MIRA INFORM REPORT

Report Date :

09.07.2008

IDENTIFICATION DETAILS

Name :	GODFREY PHILIPS INDIA LIMITED
Registered Office :	Chakala, Andheri(East), Mumabi-400099, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	03.12.1936
Com. Reg. No.:	11-8587
CIN No.: [Company Identification No.]	U16004MH1936PLC008587
TAN No.: [Tax Deduction & Collection Account No.]	MUMG08521C
PAN No.: [Permanent Account No.]	AABCG4768K
Legal Form :	Public Limited Liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing and marketing of Cigarettes containing tobacco, Tea black in packets and Unmanufactured tobacco

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 20000000
Status :	Very Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed company having fine track. Available information indicates high financial responsibility of the company. Financial position is good. Payments are usually correct and as per commitments. The company can be considered good for any normal business dealings.

LOCATIONS

Registered Office :	Chakala, Andheri(East), Mumabi-400099, Maharashtra, India
Tel. No.:	91-22-28367306 / 26832155/28367301/08
Fax No.:	91-22-28363761 / 26840775
E-Mail :	Sdasgupta-gpi@modi.com , rjoshi-gpi@modi.com
Website:	http://www.godfreyphillips.com
Head Office :	49, Community Centre, New Friends Colony, New Delhi-110065
Tel. No.:	91-11-26832155/26836468
Fax No.:	91-11-26840775/26835803
E-Mail :	Email-gpi@modi.com
Corporate Office :	Four Square House, 49, Community Centre, Friends Colony, New Delhi-110065
Factory 1 :	Ghaziabad Factory International Tobacco Company Post Box No 97, Guldhar, Ghaziabad -201301 , India
Tel. No.:	91-120-2788235
Fax No.:	91-120-2788247
Factory 2 :	AndherFactory Godfrey Phillips India Limited Chakala, Andheri (East), Mumbai – 400099, Maharashtra, India
Tel. No.:	91-22-28367301-08
Fax No.:	91-22-28363761
Leaf Division:	Godfrey Phillips India Limited PO Box 214, Ring Road. Guntur - 522002 (Andhra Pradesh) , India
Tel. No.:	91-863-2351114,2350624
Fax No.:	91-863-2350557
Leaf Division:	Godfrey Phillips India Limited Kurnool Road,Pernamitta Ongole - 523002 (Andhra Pradesh), India
Tel. No.:	91-8952-237141, 231345, 238482/3
Fax No.:	91-8952-231428
E-Mail :
Branches :	Ahmedabad 306, Sakar, opp. Nehru Bridge, Ashram Road. Ahmedabad-380009, Gujarat, India
Tel. No.:	91-79-6580290/6581817
Fax No.:	91-658329
Branches :	Calcutta 3 Cooper Street P.O Kalighat, Calcutta – 700026, India
Tel. No.:	91-33-24860178/79/80
Fax No.:	91-33-24860177
Branches :	Delhi 15, Regal Building, Connaught Circus, New Delhi – 110001, India
Tel. No.:	91-11-23341445/46/47
Fax No.:	91-11-23345995
Branches :	Mumbai Kermani Building, Dr.D.Naroji Road, Mumbai – 400001, Maharashtra, India
Tel. No.:	91-22-22045764, 22873911
Fax No.:	91-22-22821629
Branches :	Chandigarh SCO-17 2nd Floor, Sector 26 Madhya Marg, Chandigarh-160019, Punjab, India
Tel. No.:	91-172-2790415,2792414
Fax No.:	91-172- 2792416
Branches :	Hyderabad 11-5-423/1 Zafar Bagh, Lakdi ka Pul, Hyderabad- 500004, India
Tel. No.:	91-40-23317622,23308478
Fax No.:	91-40-23317014
Factory:	Andheri Plant V. K. K. Menon Road, (Sahar Road), Chakala, Andheri (East), Mumbai-400099. Maharashtra, India
Factory:	Guldhar Plant International Tobacco Company Limited Delhi-Meerut Road, Guldhar, Ghaziabad-201001, India

DIRECTORS

Name :	Mr. R.A Shah
Designation :	Chariman cum Director
Other Directorship:	Pfizer Limited (Also Chairman of Audit Committee) Colgate Palmolive India Limited (Also Chairman of Audit Committee) The Bombay Dyeing and Manufacturing Company Limited ( Also Chairman of Audit committee) BASF India Limited (Also a Member of Audit Committee) Clariant Chemicals (India) Limited (Also Chairman of Audi Committee) Abort India Limited ( Also a Member of Audit Committee) Procter and Gamble Hygiene and Healthcare Limited ( Also a Member of Audit Committee) Nicholas Piramal India Limited (Also chairman of Audit Committee) Asian Paints (India) Limited ACC Limited Deepak Fertilizers and Petrechemicals Corporation Limited Lupin Limited Wockhardt Limited
Name :	Mr. K. K. Modi
Designation :	President and Director
Name :	Mr. L. K. Modi
Designation :	Executive Director
Name :	Mr. Samir Kumar Modi
Designation :	Executive Director
Age:	32 years
Qualification:	B.A.
Experience:	12 years
Date of Joining:	11.01.1994
Previous Employment:	Indo Euro Ind. Limited – Managing Director
Name :	Mr. Lalit Bhasin
Designation :	Director
Name :	Mr. Anup N. Kothari
Designation :	Director
Qualification:	B.Arch, F.I.I.A
Other Directorship:	International Research Park Laboratories Limited Samkap Chemicals Limited
Name :	Mr. C.M. Maniar
Designation :	Director
Name :	Mr. O.P. Vaish
Designation :	Director
Qualification:	B.Com (H), M.A. (Eco), L.L.M
Other Directorship:	PNB Finance and Industries Limited Indo Rama Synthetics (India) Limited International Travel House Limited (Also Member of Audit Committee) The India Thermit Corporation Limited
Name :	Mr. S V Shanbhag
Designation :	Whole time Director
Name:	Mr. R. N. Agarwal
Designation:	Director – Finance
Age:	55 years
Qualification:	M.Com., LL.B., F.C.A.
Experience:	29 years
Date of Joining:	01.08.1982
Previous Employment:	Modipon Limited – Controller of Accounts

KEY EXECUTIVES

Name :	Mr. R Joshi
Designation :	Company Secretary
Name :	Crawford Bayley and Company
Designation :	Solicitors

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2008

Names of Shareholders	No. of Shares	Percentage of Holding
A Shareholding of promoter and promoter and group
Indian
Individuals/ Hindu Undivided Family
a) individuals	6888	0.066
Individuals/ Hindu Undivided Family
a) Directors	1200	0.012
b) Bodies Corporate	3391319	32.613
c) Any other Speify Trusteee	360276	3.465
Foreign
a) Bodies Coporate	3736704	35.934
Public Shareholdings
Institutions
a) Mutual Funds	125	0.001
b) Financial Institutions / Banks,Central Governments/ State Government	6000	0.058
c) Foreign Institutional Investors	903219	8.689
Non Institutions
a) Bodies Corporate	155888	1.499
b) Individual
i) Individuals Shareholders holding nominal share capital up to Rs. 0.100 Millions	1525312	14.668
ii) Individual Shareholders holding nominal share capital in excess of Rs. 0.100	235101	2.261
iii) Any other (specify) other directors and relatives	7441	0.072
Non resident Individuals	29608	0.285
OCBs	30000	0.288
Total	10.98784	100.000

BUSINESS DETAILS

Line of Business :

Manufacturing and marketing of Cigarettes containing tobacco, Tea black in packets and Unmanufactured tobacco

Products :

Item Code No. (ITC Code)	Product Description
Cigarattes cointaining tabacco	2402.20
Unmanufactured tabacco	2401.20
Tea blacks in packets	902.30

Brand Names :

• Stellar
• Igen
• Four Square
• Jaisalmer
• Red and White Flake
• Northpole
• Cavanders
• Tipper

GENERAL INFORMATION

Suppliers :

1. Hitkari Multifilters Limited
2. Studio Printal (New Delhi) Private Limited
3. Perfect Industries
4. Packfine Corrugating Industries
5. S and S Packaging
6. Tapan Engineering Works
7. Triwal Boards Private Limited
8. Quality Tape Manufacturers
9. Perfect Engineering Woks
10. Radix Microsystems
11. Image India Private Limited
12. Anand Packing Private Limited

Bankers :

• State Bank of India

• Bank of Baroda

• Bank of India

• Citibank N. A.

• State Bank of Hyderabad

• State Bank of Travancore

• The Hongkong and Shanghai Banking Corporation

• Union Bank of India

Facilities :

SECURED As on 31.03.2007	Amount Rs. In Millions
From Bank:
Term Loan secured by way of an exclusive charge over specific plant and machinery (Payable within 12 months Rs. 109.000 Millions, previous year Rs. 111.950 Millions)	327.000
Cash Credit and working capital demand loan secured against hypothecation of stocks and book debts and second charge on certain immovable properties of the Company	280.335
Total	607.335

Banking Relations :	Good
Auditors :
Name :	A.F. Ferguson & Company Chartered Accountant
Name :	Lodha and Company
Subsidiaries :	International Tobacco Company Limited Case Investments Limited City Leasing and Finance Limited Manhattan Creditors and Finance Limited Kashyap Metal and Allied Industries Limited Unique Space Developers Limited Rajputana Infrastructures and Real Estate Limited Gopal Krishna Infrastructure and Real Estate Limited
Associates:	Modi Entertainment Limited Modicare Limited Modern Homecare Products Limited K. K. Modi Investments and Financial Services Private Limited Beacon Travels Private Limited Modipon Limited Assam Cigarette Company Private Limited R C Tobacco Private Limited HMA Udyog Private Limited Kaushambi Investment and Leasing Company Private Limited Bina Fashion N Food Private Limited Modicare Foundation Modi Appollo Imtenational Group Private Limited Priyal Hitay Nidhi

CAPITAL STRUCTURE

As on 31.03.2007

Authorised Capital :

No. of Shares	Type	Value	Amount
24400000	Equity Shares	Rs. 10/- each	Rs. 244.000 Millions
60000	Preference Shares	Rs. 100/- each	Rs. 6.000 Millions
	Total		Rs. 250.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
10398784	Equity Shares	Rs. 10/- each	Rs. 103.988 Millions

Of the above:

1. 8682578 shares were allotted as fully paid up as bonus shares by capitalization of general reserves Rs. 31.157 Millions, share premium account Rs. 3.675 Million and profits Rs. 51.994 Millions
2. 83490 shares were allotted as fully paid up to the shareholders of D. Macropolo and Company Limited on amalgamation.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		103.988	103.988	103.988
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		4077.514	3500.624	3166.115
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		4181.502	3604.612	3270.103
LOAN FUNDS
1] Secured Loans		607.335	743.919	592.022
2] Unsecured Loans		0.000	0.000	18.777
TOTAL BORROWING		607.335	743.919	610.799
DEFERRED TAX LIABILITIES		35.544	40.796	103.655
TOTAL		4824.381	4389.327	3996.118
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1186.026	1271.643	1227.325
Capital work-in-progress		79.460	26.736	65.685
INVESTMENT		2462.657	2110.051	1991.578
DEFERREX TAX ASSETS		0.000	0.000	261.289
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1512.958	1497.164	1278.257
	Sundry Debtors	156.961	115.309	25.119
	Cash & Bank Balances	142.760	66.841	52.030
	Other Current Assets	1.272	1.517	1.277
	Loans & Advances	734.247	767.350	730.179
Total Current Assets		2548.198	2448.181	2086.862
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	912.914	996.759	1207.195
	Provisions	539.046	470.525	428.426
Total Current Liabilities		1451.960	1467.284	1635.621
Net Current Assets		1096.238	980.897	451.241
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		4824.381	4389.327	3996.118

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		7614.846	6841.661	7126.355
Other Income		335.985	166.084	0.000
Total Income		7950.831	7007.745	7126.355
Profit/(Loss) Before Tax		1352.288	996.936	999.498
Provision for Taxation		471.246	395.100	363.513
Profit/(Loss) After Tax		881.042	601.296	635.985
Earnings in Foreign Currency :
	FOB Value	775.584	602.007	738.720
	Commission Earnings	0.000	0.000	0.000
	Other Earnings	30.666	16.674	0.000
Total Earnings		806.25	618.681	738.72
Imports :
	Raw Materials	140.579	61.793	393.861
	Stores & Spares	7.025	8.302	0.000
	Capital Goods	27.402	48.570	0.00
	Others	14.196	11.942	0.000
Total Imports		189.202	130.607	393.861
Expenditures :
	Cost of Goods Sold
	Manufacturing Expenses	3462.144	3278.954
	Raw Material Consumed	3080.351	2494.034	8894.921
	Increase/(Decrease) in Finished Goods	[110.551]	140.531
	Depreciation & Amortization	190.658	183.720
	Exceptional items	[24.059]	[86.430]
	Other Expenditure	6733.153	5956.708
Total Expenditure		6598.543	6010.809	8894.921

SUMMARISED RESULTS

PARTICULARS	31.03.2008 Full Year
Sales Turnover	8842.100
Other Income	517.200
Total Income	9359.300
Total Expenditure	7427.500
Operating Profit	1931.800
Interest	36.700
Gross Profit	1895.100
Depreciation	197.700
Tax	575.200
Reported PAT	1122.200
Dividend (%)	2500.000

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.17	0.20	0.14
Long Term Debt-Equity Ratio	0.10	0.13	0.10
Current Ratio	1.38	1.29	1.35
TURNOVER RATIOS
Fixed Assets	7.10	6.82	7.76
Inventory	10.61	10.32	10.25
Debtors	117.28	203.97	171.50
Interest Cover Ratio	39.13	32.22	18.47
Operating Profit Margin(%)	8.37	7.54	9.43
Profit Before Interest And Tax Margin(%)	7.18	6.26	8.16
Cash Profit Margin(%)	5.68	4.88	6.19
Adjusted Net Profit Margin(%)	4.49	3.60	4.91
Return On Capital Employed(%)	25.23	21.86	30.42
Return On Net Worth(%)	18.52	15.08	20.79

LOCAL AGENCY FURTHER INFORMATION

Directors Report

 It is reassuring to be able to report a commendable growth during the year 2006-2007, even in the face of the roadblocks the company encounters, being particularly in an industry that remains increasingly bedevilled by the spectre of discriminatory taxation on the one hand, and increasingly crippling regulations in conducting its business, on the other. 

 As they take strides to attain greater heights of business, they remain alive to the imperatives of their responsibilities in equal measure. 

 As part of their continuing commitment to doing business with conscience, they have been able to integrate increasing shareholder value with ideals of addressing social issues encompassing a larger canvas of collaborative stakeholders' concerns. The launch of Godfrey Phillips WHITE (They Honour the Importance of Tobacco Etiquette) - a responsible smoking programme, the very first in India is yet another initiative in this direction. The campaign WHITE humbly seeks to address the concerns of non-smokers, while protecting the interest of those who have made an informed choice to smoke.

 Godfrey Phillips Bravery - now in its 17th year, not only awards individuals for their selfless acts of physical bravery, but also for mental strengths of courage and conviction (mind of steel). Activities like Blood Donation Drive and Woman Empowerment through vocational training complement the Bravery initiatives. 

GENERAL ECONOMIC ENVIRONMENT 

  India's economy is witnessing robust growth.The real GDP is estimated to grow at 9.2% in the year 2007-2008, surpassing the expectations on most counts, with the average GDP growth at 8.7% in the last three years. 

 Infact, considering any set of indices, the Indian economy has come of age and looks distinctly upbeat and confident. While the industrial sector growth at 10 % is the highest in this decade, the services sector too continues to grow around eleven percent. 

 The Foreign Exchange reserves of the country have topped US$ 200 billion: the exports were over US$ 125 billion in the last fiscal year, with US$ 160 billion as the target for the current year. The Sensex recently breached the 15,000 mark, FDI inflows touched US$ 17 billion during the year 2006-2007, and is expected to grow to US$ 30 billion mark in the current year. 

 Agriculture, which supports the livelihood of over 70% of the rural population, and contributes almost a quarter to the GDP, recorded a modest growth of 2.7% as against 6% last year, and continues to be an area of concern. There is no denying the fact that the growth, in order to be real and sustainable, has to be 'inclusive'. 

Maximizing Potential of Tobacco Sector 

 In a country like India, where the livelihood of 38 million people is linked to tobacco, and where tobacco contributes over Rs94500.000 Millions in taxes, only a cohesive strategy can help maximize the economic value of tobacco, ensuring optimal returns for the farmers and farm workers. Keeping in mind, India's unique and fragmented pattern of tobacco consumption, this can be achieved through: a) Farmers and initiatives to improve productivity; b) an equitable Tobacco Taxation Policy and c) preventing small Units from misusing the provisions of ID&R Act, 1951. 

 Tobacco provides direct and indirect employment to 38 million people, around 75% of whom are in the agricultural sector. Although India grows 10% of the world's tobacco, its share of the US$ 6.3 billion global tobacco leaf exports is a mere 3.5%. This is mainly due to the fact that the exportable variety of tobacco - FCV (Flue Cured Virginia), accounts for only 35% of the total Indian production of tobacco. If India can align its production pattern to favour FCV variety and manages to garner a proportionate share of the export trade, it can clock a turnover of Rs. 28000.000 Millions - thrice the present levels.

 To achieve this, a strong and stable domestic base market is essential, as it will encourage farmers to grow better quality and higher-revenue yielding varieties, and also protect them against fluctuations in International demand. Modernization of tobacco consumption and production patterns in India - i.e. moving from traditional tobaccos to cigarette tobaccos - would enable India to emulate the performance of Brazil, which with similar production base, currently earns US$ 1.7 billion from exports of tobacco and tobacco products (Source: The Tobacco Institute of India). 

 Total exports of tobacco products stand at Rs. 14,134 million in FY2006, accounting for 0.3% of India's total exports. While in absolute numbers, the exports of tobacco have increased marginally, in comparative terms to the total exports, tobacco has a declining share. This is primarily due to the sharp decline in the export share of unmanufactured tobacco and lower consumption in the developed world. However, the overall scenario for tobacco exports looks promising keeping in view the shift in the U.S. from tobacco farming, withdrawal of subsidies from tobacco plantation in European countries and the political instability in Zimbabwe collectively offering a very high potential for exports of tobacco from India provided they come up with higher qualities and better flavourful varieties of tobacco. 

 Indian FCV tobacco is amongst the cheapest in the world market. Further, by virtue of absence of any governmental protection for this crop, unlike in many tobacco-producing countries, Indian FCV tobacco requires an edge in the competitive export market. Indian FCV tobacco is the least protected and therefore, needs more favourable terms of trade. India has yet to make its presence felt in the exports market for cigarettes, even though its volume has increased in absolute terms from Rs. 565 million in FY2001 to Rs. 1,552 million in FY2006. The tobaccorelated export basket remains dominated by unmanufactured tobacco and all efforts should be made by the Government and the exporters to secure removal of restrictions on export of Indian tobaccos to the U.S.A.. 

SEGMENTWISE PERFORMANCE IN 2006-2007 

 Cigarettes 

 During the year there was an overall improvement in sales volume of the Company's cigarette brands compared to that in the previous year. In value terms the domestic cigarette sales were higher at Rs. 14600.000 Millions compared to Rs. 13240.000 Millions in the previous year giving an increase of 10%. Cigarette exports were higher at Rs. 114.900 Millions compared to Rs85.500 Millions in the previous year registering a significant increase of 34%.

 The Company launched two new brands 'Stellar' and 'Champ' in the domestic market and a few others in the export markets. 

 In the first quarter of the current financial year the domestic cigarette sales were higher at Rs. 3790.000 Millions as against Rs. 3610.000 Millions in the corresponding quarter last year.

 Tea 

 During the year the domestic tea sales were higher at 3560 tonnes valued at Rs. 474.600 Millions compared to 3050 tonnes valued at Rs. 392.600 Millions in the previous year. The Company thus registered an increase of 17% (way ahead the Industry growth of 12%) in volumes and 21% in terms of value for the year under report compared to that in the previous year. 

 The process of integration of tea distribution with that of cigarette distribution started a year ago and has been bringing in better result in terms of distribution and sales and the Directors are confident of achieving higher turnover of tea in future. 

 Tea City, a diversified offering under the Godfrey Phillips banner, has seen a progression in all spheres including dynamic marketing initiatives, packaging makeovers, effective Sales & distribution, technology and product up-gradations, to define a more contemporary culture and mission for Tea City.

 During the year the volume growth has been garnered through brand introduction in modern formats and increased contributions from newly entered states of Andhra Pradesh, Rajasthan and Madhya Pradesh. 

 This year, Symphony, a premium offering from Tea City has seen a complete launch in Delhi. Symphony with a more contemporary and premium look has created a hi-decibel impact. Apart from prominent brand visibility, customized Symphony experiences were shared with consumers to publicize the new Symphony launch.

 During the first quarter of the current financial year the Company has been able to achieve tea sales in the domestic market of Rs. 106.900 Millions as compared to Rs. 96.900 Millions during the corresponding quarter last year. 

The shareholders would be pleased to notice from the figures as above, significant improvement in the Company's performance during the year compared to the previous year. The head 'Tobacco and tobacco products' as above includes raw tobacco, cut tobacco and cigarettes. While cigarette exports in terms of value were higher by 34% the cut tobacco exports were significantly higher by 716% compared to that in the previous year. The Company's exports of cut tobacco now goes to many countries. 

 The expansion of distribution of the Company's own brand 'Force 10' in West Africa has given encouraging results. The Company's brand 'Originals International' was successfully launched in November 2006. Test marketing of 'Ultima' brand has been completed with encouraging results in the COMESA region. The Company successfully opened new export markets in South East Asia and Middle East for supply of cut tobacco and cigarettes. 

 However, the decline in un manufactured tobacco exports has been primarily due to lack of sufficient orders from one of the long associated merchant companies. The Company is making all out efforts to increase direct exports through development of a wider customer base. Business relations are being established in Philippines and Brazil besides appointment of agents in many countries including Netherlands and Philippines. With these measures, the company is confident of achieving higher tobacco export sales in the coming years.

Cigar 

 During the year, sales were higher by 44% at Rs. 33.100 Millions as against Rs. 22.900 Millions for the previous year. The increased sales led to their market share going up to 65%. 

 The Company continues to expand the cigar portfolio both in machine made and hand rolled segments. Cigars from Altadis USA are gaining popularity and all the brands, Phillies, Hav-ATampa, Don Diego, Santa Damiana and Flor De Copan have shown robust growth, with flavoured cigars growing in demand. 

 In keeping with the increasing demand of hand-rolled and machine made cigars, the Company successfully concluded an exclusive distribution agreement with Oettinger Davidoff International of Switzerland, and launched the premium range of Davidoff - The Good Life cigars, Millennium Blend Robusto Tubes, Davidoff - Tubo no. 2, Special R, world famous Grand Cru series, Exquisitos, Demitasse, and cigarillos. These fine quality cigars have been introduced in Delhi, Mumbai, Bangalore, Hyderabad,Chennai, Jaipur, Udaipur, Jodhpur and Cochin, and receiving enthusiastic response from the cigar aficionados. 

 With the growth in its portfolio, the Company is presently distributing cigars in 55 cities. 

 Godfrey Phillips has also opened a cigar shop in the Park Plaza in Gurgaon which stocks cigars and cigar accessories manufactured and supplied by different companies associated with the Company. The shop clientele has been growing and the initiative by the Company has been appreciated by the consumers

 Their efforts to distribute cigars in the Horeca and Modern Trade are helping us to create the awareness and right image, resulting in improved sales of these aspirational life style brands. 

TREASURY OPERATIONS 

 The Company has been deploying its surplus funds, generated on an ongoing basis, primarily in debt oriented schemes of different reputed mutual funds. Since the pure debt funds are exposed to the interest rate volatility prevailing in market, for quite sometime now the Company has been investing further surplus funds in Fixed Maturity Plans offered by different mutual funds. As on 31st March, 2007 out of total investments of Rs. 2460.000 Millions, an aggregate amount of Rs.1440.000 Millions stood invested in Fixed Maturity Plans of different mutual funds. 

 As in previous years the Company continued to invest its temporary surplus funds in liquid/short term schemes of different mutual funds. 

 During the year under report the Company also invested a small part of its long term surpluses in some of the equity schemes offered by the mutual fund houses. The Board of Directors felt that the Company could take advantage of the equity market by way of a limited exposure with the objective to obtain higher overall returns on its investments. 

 The Company booked an aggregate amount of profit of Rs223.000 Millions on sale/redemption of long as well as short term investments in mutual funds during the year. 

The overall sales turnover comprising of cigarettes, tobacco, cigar and tea was higher at Rs. 15970.000 Millions as against Rs. 14320.000 Millions in the previous year, registering an increase of more than 11%. After providing for the taxation, the net profit of the Company was higher at Rs. 881.000 Millions as against Rs. 601.300 Millions in the previous year. 

Fixed Assets:

• Goodwill
• Patents and trade Marks
• Land (leasehold)
• Land (freehold)
• Buildings
• Plant and Machinery
• Electrical installation and equipments
• Furniture, fixture and office equipments
• Motor vehicles

AS PER WEBSITE

Profile

The success of subject is the result of the Company’s commitment to innovations, enhanced operational efficiencies and adoption of internationally acclaimed business processes. Driven to excel, innovate and win, they intend to emerge as one of the most respected Company in the tobacco industry.

As the second largest player in the Indian cigarette industry, their annual turnover exceeds INR 15500.000 Millions (approx. US $387.5 million). They own some of the most popular cigarette brands in the country like Four Square,
Red and White, Jaisalmer, Cavanders and Tipper. Over the years they have also set their own benchmarks in innovation with revolutionary brands like Stellar, the first slim cigarette and I-gen, the first euro norm cigarette in India.

Their products are distributed over an extensive India wide network of more than 500 distributors and 800,000 retail outlets. With the Corporate Office in Delhi, the Company has offices all across India in over 8 locations.

Godfrey Phillips India has two major stakeholders, one of India's leading industrial houses - the K. K. Modi Group and one of the world's largest tobacco companies, Philip Morris. The Company also enjoys a strong backing of over 12,000 shareholders.

Godfrey Phillips India is a Company committed to innovation and continuous improvement which can be seen in the Company employees; from the top management to the factory level.

Godfrey Phillips India’s management represents the optimum mix of professionalism, knowledge and experience. They are the guardians to the Company, and protectors of the shareholder’s interest.

Top Management and Executive Committee

• K. K. Modi (Chairman, K. K. Modi Group of Companies)
• Ram Poddar (Chief Mentor, K. K. Modi Group of Companies)
• S. Seru(CEO - Domestic)
• R. Anan (CEO - International)
• Ajit Suryanarayan(EVP - New Product Development)
• Arun Kumar(EVP - HR)
• Bhisham Wadhera (EVP – Sales)
• Nita Kapoor (EVP – Marketing & Corporate Affairs)
• Pradip Mittra(EVP - Operations)
• R. N. Agarwal (CFO)
• S. R. Balasubramanian(EVP – IT & Corporate Development)

Philip Morris

Altria Group Inc is the parent Company of Philip Morris International, Philip Morris USA and Philip Morris Capital Corporation. Altria Group owns 100% of the outstanding stock of Philip Morris USA, Philip Morris International and Philip Morris Capital Corporation.

Philip Morris, the owner of some of the world's most respected brands including Marlboro, is one of the largest shareholders in Godfrey Phillips India and has an agreement with the Company to provide technological services and assistance in all areas of business.

In 1968 Philip Morris International Finance Corporation, a wholly owned subsidiary of Philip Morris Inc., U.S.A. acquired full ownership of Godfrey Phillips Limited, London, U.K., which was the Holding Company of Godfrey Phillips India Limited till the issue of shares to the Indian public during 1975. As a result of acquisition of Godfrey Phillips Limited, London, U.K. as above, Philip Morris Inc. through its wholly owned subsidiary, Philip Morris International Finance Corporation became the Holding Company of Godfrey Phillips India Limited After the public issue in 1975, offer for sale to Indian public in 1979 and a rights issue in 1981 the shareholding of Philip Morris International Finance Corporation in Godfrey Phillips India Limited came down to the present level of 35.93%.

Philip Morris Inc. joined hands with the K. K. Modi Group in 1979.

Altadis

In December 2002, Godfrey Phillips India commenced as the exclusive distributor for the brands of the world's largest cigar manufacturer, Altadis in India, Nepal and Sri Lanka.

Altadis the world’s largest cigar manufacturer has three major areas of activity, which are blond and dark cigarettes, distribution and cigars. Blond and dark cigarettes are manufactured and marketed by the group itself, under well-established brand names in France and Spain. It is a market leader in its segment.

Altadis's value-added logistical expertise in tobacco and consumer-product services is extended to retailers to new sectors. Altadis ranks 3rd in Western Europe in cigarettes and 1st in the world in cigars.

Altadis group is the undisputed leader in three of the largest cigar markets namely United States, Spain and France.

Some of the well known cigar brands of the Company are: Farias, Fleur de Savane, Phillies, Dutch Master, VegaFina, Pleiades, Don Diego, Longchamp, Antonioy Cleopatra, Santa Damiana, Meccarillos, Cruzeros, Montecristo, Partagás, Cohiba, La Gloria Cubana, H. Upmann, Picaduros, Ducados Mini, Van Holden, Entrefinos, Tampa Nugget, Hav-a-Tampa, Backwoods and yotras marcas.

The Cigar Division of the Company consolidated its No.1 position worldwide in 2002, with a market share of nearly 25%, a sales volume of around 3.2 billion units.

International Division

Striving towards it vision to become a leading tobacco player in India and beyond, Godfrey Phillips India has forayed into international markets with successful new business ventures.

Today, Godfrey Phillips India is partnering with some of the top most players in the international tobacco industry in marketing their products and providing various professional and expert services which include contract manufacturing, consultancy services, cut tobacco and smoke analysis.

Already present in the Middle East, West Africa, South East Africa and South East Asia, Godfrey Phillips India wishes to strengthen its position as an international player by entering new markets.

Understanding the needs of the India consumer, the International Division also took initiative in recognizing the market for the cigar segment and providing for it. Today, Godfrey Phillips India can claim to be the first and only tobacco Company to organize the fragmented cigar market in India and secure its position as the market leader in the cigar distribution. The success can be measured by the exclusive distribution agreements Godfrey Phillips India has with Altadis, USA who are the world’s largest cigar Company. The other coups are Oettinger Davidoff International of Switzerland, Promocigar from Cuba, Villiger of Switzerland, Henri Wintermann from Holland and Cibahia from Brazil. With Davidoff – The Good Life cigars, Don Diego, Santa Damiana, Phillies, Hav-a-Tampa, Dutch Treats etc. receiving enthusiastic response from cigar aficionados, has encouraged us to open an exclusive cigar boutique at Hotel Park Plaza in Gurgaon where one can find the choicest of super luxury cigars and cigar accessories.

With the vision of K. K. Modi, President and Amrish R. Anand, CEO - International Division at the helm of it, the Company hopes to leave its footprints on the world map.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.43.37
UK Pound	1	Rs.85.51
Euro	1	Rs.68.08

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions