 24 19
1 1
2 2
Current liabilities and 1 1
1 1
Misc. Expenditure 2 4 4 4
1 1
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3 3
Revenues 286 293 28 66
Growth in revenues 1 1
(%) 46.2 2.3 2.0 1.6
1 1
% of Sales 24.5 16.6 9.5 9.7
2 2
% of Sales 13.9 22.7 2.7 3.0
Selling and other 1 2
expenses 166 162 79 00
5 5
% of Sales 58.0 55.3 4.7 4.8
EBITDA 10 16 5 6
EBITDA Margin 3.6 5.4 1.4 1.7
PBIT 8 12 1 2
PBIT from operations 6 11 (0) 1
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Other non operating

income 13 8 7 9
PBT before extra-
(expenses) - 7 - -
PBT 19 26 7 9
Provision for tax 1 (1) 0 0

(
Effective tax rate 4.7 4.5) 4.5 4.7
PAT 18 27 6 9
Adjusted PAT 18 20 6 9
(7 4
Growth in PAT (%) 74.8 45.5 6.2) 1.0
PAT margin 6.4 9.1 1.9 2.4
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GODREJ AGROVET Ltd
GAVL – Financial
snapshot
Revenues 10,079.0 12,517.0 12,965.0 14,283.0
EBIT (124.6) (359.2) 405.0 634.8
EBIT margin (%) (1.2) (2.9) 3.1 4.4
PAT (173.7) (319.8) 299.1 509.6
PAT margin (%) (1.7) (2.6) 2.3 3.6
Valuation of GIL
stake in GAVL
(based on FY10E)
GIL's EV for
(Rsmn) FY10Esales EV/Sales(x) EV stake(%) GIL
Godrej Agrovet 9,317 0.5 4,659 75.2 3,503
Goldmohur Foods & Feeds 4,409 0.5 2,204 75.2 1,658
EV (ex oil palm
plantation) 5,161
Less Debt 1,685
Add Cash 145
M-Cap contribution to GIL (ex oil palm
plantation) 3,621
Contribution of GAVL (ex oil plantation) to share price 11
Contribution of oil palm plantations to share
price 5
Total share price contribution from GAVL 16
Interpretation: Godrej agrovet is an important part of GIL. 75% of Godrej Agrovet is

under Godrej Industries. The share of GIL from Godrej agrovet including the oil palm
plantations comes upto Rs16.
Godrej Agrovet
Consol 75%
Balance Sheet
Y/E March FY06 FY07 FY08 FY09E FY10E
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(Rs. Mn)
1 1 1 1
Share Capital 01 21 21 21
9 2,2 2,4 2,7
Reserves 24 78 35 39
1,0 2,3 2,5 2,8
Shareholders' fund 25 99 57 60
Minority Interest - - - -
1,8 2,2 1,8 1,7
Debt 01 13 60 60
Deferred Tax Liability 1 1 1 1
(Net) 07 14 14 14
Total Capital 2,9 4,7 4,5 4,7
Employed 33 25 30 34
1,9 1,8 2,1 2,3

Gross Block 90 77 07 49
Accumulated 6 6 7 9
depreciation 07 20 80 48
1,3 1,2 1,3 1,4
Net Block 83 57 27 01
Capital WIP 60 25 25 26
1,4 1,2 1,3 1,4
Total Fixed Assets 44 82 52 26
5 1,2 1,2 1,2
Investments 24 76 76 76
1,5 1,1 1,2 1,3
Inventories 58 37 10 00
8 9 9 1,0
Debtors 26 15 50 52
Cash and bank 1 2 1 1
balances 17 91 89 43
7 2,1 1,7 1,8
3,2 4,4 4,0 4,3
Current liabilities and 2,2 2,3 2,1 2,3
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9 2,1 1,9 2,0

Misc. Expenditure 6 - - -
2,9 4,7 4,5 4,7
Profit & Loss

Account
10,0 12,5 12,9 14,2
Revenues 8,972 79 17 65 83
Growth in revenues 12. 24. 3. 10.
(%) 34 18 58 17
7,9 10,1 9,5 10,2
7 8 7 7
% of Sales 9.2 1.0 3.4 1.9
4 6 7 7
% of Sales 4.9 5.1 5.5 5.5

Selling and other 1,6 1,9 2,1 2,3
expenses 32 33 47 85
1 1 1 1
% of Sales 6.2 5.4 6.6 6.7
( (1 5 8
EBITDA 35) 94) 93 34
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(0 (1
EBITDA Margin .3) .5) 4.6 5.8
1 1 1
(1 (3 4 6
PBIT 25) 59) 05 35
1 2 1 1
(2 (5 2 4
PBIT from operations 55) 91) 25 70
Other non operating 1 3 2 2
income 04 67 09 28
PBT before extra- (1 (2 4 6
ordinary items 50) 24) 33 98
Extra-ordinary income/ 2 7
(expenses) 30 79 - -
5 4 6
PBT 80 55 33 98
1 1
Provision for tax 24 96 34 89
2 1 3 2
Effective tax rate 9.4 7.3 1.0 7.0
4 2 5
PAT 203 57 59 99 10
Adjusted (1 (3 2 5
PAT 204 74) 20) 99 10
(185 (284 19 7
Growth in PAT (%) .2) .1) 3.5 0.4
(1 (2
PAT margin .7) .6) 2.3 3.6
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GODREJ INDUSTRIES Ltd(STANDALONE)
Valuation of GIL (standalone) based on FY10E

Sales (Rsmn) 10,015
EV/Sales (x) 0.5
Implied EV (Rsmn) 5,007
Remove debt (Rsmn) 4,357
Add cash (Rsmn) 3,942
Implied m-cap (Rsmn) 4,592
Value per share (Rs) 14
GIL – Financial snapshot (consolidated)

Y/E March (Rsmn) FY06 FY07 FY08 FY09E FY10E
Revenue 20,430.0 23,790.0 29,477.0 32,097.0 36,211.0
Growth in revenue (%) 4.7 16.4 23.9 8.9 12.8
EBIDTA 959.0 971.0 1,976.0 2,361.0 3,292.0
EBIDTA Margin (%) 4.7 4.1 6.7 7.4 9.1
Adjusted PAT 506.0 633.0 1,408.0 1,832.0 2,442.0
Growth in PAT (%) (24.2) 198.5 14.7 9.1 33.3
PAT margin (%) 2.7 4.8 5.7 6.7 7.7
Interpretation: Godrej Industries standalone price which obviously adds upto the total
price of the share and it has been calculated to be Rs 14/share.
Others
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Y/E March (Rs. Mn) FY06 FY07 FY08 FY09E FY10E
6 6 8, 8,9 9,8
Revenues ,258 ,539 567 96 95
5. 1
Growth in revenues (%) 4% 31% 00 0.0
4 5 6, 7,2 8,0
Raw materials ,967 ,619 999 87 15
8 8
% of Sales 79.4 85.9 81.7 1.0 1.0
1 2
Personnel expenses 214 137 157 80 08
% of Sales 3.4 2.1 1.8 2.0 2.1

Selling and other 1, 1,1 1,2
expenses 810 481 053 06 17
1 1
% of Sales 12.9 7.4 12.3 2.3 2.3
4 4
EBITDA 267 302 358 23 55
EBITDA Margin 4.3 4.6 4.2 4.7 4.6

1 1
Depreciation 73 79 93 02 12
3 3
PBIT 193 222 265 21 43
Interest expenses 169 69 47 52 57

PBIT from 2 2
operations 24 153 218 69 86
Other non operating
income 55 (528) (24) - -
PBT before extra- 2 2
ordinary items 79 (374) 195 69 86
Extra-ordinary (
income/ (expenses) (351) 636 354) - -
( 2 2
PBT (272) 262 159) 69 86
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Provision for tax 103 (64) 255 89 94

1 3 3
Effective tax rate 37.7 24.5 60.6 3.0 3.0
( 1 1
PAT (375) 325 415) 80 92
1 1
Adjusted PAT (24) (311) (61) 80 92
Growth in PAT (%) 6%
(
PAT margin (6.0) 5.0 4.8) 2.0 1.9
COMBINED VALUES
GIL’s revenue model

Revenue 23,790 29,477 32097 36,211
GIL (standalone) 6,548 7,353 8,315 8,815
Godrej Properties 1,117 1,851 2,508 3,943
GAVL 7,580 9,413 9,750 10,741
Others 8,545 10,860 11,523 12,712
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EBIDTA 971 1,976 2,361 3,292

GIL (standalone) 140 630 333 397
Godrej Properties 410 976 970 1565
GAVL -26 -146 446 627
Others 448 516 612 703
EBIDTA Margin (%) 4.1 6.7 7.4 9.1
GIL (standalone) 2.1 8.6 4 4.5
Godrej Properties 36.7 52.7 38.7 39.7
GAVL -0.3 -1.5 4.6 5.8
Others 5.2 4.7 5.3 5.5
Interpretation: The Revenue model above shows the compiled values and the total
value of Godrej Industries and its subsidiaries. Here we can see that the loss of one
subsidiary will be nullified with the gain of another subsidiary.
GIL’s SOTP valuation based on FY10E

EV Standalone (Rs m) 5,007
EV Subsidiaries/Investments (Rs m) 8,284
Total EV (Rs m) 13,291
Remove debt* (Rs m) 11,434
Add cash* (Rs m) 9,076
Equity value (Rs m) 10,932
Number of shares (m) 320
Per Share value of GIL (Rs) 34
Per Share value of Oil Plantations (Rs) 5
Per Share value of GCPL (Rs) 19
Per Share value of Godrej Properties (Rs) 91
Share value 150
Conglomerate discount 20%
Price per share (Rs) 120
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Interpretation: The actual values which were calculated from individual companies
depending upon the share of Godrej Industries Ltd in it. Taking all of the calculated
values and adding it up we can find out the actual value of Godrej Industries as shown
above. We can also see that there is a conglomerate discount of Rs30 that is 20%
which has been deducted from the value of Rs150 to give Rs120 as the actual or fair
value of the share. ( This is as expected on March 2009 for the Financial Year 2010
expected value)
Valuation of
subsidiaries
FY10E sales EV GIL’s stake EV for
Company (Rsmn) EV/Sales (Rsmn) (%) GIL
GAVL 9,317 0.5 4,659 75.2 3,503
Goldmohur Foods &
Feeds 4,409 0.5 2,204 75.2 1,658
Godrej Hershey 2,554 0.7 1,788 43 769
Godrej Sara Lee 7,190 1.5 10,785 20 2,157
Godrej Hicare 366 0.7 256 76.9 197
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Total No of No of
Name of the value(in stake% stake in shares shares(GIL)in Per share
subsidiaries mn) in GIL GIL in mn mn value
GIL (standalone) 4,592 100% 4592 320 320 14
Godrej Properties
50% discount 6,507 81.40% 5297 58 47 112
GCPL 30,908.0 20% 6182 1600 320 19
Godrej SaraLee 12053 20% 2411 1599 320 8
Godrej Hershey 797 43% 343 320 138 2
Godrej Agrovet 8,378 75.20% 6300 524 394 16
Total 25,124 172
Interpretation: The values were expected before the diversification of Godrej
properties earlier and hence the expected price was lower, but as the above values
show that the price of Godrej Properties have increased leading to an increase in the
overall value of the Godrej Industries, but one more difference is that the value of the
share price in this table has not considered the Conglomerate discount.
Revenue Model (Rs mn) FY07 FY08 FY09E FY10E

Revenue 23790 29477 32097 36211
GIL (Standalone) 6548 7353 8315 8815
Godrej Agrovet 7580 9413 9750 10741
Others 8545 10860 11523 12712
EBIDTA 971 1976 2361 3292
GIL (Standalone) 140 630 333 397
Godrej Agrovet -26 -146 446 627
Others 448 516 612 703
EBIDTA Margin 4.1 6.7 7.4 9.1
GIL (Standalone) 2.1 8.6 4.0 4.5
Godrej Properties 36.7 52.7 38.7 39.7
Godrej Agrovet -0.3 -1.5 4.6 5.8
Others 5.2 4.7 5.3 5.5
Interpretation: As the above information shows that the easiest way of knowing the
actual/fair price of the share is through SOTP as this method does not involve any
kind of complicated methods of calculation.
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CHAPTER 4
Summary and Findings
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CHAPTER 4
SUMMARY
Godrej industries Ltd follows the SOTP valuation method. The some of the parts
valuation method is also called SOTP method.
Valuation Analysis
Deep-value pick
I am of the view that there is deep-value in GIL as current valuations do not reflect
the true value embedded in its several subsidiaries (most of them unlisted) and joint
ventures. Further, due to varied nature of its several businesses – edible oil, poultry,
animal feeds, real estate, retail – the market has tended to regard the company as
lacking focus and unwieldy. I believe these manifold businesses could turn out to be
growth drivers. GIL’s strength in the FMCG space is underplayed and the biggest
value driver, Godrej Properties, a potential realty behemoth with a strong brand, is
mistakenly seen in the same vein as other stressed realty majors.
Different periods different valuation methodologies.
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GIL is a unique case where the market has valued the stock on different valuation
methods as per the flavour of the season. Traditionally, the company was viewed as a
commodity play with assigned low P/E multiple. Somewhere in mid-2006 and half-
way through the bull market phase, the street saw value in its multiple businesses and
SOTP valuation became the norm. As 2007 was coming to an end, significant value
was ascribed to its realty business. Incidentally, around this time, the stock’s price
behaviour mimicked that of real estate majors.
Today, in the absence of a ‘value anchor’, it is believed that the stock is trading far
below its true value. We are of the view that our price target of Rs150 per share would
fairly capture value of the company's many businesses – though at a discount leaving
significant upside possibilities. We are confident that listing of Godrej Properties (the
company had filed a Draft Red Herring Prospectus with Sebi in May 2008 but the
proposed IPO was deferred due to adverse market conditions), rerating of the real
economy businesses such as Godrej Agrovet and increasing awareness of the
company’s strength in the FMCG space would provide significant scope for its P/E
multiple expanding.
Not a holding company or incubator, all investments strategic
Due to varied nature of its several businesses, the market has tended to regard GIL as
a holding company or an incubator lacking focus and unwieldy. I am of the view there
is fantastic deepvalue in these businesses (mostly unlisted subsidiaries and JVs). GIL
has successfully built credible and strong partnerships. It has also proven its expertise
in capitalizing on opportunities and scaling-up businesses. This continued focus gives
us the reassurance that the multiple businesses would be significantly value accretive
going ahead.
Based on a SOTP valuation, I have arrived at a per share value of Rs120 (as on 2009
march )for GIL post 20% conglomerate discount. We find the valuation extremely
attractive with 84% upside from current levels. The value of GIL’s business, its
subsidiaries and JVs works out to Rs59 per share, while the value of its property
business arrives at Rs91 per share.
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FINDINGS
According to a centrum report on godrej industries based on the sotp valuation in the
year 2009 march showed that the stock price which was then around Rs 65/share was
said to be undervalued and the actual value of the price according to the SOTP
valuation was around Rs120/share along with a conglomerate discount of Rs 30.
This has been proved right as the current price of Godrej industries as on February
2010 is trading around 140+ which was estimated earlier in the centrum report, which
means that this kind of valuation in case of godrej industries did provide the actual
worth of the company. The above explained point is clearly shown below:
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-50
0
50
100
150
GIL stanalone
Godrej 14
16
Agrovet
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Godrej Sara
8
Lee
Godrej
2
Hershey's
Series1
GCPL
19
GIL Value Bar chart
Godrej
91
Properties
Conglomerate
-30
Discount
GIL
120
consolidated
73
CHAPTER 5
Godrej Report
Godrej Report
Suggestions & Recommendations
CHAPTER 5
SUGGESTIONS
There are a number of risks faced by godrej industries a few of the Risks and
Concerns are:
Key upside risks
o A faster than anticipated recovery in macro-economic environment leading to
improved demand scenario for properties.
o A higher than expected increase in property prices leading to better margins
and higher realizations.
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o GIL transferring its land assets held in various subsidiary companies,

particularly land in Vikhroli, Mumbai to the books of Godrej Properties.
o Stake increase in Godrej Sara Lee from current 49% could be a potential
trigger.
Key downside risks
o A longer than expected slump in the real estate markets leading to slow
demand offtake, execution delays and funding constraints.
o Godrej Properties’ JV partners backing out of projects or disputes over land
titles pertaining to JVs.
RECOMMENDATIONS
o The first set of the points under suggestions shows how the Company can
utilise the opportunities available to it and hence the recommendation in that
case would be utilise its potential to the fullest.
o Looking at the risks that can be faced by the company the following can be
done:
 Effective planning of delays
 Finding reliable resources of funding
 Maintaining healthy relationship with partners
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 Other than the risks Godrej Industries should actually consider pricing their
shares based on the SOTP valuation method as it gives the actual value or fair
value of the share.
Now lets discuss about SOTP valuation method:

o SOTP is regarded as the best tool to value companies with diversified business
interests
o It evaluates each business or division of the company separately and assigns a

value to its contribution
o This valuation also captures future potential of the new ventures which are not
generating revenues right now
o At the end, the value of all the parts (including core business) are added up to
arrive at an approximate value of the company as a whole
o SOTP valuation indicates if the company’s value would be increased if it was

split into separate business units.
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BIBLOGRAPHY & ANNEXURES
BIBLOGRAPHY
WEBSITES VISITED
http://www.thisismoney.co.uk/investing/share-tips-and-fund-tips/article.html?
in_article_id=498388&in_page_id=23
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http://www.mydigitalfc.com/corporate-releases/godrej-properties-lists-16-premium-
151
http://www.scribd.com/doc/22280840/Godrej-Industries-Limited
http://www.moneycontrol.com/competition/godrejindustries/comparison/GI23
http://www.koreaherald.co.kr/NEWKHSITE/data/html_dir/2010/02/13/20100213001
3.asp
www.bloomberg.com
ANNEXURES
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Income Statement
31-Mar- 31-Mar- 31-Mar-

08(12) 07(12) 06(12)
Profit / Loss A/C Rs mn %OI Rs mn %OI Rs mn %OI
Net Sales (OI) 7353.05 100.00 6547.76 100.00 7454.83 100.00
Material Cost 3962.26 53.89 4139.87 63.23 4090.99 54.88
Increase Decrease Inventories 54.04 0.73 -287.76 -4.39 903.97 12.13
Personnel Expenses 795.84 10.82 626.57 9.57 673.47 9.03
Manufacturing Expenses 943.11 12.83 733.73 11.21 647.94 8.69
Gross Profit 1597.80 21.73 1335.35 20.39 1138.46 15.27
Administration Selling and
954.34 12.98 682.22 10.42 749.22 10.05
Distribution Expenses
EBITDA 643.46 8.75 653.13 9.97 389.24 5.22
Depreciation Depletion and
254.70 3.46 242.64 3.71 225.94 3.03
Amortisation
EBIT 388.76 5.29 410.49 6.27 163.30 2.19
Interest Expense 349.51 4.75 388.07 5.93 243.09 3.26
Other Income 1115.13 15.17 1353.61 20.67 631.09 8.47
Pretax Income 1154.38 15.70 1376.03 21.02 551.30 7.40
Provision for Tax 11.07 0.15 24.11 0.37 154.64 2.07
Extra Ordinary and Prior
23.16 0.31 9.47 0.14 309.82 4.16
Period Items Net
Net Profit 1165.33 15.85 1361.03 20.79 711.24 9.54
Adjusted Net Profit 1142.17 15.53 1351.56 20.64 400.66 5.37
Dividend – Preference 0.00 0.00 0.00 0.00 0.00 0.00
Dividend - Equity 399.70 5.44 291.85 4.46 243.21 3.26
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Balance Sheet
31-Mar-
31-Mar-08 %BT 31-Mar-07 %BT %BT
06
Equity Capital 319.76 1.73 291.85 2.53 291.85 3.09
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Share Capital 319.76 1.73 291.85 2.53 291.85 3.09
Reserves and Surplus 10264.45 55.62 3814.26 33.00 3421.67 36.17
Loan Funds 4356.70 23.61 4676.96 40.47 3271.41 34.58
Current Liabilities 2455.43 13.31 1805.32 15.62 1572.63 16.62
Provisions 695.53 3.77 570.41 4.94 520.20 5.50
Current Liabilities and Provisions 3150.96 17.07 2375.73 20.56 2092.84 22.12
Total Liabilities and Stockholders
18453.79 100.00 11556.80 100.00 9459.57 100.00
Equity (BT)
Tangible Assets Net 2633.37 14.27 2655.36 22.98 2777.12 29.36
Intangible Assets Net 31.50 0.17 40.17 0.35 30.07 0.32
Net Block 2664.87 14.44 2695.53 23.32 2807.20 29.68
Capital Work In Progress Net 49.37 0.27 174.90 1.51 52.24 0.55
Fixed Assets 2714.24 14.71 2870.43 24.84 2859.43 30.23
Investments 7754.84 42.02 4856.68 42.02 3713.47 39.26
Inventories 1977.12 10.71 1551.52 13.43 1189.24 12.57
Accounts Receivable 1564.04 8.48 925.32 8.01 580.66 6.14
Cash and Cash Equivalents 2942.89 15.95 253.63 2.19 125.96 1.33
Other Current Assets 0.00 0.00 0.00 0.00 0.00 0.00
Current Assets 6484.04 35.14 2730.47 23.63 1895.86 20.04
Loans & Advances 1393.88 7.55 939.00 8.13 768.87 8.13
Miscellaneous Expenditure Other
106.79 0.58 160.21 1.39 221.94 2.35
Assets
Total Assets (BT) 18453.78 100.00 11556.80 100.00 9459.57 100.00
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Ratio Analysis
As on 31-Mar-08 31-Mar-07 31-Mar-06
Return Related
Return on Total Assets (%) 2.50 4.50 2.20
Return on Networth (%) 10.80 32.90 10.70
Return on Capital Employed (%) 9.40 18.70 10.60
Profitability
Gross Margin (%) 21.70 20.40 15.30
Operating Margin (%) 5.30 6.30 2.20
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Net Profit Margin (%) 15.80 20.80 9.10

Adjusted Net Profit Margin (%) 15.50 20.60 5.00
Asset Turnover(x) 0.60 0.80 1.10
Leverage
Debt/Equity ratio (x) 0.40 1.10 0.90
Total Debt/Total Assets (x) 0.30 0.50 0.40
Long term Debt/Networth (x) 0.20 0.70 0.70
Interest Coverage (x) 1.80 1.70 1.60
Liquidity
Current Ratio (x) 2.10 1.20 0.90
Quick Ratio (x) 1.80 0.70 0.40
Cash Ratio (x) 1.20 0.10 0.10
Working Capital
Working Capital to Sales (x) 0.50 0.10 --
Working Capital Days (days gross sales) 184.70 47.30 14.70
Receivables (days gross sales) 71.70 47.30 26.50
Creditors (days cost of sales) 136.70 110.60 79.80
FG Inventory (days cost of sales) 21.90 23.80 20.10
RM Inventory (days consumption) 97.90 52.50 48.00
Cash Flow Indicator

Operating Cash Flow/Sales (%) 6.80 -1.40 2.10
Per Share
Book Value Per Share (Rs) 32.10 12.80 66.50
Earnings Per Share (Rs) 3.60 4.70 14.60
Dividend Per Share (Rs) 1.20 1.00 5.00
Growth(%)
Total Operating Income 12.30 -12.17 1.34
EBITDA -1.48 67.80 14.77
EBIT -5.29 151.39 31.36
Net Profit -14.38 91.36 -6.13
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Mar ' Mar ' Mar '

Profit loss ac(in crores) 04 Mar ' 05 Mar ' 06 07 08
Income:
Operating income 716.7 763.9 742.6 655.4 724.7
Expenses
Material consumed 475.3 507.3 496.7 443.3 409.4
Manufacturing expenses 42.5 52.3 51.3 57.1 66.3
Personnel expenses 65.3 68.7 67.4 62.7 79.6
Selling expenses 29.8 32.2 41.6 39.9 49.1
Adminstrative expenses 19.5 33.2 40.4 36.3 45.8
Expenses capitalised - (5.8) (5.4) (6.7) (7.5)
Cost of sales 632.4 687.9 691.9 632.5 642.6
Operating profit 84.3 76.0 50.7 22.9 82.0
Other recurring income 17.0 26.2 33.1 68.3 35.5
Adjusted PBDIT 101.4 102.2 83.8 91.2 117.5
Financial expenses 17.0 17.5 24.3 39.0 38.3
Depreciation 21.5 21.5 22.6 24.3 25.5
Other write offs - - - - -
Adjusted PBT 62.9 63.3 36.9 27.9 53.8
Tax charges (1.3) (0.7) 15.0 2.2 2.2
Adjusted PAT 64.14 63.94 21.90 25.69 51.53
Non recurring items (0.4) 11.8 49.3 52.6 56.3
Other non cash adjustments 1.9 0.0 (0.1) (0.2) 1.0
Reported net profit 65.7 75.8 71.1 78.1 108.8
Earnigs before appropriation 177.8 230.6 271.9 315.2 382.0
Equity dividend 14.6 19.5 24.3 29.2 40.0
Preference dividend - - - - -
Dividend tax 1.9 2.7 3.4 5.0 6.8
Retained earnings 161.4 208.4 244.2 281.0 335.3
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(in Mar ' Mar ' Mar '

Balance sheet crores) 04 Mar ' 05 Mar ' 06 07 08
Sources of funds
Owner's fund
Equity share capital 29.2 29.2 29.2 29.2 32.0
Share application money
Preference share capital
1,009.
Reserves & surplus 229.4 275.9 319.3 363.2 7
Loan funds
Secured loans 168.1 220.8 249.1 330.9 249.5
Unsecured loans 42.4 35.6 78.0 136.8 186.2
1,477.
Total 469.1 561.4 675.6 860.1 4
Uses of funds
Fixed assets
Gross block 489.5 497.3 536.4 542.6 558.2
Less : revaluation reserve 32.6 30.3 22.9 18.3 16.7
Less : accumulated
depreciation 236.1 261.9 255.7 273.0 291.7
Net block 220.9 205.1 257.8 251.3 249.8
Capital work-in-progress 3.1 15.6 5.2 17.5 4.9
Investments 265.3 335.8 371.4 485.7 775.5
Net current assets
Current assets, loans &
advances 246.7 262.1 274.4 384.3 803.8
Less : current liabilities &
provisions 269.0 258.4 255.4 294.7 367.3
Total net current assets (22.3) 3.7 19.0 89.6 436.5
Miscellaneous expenses not
written 2.1 1.3 22.2 16.0 10.7
1,477.
Total 469.1 561.4 675.6 860.1 4
Notes:
Book value of unquoted
investments 203.2 219.1 264.1 393.5 645.2
Market value of quoted
investments 80.2 227.1 488.8 340.2 333.7
Contingent liabilities 98.4 143.4 91.3 111.0 124.5
Number of equity shares
outstanding 4.9 4.9 4.9 29.2 32.0
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(Rs
Cash flow crore)
Mar ' Mar ' Mar '
04 Mar ' 05 Mar ' 06 07 08
Profit before tax 63.8 75.1 55.1 79.6 107.7
Net cashflow-operating activity 75.7 46.0 15.3 (9.0) 50.3
Net cash used in investing activity (59.9) (40.6) (33.1) (51.5) (262.6)
Netcash used in fin.
Activity (29.0) 2.8 19.0 73.3 481.2
Net inc/dec in cash and equivlnt (13.2) 8.2 1.2 12.8 268.9
Cash and equivalnt begin of year 18.8 5.6 11.4 12.6 25.4
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Cash and equivalnt end of year 5.6 13.8 12.6 25.4 294.3
Rs in
crores
Annual results in brief
Mar ' Mar ' Mar '
04 Mar ' 05 Mar ' 06 07 08
Sales 716.66 762.59 745.48 714.26 796.02
Operating profit 74.23 66.68 48.88 13.99 64.11
Interest 5.8 25.82 28.37 38.31 34.44
Gross profit 85.32 96.54 77.73 103.82 82.34
EPS (Rs) 2.23 2.6 2.44 2.67 3.57
(Rs
crore)
Annual results in details
Mar ' Mar ' Mar '
04 Mar ' 05 Mar ' 06 07 08
Other income 16.9 55.7 57.2 128.1 52.7
Stock adjustment 3.8 (8.8) (12.0) (28.8) 5.4
Raw material 462.4 515.3 502.3 462.7 387.0
Power and fuel - - - - -
Employee expenses 65.3 68.7 67.4 63.0 79.6
Excise - - - 59.5 60.7
Admin and selling expenses - - - - -
Research and development expenses - - - - -
Expenses capitalised - - - - -
Other expenses 111.0 120.7 138.9 143.9 199.3
Provisions made - - - - -
Depreciation 21.5 21.5 22.6 24.3 25.5
Taxation (1.3) (0.7) 19.0 2.2 2.2
Net profit / loss 65.1 75.8 71.2 78.1 107.8
Extra ordinary item - - 35.1 0.7 53.2
Prior year adjustments - - - - (1.0)
Equity capital 29.2 29.2 29.2 29.2 30.2
Equity dividend rate - - - - -
Agg.of non-prom. shares (Lacs) 55.4 55.4 56.4 410.3 685.2
Agg.of non promotoHolding (%) 11.4 11.4 11.6 14.1 21.4
OPM (%) 10.4 8.7 6.6 2.0 8.1
GPM (%) 11.6 11.8 9.7 12.3 9.7
NPM (%) 8.9 9.3 8.9 9.3 12.7
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Summary Financials
March (Rsmn) FY08 FY09E FY10E

Key Income Statement
Revenue 29,477 32,097 36,211
YoY growth (%) 23.9 8.9 12.8
Operating profit 1976 2361 3292
YoY growth (%) 103.5 19.4 39.4
Operating margin 6.7 7.4 9.1
Depreciation 514.0 570.0 605.0
Interest expenses 712.0 766.0 824.0
PBT 1,349.0 1,429.0 1,446.0
Provision for tax 2,370.0 2,454.0 3,309.0
Minority interest 692.0 622.0 867.0
PAT (adjusted) - - -
YoY growth (%) 1,408.0 1,832.0 2,442.0
PAT margin 122.3 30.1 33.3
Key CF Statement 2.7 4.8 5.7
Key Balance Sheet Data
Shareholders' fund (3,545.0) 1,719.0 3,255.0
Debt 274.0 (1,875.0) (608.0)
Minority Interest 6,042.0 (1,168.0) (501.0)
Total Capital Employed 2,771 -1,325 2,146
Fixed Assets
Investments 13,664 15,748 17,174
Net current assets 10,497 10,095 11,434
Total Assets 994 994 994
Key Ratio 25,831 27,309 30,075
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ROCE 10,552 12,286 12,402

ROIC 2,177 2,177 2,177
ROE 12,833 12,732 15,382
Per share Ratios (Rs) 25,831 27,309 30,074
Fully diluted EPS
Book value 15.5 13.1 14.4
Solvency Ratio (x) 8.2 11.6 8.3
Debt-equity 15.3 12.5 14.8
Interest coverage ratio
Valuation parameters(x) 4.4 5.7 7.6
P/E (Fully Diluted) 80.8 85.4 94
P/BV
EV/EBITDA 0.8 0.6 0.7
EV/Sales 2.1 2.3 3.3
14.8 11.3 8.5

0.8 0.8 0.7
15 12.5 9
1 0.9 0.8
SHARE PRICE OF GIL from October 2009 to January 2010
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GRAPH SHOWING GROWTH OF GIL OVER THE YEARS
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STAKE IN SUBSIDIARIES
SUBSIDIARY COMPANIES STAKE

Godrej Agrovet (GAVL) 75.20%
Godrej Properties 81.30%
Ensemble Holdings & Finance Ltd 100%
Godrej International 100%
Godrej Global Solutions 99.80%
Godrej Hicare 76.80%
Godrej Sara Lee 20%
Godrej Hershey 43%
Golden Feed Products Ltd. 100.0% stake of GAVL
Godrej Gokarna Oil Palm 48% stake of GAVL
Godrej Goldcoin Aquafeed 49.0% stake of GAVL
Godrej Tyson Foods 49.0% stake of GAVL
Godrej Oil Plantations Ltd. 80.0% stake of GAVL
Goldmohur Foods & Feeds Ltd. 100.0% stake of GAVL
Cauvery Palm Oil Ltd. 51.0% stake of GAVL
Christ College 91

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Godrej Report

Introduction to the topic:

Godrej industries is a conglomerate and it is difficult to completely valuate the

The following things are covered in the report they are:

INTRODUCTION TO THE INDUSTRY

Godrej Industries is into a number of businesses and they include:

Real estate industry:

INTRODUCTION TO THE COMPANY

INDIVIDUAL COMPANY PROFILES

1. Godrej & Boyce Mfg. Co. Ltd.

PRODUCTS OF GODREJ & BOYCE:

IV. SECURITY EQUIPMENT

• Physical Security Products

• Currency Handling Products

V. AUDIO VISUAL SOLUTIONS

2. GODREJ CONSUMER PRODUCTS LTD

Godrej has well known brands such as

Leader in hair colour products:

Liquid detergent brand

Godrej consumer products deals with:

3. GODREJ INDUSTRIES LTD

Godrej Industries Limited is India's leading manufacturer of oleochemicals and makes

Geometric is a specialist in the domain of engineering solutions, services and

5. GODREJ INFOTECH LTD

Godrej Infotech Ltd. is in the business of software Development, e-solutions

6. GODREJ AGROVET LTD

Cattle feed: Cattle feed, GAVL’s flagship business, is a high-volume, low-margin

Godrej Tyson: Godrej’s poultry business is an integrated business vertical which

Trading business: GIL’s subsidiary Ensemble Holdings & Finance Ltd is a

7. GODREJ SARA LEE LTD

8. GODREJ HICARE LTD

Godrej Hicare Ltd (GHCL) is an initiative by Godrej Group to introduce professional

9. GODREJ EFACEC AUTOMATION AND ROBOTICS LTD

10. GODREJ PROPERTIES

Godrej Properties was established in 1990 as a real estate development company

Godrej Properties adheres to a simple philosophy: providing exemplary service based

11. OVERSEAS ESTABLISHMENTS

Company review: Larsen & Turbo

Larsen & Turbo is another conglomerate handling a number of businesses in different

Author : Priya Kansara Pandya, ET Bureau

Author: Mr. A.B. Godrej Chairman, Godrej Industries

Author: Korean herald, Sunday, February 14

Author: Sunday Newspaper, 31 January 2010

Author: By Thomas Kutty Abraham, February 01, 2010

Godrej Inds sails against tide on turnaround show

Author: Unknown Agencies | 2010-01-25

Godrej Industries Q3 net up at Rs 43.80 cr

In view of change in the Company's shareholdings in some of the subsidiaries, joint

The company is increasingly introducing smaller SKUs as people in smaller towns

Godrej Properties lists at 16% premium

The IPO of Godrej Properties Limited received an overwhelming response as it got

TITLE OF THE STUDY

OBJECTIVES OF THE STUDY

o To study about the Godrej industry

SCOPE OF THE STUDY

SAMPLE SIZE AND SAMPLING METHOD

STATISTICAL TOOL USED

SOTP valuation model that is Some of the parts valuation model.