DIRECTORS' REPORT

This year too, your Company has continued to grow ahead of the overall FMCG sector, as well as the home and personal care categories that it participates in, despite a challenging macro environment.

Godrej Consumer Products Limited’s ('GCPL') expanding footprint is driven by a focused 3×3 strategy – a presence in three business categories (personal care, hair care, and home care) across three geographies (Asia, Africa, and Latin America).

Despite challenges across geographies, its businesses have performed well, with the Company's salience of international revenues at 47%. During the year, GCPL's consolidated sales increased by 11% and EBITDA by 21% in organic constant currency terms. India business net sales increased by 9% driven by 11% volume growth.

In our international business, our sales growth of 14%, in organic constant currency terms, was led by strong growth in Africa and Latin America. The standalone net profit grew by 13% at Rs. 740 crore as compared with previous year net profit of Rs. 654 crore and the consolidated net profit grew by 23% at Rs. 1,119 crore as compared with previous year net profit of Rs. 907 crore.

GCPL's focus has been to accelerate innovation and back new products with strong marketing investments. In the past year, GCPL made several new launches in the domestic and international businesses, which are expected to further enhance the company's competitiveness, improve the brand equity, and drive increased penetration and consumption. More than 40% of GCPL's growth now comes from new products and renovations. It was also the highest ranked Indian company (at number 24) on Forbes' list of the World's 100 Most Innovative Growth Companies 2015', for the second year in a row.

Today, GCPL is one of the largest household and personal care companies in India; the leader in hair colour, household insecticides, and liquid detergents, and the number 2 player in toilet soaps and air care. Significant marketing investments have driven higher consumption and penetration across the board. GCPL's superior global supply chain and future ready sales organisation leverage the latest technology for sharper execution and better decision making, thus strengthening market positions.

It was ranked the number 1 FMCG company to work for in the 'Great Place to Work-Best Workplaces in India 2015' list; its twelfth consecutive year on the list. It was also ranked number 9 on the 'Great Place to Work - Best Workplaces in Asia 2016' list and ranked among the top 25'Aon Hewitt Best Employers in India - 2016' survey'.

Your Company’s financial performance for the year under review is summarised below:

Figures in Rs. Crore

Financials	Consolidated		Standalone
Abridged Profit and Loss Statement	FY 2015-16	FY 2014-15	FY 2015-16	FY 2014-15
Net Sales	8957.15	8242.20	4748.19	4369.25
Other Operating Income	10.66	34.16	63.38	60.55
Total Income from Operations	8967.81	8276.36	4811.57	4429.80
Total Expenses other than Depreciation & Finance Cost	7343.66	6904.74	3828.66	3590.13
Profit from Operations before Other Income, Finance Cost, Exceptional Items & Depreciation	1624.15	1371.62	982.91	839.67
Depreciation	103.11	90.78	47.38	41.67
Profit from Operations before Other Income, Finance Cost & Exceptional Items	1521.04	1280.84	935.53	798.00
Foreign Exchange Gain / (Loss)	15.08	(3.25)	(0.59)	2.27
Other Income	66.87	91.51	42.81	55.24
Profit before Finance Costs & Exceptional Items	1602.99	1369.10	977.75	855.51
Finance Cost	100.17	103.21	36.54	36.92
Profit after Finance Costs but before Exceptional Items	1502.82	1265.89	941.21	818.59
Exceptional Items	(26.83)	(17.17)	-	8.60
Profit Before Tax	1475.99	1248.72	941.21	827.19
Tax Expense	317.10	272.29	201.49	172.74
Net Profit after Tax but before Minority Interest	1158.89	976.43	739.72	654.45
Share of Profit in Associate Company	0.10	0.04	-	-
Minority Interest	(39.58)	(69.35)	0.00	0.00
Net Profit for the period	1119.41	907.12	739.72	654.45

Your Directors recommend appropriation as under: Rs. Crore

GCPL Standalone	FY 2015-16	FY 2014-15
Surplus as at the end of previous year	1720.37	1270.33
Add: Net Profit for the year	739.72	654.45
Available for appropriation	2460.09	1924.78
Add: Transfer from Debenture Redemption Reserve	24.39	20.39
Less: Interim Dividend	195.81	187.24
Less: Tax on distributed profits	39.86	36.73
Less: Depreciation Adjustment pursuant to implementation of Schedule II of the Companies Act, 2013	-	0.83
Total Appropriation	211.28	204.41
Surplus Carried Forward	2248.81	1720.37

For the year 2015-16, four interim dividends were paid on shares of face value Rs. 1/- each, the details of which are mentioned below:

Dividend Type	Declared at Board Meeting Dated	Dividend rate per share on shares of face value Rs. 1 each	Record Date
1st Interim for FY 2015-16	July 29, 2015	Rs. 1.00	August 6, 2015
2nd Interim for FY 2015-16	October 24, 2015	Rs. 1.00	November 2, 2015
3rd Interim for FY 2015-16	January 27, 2016	Rs. 1.00	February 4, 2016
4th Interim for FY 2015-16	May 3, 2016	Rs. 2.75	May 11, 2016
TOTAL		Rs. 5.75

Your Directors recommend that the aforesaid interim dividends aggregating to Rs. 5.75/- per equity share be declared as the final dividend for the year ended March 31, 2016.

Four Board meetings were held during the year. Details of the meetings and the attendance record of the Directors are in the Corporate Governance section of the Annual Report.

All the Independent Directors have given their declaration of independence as required under Section 149(6) of the Companies Act, 2013; this has been recorded by the Board of Directors.

A familiarisation programme for the Independent Directors was conducted to familiarise them with the company, their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company, etc.

The same may also be accessed through the link given below.
http://www.godrejcp.com/Resources/pdf/Familiarisation-Programme-for-Independent-Directors.pdf

The service contract of Mr. Adi Godrej was for a period of 3 years beginning from April 1, 2013 to March 31, 2016. The Board of Directors have reappointed Mr Adi Godrej for a further period of 3 years beginning from April 1, 2016 to March 31, 2019. This re-appointment is subject to the approval of shareholders and accordingly a special resolution is included in the Notice of Annual General Meeting.

The service contracts of Ms.Nisaba Godrej, Executive Director and Mr. Vivek Gambhir, Managing Director are for a period of 3 years beginning from July 1, 2013 to June 30, 2016. The Board of Directors have reappointed Ms. Nisaba Godrej as Executive Director and Mr Vivek Gambhir as Managing Director for a further period of 3 years beginning from July 1, 2016 to June 30, 2019. This reappointment is subject to the approval of shareholders and accordingly separate ordinary resolutions are included in the Notice of Annual General Meeting for their re-appointment.

In the forthcoming Annual General Meeting, Ms. Tanya Dubash will retire by rotation and being eligible is considered for re-appointment.

Your Company has an Audit Committee in compliance with the Listing Regulations and the provisions of the Companies Act, 2013. The Committee consists entirely of the Independent Directors. The composition of the Committee is given in the Corporate Governance section of the Annual Report.

The Company's Registered Office is now located at Godrej One, 4th Floor, Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai - 400 079 w.e.f. November 20, 2015.

The Company's Remuneration Policy for Directors, Key Managerial Personnel, and other employees is attached as Annexure 'A' to the Directors' Report. The Company's total rewards framework aims at holistically utilising elements such as fixed and variable compensation, longterm incentives, benefits and perquisites, and noncompensation elements (careerdevelopment, work-life balance, and recognition).

The non-executive directors receive sitting fees and commission in accordance with the provisions of the Companies Act, 2013.

The Company also has a Board Diversity Policy in place, which is attached as Annexure 'B'. The criteria for determining qualification, positive attributes, and independence of directors are as per the Board Diversity Policy, Listing Regulations and the Companies Act, 2013.

The disclosure on the details of remuneration to directors and other employees pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure ‘C’.

Information as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. The abovementioned annexure is not being sent along with the Report. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid annexure is also available for inspection at the Registered Office of the Company during working hours, up to the date of the Annual General Meeting.

Mr. Adi Godrej, Chairman; Ms. Nisaba Godrej, Executive Director, Innovation; and Mr. Vivek Gambhir, Managing Director receive remuneration from your Company. Mr. Adi Godrej receives commission from your Company's holding company viz. Godrej & Boyce Manufacturing Company Limited.

We conducted a formal Board Effectiveness Review as part of our efforts to evaluate and identify improvements and thus enhance the effectiveness of the Board, its Committees, and Individual Directors. This was in line with the requirements mentioned in the Companies Act, 2013 and the Listing Regulations.

The Corporate HR team of Godrej Industries Limited and Associate Companies (GILAC) worked directly with the Chairman and the Nomination & Remuneration Committee of the Board, to design and execute this process, which was adopted by the Board. Each Board Member completed a confidential online questionnaire, providing vital feedback on how the Board currently operates and how it could improve its effectiveness.

The survey comprised four sections and compiled feedback and suggestions on:

1. Board Processes (including Board composition, strategic orientation, and team dynamics)
2. Individual Committees
3. Individual Board Members
4. Chairman

The criteria for evaluation of the Board Committees covered whether the Committee has well defined objectives, whether the Committee has the right composition and whether it delivers its objectives. The criteria for evaluation of all the individual Directors included skills, experience, and level of preparedness of the Directors, attendance and extent of contribution to Board debates and discussion, how the Director leverages his/her expertise and networks to meaningfully contribute to the Company. The criteria for the Chairman's evaluation included leadership style, conduct of Board meetings etc.

The following reports were created, as part of the evaluation:

1. Board Feedback Report
2. Individual Board Member Feedback Report
3. Chairman's Feedback Report

The overall Board Feedback Report was facilitated by Mr. Bharat Doshi with the Independent Directors. The Directors were vocal about the Board functioning effectively, but also identified areas that show scope for improvement. The individual Committees and Board Members' feedback was shared with the Chairman. Following his evaluation, a Chairman's Feedback Report was also compiled.

A. Non-Convertible Debentures

The 2,500 Unsecured Redeemable Zero Coupon Non-Convertible Debentures issued on October 16, 2014 on private placement basis, aggregating to Rs. 250 crore for a tenor of 1 year and 63 days (428 days), having a credit rating of ‘ICRA AA+ (Stable)', have been redeemed during the year as per the terms of the issue.

B. Particulars of Loans, Guarantees, and Investments

Following are the particulars of Investments, Guarantees and Loans made by the Company during the year:-

Sr. No.	Name of the wholly owned subsidiary	Amount USD (Mio)	Amount Rs. (Crore)
INVESTMENTS:
1	Godrej Consumer Products Holding (Mauritius) Limited	0.50	3.20
2	Godrej East Africa Holdings Limited	7.05	46.47
3	Godrej Household Products (Bangladesh) Pvt. Ltd.	1.60	10.53
4	Godrej Mauritius Africa Holdings Limited	23.90	156.97
5	Godrej Netherlands B.V.	4.00	26.49
6	Godrej Tanzania Holdings Limited	4.55	30.80
	Total	41.60	274.46
CORPORATE GUARANTEES:		Amount USD (Mio)	Amount Rs. (Crore)
Given during the year for loans availed by wholly-owned subsidiaries		415.10	2750.25

Note:
All investments above are in equity capital.

Details of Corporate Guarantees given are provided under the Note on Contingent Liabilities in the Notes to the Financial Statements section of the Annual Report.

No Loans were given during the year.

In compliance with the Listing Regulations, the Company has a policy for transactions with Related Parties ('RPT Policy'). The RPT Policy is available on the Company website viz. www.godrejcp.com, on the Investors page, under the section titled 'Compliance'.

The same may also be accessed through the link given below http://www.godrejcp.com/Resources/pdf/Related-Party-Transactions-Policy.pdf

Apart from the Related Party Transactions in the ordinary course of business and at arm's length basis, details of which are given in the notes to the financial statements, there were no other Related Party Transactions requiring disclosure in the Directors' Report, for compliance with Section 134(3) (h) of the Companies Act, 2013. Therefore, a Nil Report is attached as Annexure 'D' in the format prescribed i.e. Form AOC-2.

Pursuant to a Deed of Merger ('the Scheme'), sanctioned by a Dutch Court, vide its order effective March 31, 2016, Godrej Argentina Dutch Cooperatief UA has been merged with Godrej Consumer Products Dutch Cooperatief UA, Godrej Netherlands Argentina BV has been merged with Godrej Consumer Holdings (Netherlands) BV, and Godrej Netherlands Argentina Holding BV has been merged with Godrej Consumer Products (Netherlands) BV w.e.f. from April 1, 2015.

Your Company completed the acquisition of balance 40% stake in Cosmetica Nacional, a market-leading hair colourant and cosmetics company in Chile. Subsequently, the stake owned by your Company is 100%.

Your Company has increased its equity stake by 39% in DGH Phase Two Mauritius, owning Style Industries Limited, Kenya on March 9, 2016. Subsequently, the stake owned by your Company is 90%.

Your Company entered into the following agreements during the year for various acquisitions:

1. With Canon Chemicals Limited on February 3, 2016 to acquire majority equity stake in its business in Kenya. Canon Chemicals Limited, a Kenya based company, manufactures and distributes products in the personal and home care categories.
2. With Strength of Nature, a leading hair care company, on April 1, 2016 to acquire 100% equity stake in its business, to accelerate growth in Africa.

The above acquisitions were completed after the close of the financial year

During the year, the following companies became subsidiaries of your Company:

Charm Industries Limited
Godrej Hair Care Nigeria Limited
Godrej Household Insecticide Nigeria Limited
Godrej Hair Weave Nigeria Limited
Hair Credentials Zambia Limited
Godrej SON Holdings INC
Godrej Consumer Products US Holding Limited
Godrej Mid East Holdings Limited
Belaza Mozambique LDA

On account of mergers with other subsidiaries, the following companies ceased to be subsidiaries during the year:
Godrej Argentina Dutch Cooperatief UA (GADC UA)
Godrej Netherlands Argentina BV (GNABV)
Godrej Netherlands Argentina Holding BV (GNAHBV)

The details of business of the key subsidiaries are given in the Management Discussion & Analysis section of the Annual Report.

A report on the performance and financial position of each of the subsidiaries, associates, and joint venture companies has been provided after the Consolidated Annual Financial Statements section of the Annual Report in Form AOC-1.

The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with Accounting Standard 21 issued by the Institute of Chartered Accountants of India, also forms a part of the Annual Report and Accounts of your Company.

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Company has placed the financial statements of its subsidiaries on the Company's website www.godrejcp.com.

In compliance with the Listing Regulations, the Board has adopted a policy for determining material subsidiaries. This policy is available on the Company's website www.godrejcp.com, on the Investors page, under the section titled 'Compliance'. This may also be accessed through the link given below.

http://www.godrejcp.com/Resources/pdf/Policy-on-Material-Subsidiaries.pdf

Annexure 'E' to this Report provides information on Conservation of Energy, Technology Absorption, and Foreign Exchange Earnings and Outgo, required under Section 134 (3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, which forms a part of the Directors' Report.

The Board has constituted a Risk Management Committee. Elements of risks to the Company are given in the Management Discussion & Analysis section of the Annual Report under the heading 'Risks & Concerns'.

The Company has framed a CSR policy in compliance with the provisions of the Companies Act, 2013. The policy as well as projects and programmes falling under the CSR policy are on the Company website. Details of CSR projects in the prescribed format and the link to access the Company's CSR Policy are provided in Annexure 'F'.

Your Company has adopted a Vigil Mechanism Policy.

The purpose of the policy is to enable employees to raise concerns about unacceptable improper practices and/or any unethical practices being carried out in the organisation without the knowledge of management. All employees shall be protected from any adverse action for reporting any unacceptable/improper practice and/or any unethical practice, fraud or violation of any law, rule, or regulation. This Whistle Blower Policy will also be applicable to the Directors of the Company.

The Audit Committee reviews on a quarterly basis, reports made under this policy and implements corrective actions, wherever necessary.

In Compliance with Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, your Company has constituted an 'Internal Complaints Committee' ('Committee').

Because the number of complaints filed during the year was NIL, the Committee prepared a NIL complaints report. This is in compliance with Section 22 of the Act.

Your Company has an Audit Committee in compliance with Section 177 of the Companies Act, 2013 and the Listing Regulations. The Audit Committee consists of the following Independent Directors: Mr. Bharat Doshi as Chairman of the Committee and Mr. Narendra Ambwani, Dr. Omkar Goswami, Mr. Aman Mehta, Mr. D Shivakumar, and Ms. Ireena Vittal as members.

The details of the grants allotted under Godrej Consumer Products Limited Employee Stock Grant Scheme, 2011 as also the disclosures in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 and Section 62 1(b) read with Rule 12(9) of the Companies (Share Capital & Debentures) Rules, 2014 are set out in Annexure ‘G’ to this report.

Under the scheme of amalgamation between your Company and Godrej Household Products Limited ('GHPL') the Employee Stock Option Scheme of the erstwhile unlisted GHPL has become part of your Company. The equity shares of 'Godrej Industries Limited' are the underlying equity shares for the stock option scheme. As of April 1, 2015, 35,000 options convertible into 35,000 equity shares of Godrej Industries Limited (GIL) were outstanding, 20,000 options were vested and consequently exercised, and 15,000 options were vested and lapsed. Consequently, no options are outstanding as of March 31, 2016.

The Company has not given any loan to any person under any scheme for the purpose of or in connection with the subscription or purchase of shares in the Company or the Holding Company. Hence, there are no disclosures on voting rights not directly exercised by the employees in respect of shares to which the scheme relates.

The Board has laid down Internal Financial Controls within the meaning of the explanation to section 134 (5) (e) (“IFC”) of the Companies Act, 2013. The Board believes the Company has sound IFC commensurate with the nature and size of its business. Business is however dynamic. The Board is seized of the fact that IFC are not static and are in fact a fluid set of tools which evolve over time as the business, technology and possibly even fraud environment changes in response to competition, industry practices, legislation, regulation and current economic conditions. There might therefore be gaps in the IFC as Business evolves. The Company has a process in place to continuously identify such gaps and implement newer and/or improved controls wherever the effect of such gaps might have a material effect on the Company's operations.

Pursuant to the provisions contained in Section 134(5) of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management, and after due enquiry, confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;
2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
3. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. They have prepared the annual accounts on a going concern basis;
5. They have laid down internal financial controls to be followed by the Company, and such internal financial controls are adequate and operating effectively;
6. They have devised a proper system to ensure compliance with the provisions of all applicable laws, and this system is adequate and operating effectively.

In compliance with the Listing Regulations, your Company has transferred the unclaimed shares into a demat account, viz. 'Unclaimed-Suspense Account'. As and when an allottee approaches the Company, after proper verification, either credit the shares lying in the Unclaimed-Suspense Account to the demat account of the allottee to the extent of the allottee’s entitlement, or deliver the physical certificates after re-materialising them, depending on what has been opted for by the allottee.

Particulars	No. of Shareholders	No. of Shares
Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the beginning of the year;	5,756	873,737
Number of shareholders and aggregate shares transferred to Unclaimed Suspense Account during the year;	-	-
Number of shareholders who approached the issuer for transfer of shares from the Unclaimed Suspense Account during the year and aggregate shares transferred;	98	15,552
Number of shareholders to whom shares were transferred from the Unclaimed Suspense account during the year and the aggregate shares transferred;	98	15,552
Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the end of the year.	5,658	858,185

The shares of your Company are listed at the BSE Limited and the National Stock Exchange of India Limited.

The applicable annual listing fees have been paid to the Stock Exchanges before the due date.

Your Company is now listed on the Futures & Options Segment of the National Stock Exchange of India.

Annexure 'H' to this Report provides the Extract of Annual Return to be filed by the Company under the Companies Act, 2013.

A. Statutory Auditors

In accordance with Section 139 of the Companies Act, 2013 and rules made thereunder, M/s Kalyaniwalla & Mistry, Chartered Accountants, Mumbai, have been appointed as Statutory Auditors to hold office from the conclusion of the 14th Annual General Meeting (AGM) till the conclusion of the 17th Annual General Meeting, which will be held in 2017 (subject to ratification of re-appointment by the members at every AGM held after the AGM in which the appointment was made) of the Company, on a remuneration as may be agreed upon by the Board of Directors and the Auditors.

The notes to the Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further explanation.

B. Cost Auditors

Pursuant to directions from the Department of Company Affairs, M/s. P. M. Nanabhoy & Co., Cost Accountants, have been appointed as Cost Auditors for the applicable products of the Company for FY 2015-16. They are required to submit the report to the Central Government within 180 days from the end of the accounting year.

C. Secretarial Auditors

The Board has appointed M/s. A. N. Ramani & Co., Company Secretaries, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is attached herewith marked as Annexure 'I' to this Report. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark.

The Company continues to enjoy a Corporate Governance Rating of CGR2+ (pronounced as CGR 2 plus) and a Stakeholder Value Creation and Governance Rating of SVG1 (pronounced as SVG one). The '+' sign indicates relatively higher standing within the category indicated by the rating. The above ratings are on a scale of 1 to 6, where 1 is the highest rating. The two ratings evaluate whether a company is being run on the principles of Corporate Governance and whether the practices followed by the company lead to value creation for all its shareholders.

The CGR2 rating is on a scale of CGR1 to CGR6, where CGR1 denotes the highest rating. The CGR2+ rating implies that in ICRA's current opinion, the rated company has adopted and follows such practices, conventions, and codes as would provide its financial stakeholders a high level of assurance on the quality of corporate governance.

The SVG1 rating is on a scale of SVG1 to SVG6, where SVG1 denotes the highest rating. The SVG1 rating implies that in ICRA's current opinion, the company belongs to the highest category on the composite parameters of stakeholder value creation and management as also corporate governance practices.

Pursuant to the Listing Regulations, the Management Discussion & Analysis Report and the Report on Corporate Governance are included in the Annual Report. The Auditors' Certificate certifying the Company's compliance with the requirements of Corporate Governance in terms of the Listing Regulations, is attached as Annexure 'J' and forms a part of the Annual Report.

Your Directors wish to extend their sincere thanks to the Central and State Governments as well as the Government agencies, banks, customers, shareholders, vendors, and other related organisations who have helped in your Company's progress, as partners, through their continued support and co-operation.

For and on behalf of the Board of Directors

Adi Godrej
Chairman

Mumbai, 3^rd May 2016

GCPL TOTAL REWARDS POLICY

GCPL's Total Rewards Framework aims at holistically utilising elements such as fixed and variable compensation, long-term incentives, benefits and perquisites, and noncompensation elements (career development, work-life balance, and recognition).

Highlights

The rewards framework offers the employees the flexibility to customise different elements on the basis of need. It is also integrated with GCPL's performance and talent management processes and designed to ensure sharply differentiated rewards for our best performers.

The total compensation for a given position is influenced by three factors: position, performance, and potential. As a broad principle, for high performers and potential employees, GCPL strives to deliver total compensation at the 90th percentile of the market.

Total Cash Compensation

Employee's total cash compensation has three components:

'Fixed Compensation' comprises the basic salary and retirement benefits like provident fund and gratuity.

'Flexible Compensation' is a fixed pre-determined component of employee's compensation. Employees can allocate this amount to different components, as per their grade eligibility, defined at the start of each financial year.

'Variable Compensation (Performance Linked Variable Remuneration)'' rewards employees for delivering superior business results and individual performance. It is designed to provide a significant upside earning potential without cap for over-achieving business results. It has a 'Collective' component, linked to the achievement of specified business results, measured by Economic Value Added or other related metrics, relative to the target set for a given financial year and an 'Individual' component, based on Employee’s performance, as measured by the performance management process.

Long Term Incentives (Employee Stock Grant Scheme)

This scheme aims at driving a culture of ownership and focus on long-term results. It is applicable to Godrej Leadership Forum members, grades Vice President and above. Under this scheme, performance-based stock grants are awarded, measured by employee's annual review rating. The value of the stock grant is proposed by the management and approved by the Compensation Committee.

BOARD DIVERSITY POLICY

The Company is committed to equality of opportunity in all aspects of its business and does not discriminate on the grounds of nationality, race, colour, religion, caste, gender, gender identity or expression, sexual orientation, disability, age, or marital status.

The Company recognises merit and continuously seeks to enhance the effectiveness of its Board. The Company believes that for effective corporate governance, it is important that the Board has the appropriate balance of skills, experience, and diversity of perspectives.

Board appointments will be made on a merit basis and candidates will be considered against objective criteria, with due regard for the benefits of diversity on the Board. The Board believes that such merit-based appointments will best enable the Company to serve its stakeholders.

The Board will regularly review this policy to ensure its effectiveness.

Information pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

1. The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2015-16, the percentage increase in remuneration of each Director and Chief Financial Officer and Company Secretary during the financial year 2015-16 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under:

A. Whole-time Directors, Chief Financial Officer and Company Secretary

Sr. No.	Name of the KMP	% increase in remuneration in the financial year 2015-16	Ratio of remuneration of each Director to the median remuneration paid/payable to all employees for FY 2015-16 %
1	Adi Godrej, Chairman	35%	355.5
2	Nisaba Godrej, Executive Director, Innovation	44%	124.5
3	Vivek Gambhir, Managing Director	72%	380.2
4	V Srinivasan, Chief Financial Officer & Company Secretary (wef April 1, 2016)	Not Applicable	Not Applicable

Remuneration includes the actual variable bonus paid out on the basis of performance.

Comparison of remuneration of KMP against performance of the Company: The standalone net profit of the Company during the financial year grew from Rs. 654 crore to Rs. 740 crore (an increase of 13%).

B. Non-Executive Directors

Sr. No.	Name of the Director	% Increase in remuneration in the FY 2015-16	Ratio of remuneration of each Director to the median remuneration paid/payable to all employees for FY 2015–16
1	Jamshyd Godrej	(11)	4.40
2	Nadir Godrej	(14)	4.66
3	Tanya Dubash	(10)	4.66
4	Narendra Ambwani	11	5.44
5	Bharat Doshi	0	5.18
6	Omkar Goswami	11	5.44
7	Aman Mehta	0	5.18
8	D Shivakumar	5	5.18
9	Ireena Vittal	0	5.18

Note:

1. As per the approval received from the shareholders at the Annual General Meeting held on July 28, 2014, Non Executive Directors are entitled to a Commission on Profits at a rate not exceeding 1% of the net profits subject to a maximum of Rs. 15 lac per director, for a period of three financial years beginning from 2014-15.

2. Median remuneration of all the employees of the Company for the financial year 2015- 2016: Rs. 3.86 Lakhs
3. The percentage increase in the median remuneration of employees in the financial year: 9.35% basis like to like comparison
4. The number of permanent employees on the payrolls of the Company as on March 31, 2016 was 2306.
5. Relationship between average increase in remuneration and company performance:
   The average increase in remuneration during the financial year 2015-16 was 30.2% compared with that during the previous financial year. Income from operations of the Company during the financial year grew from Rs. 4429.80 crore to Rs. 4811.57 crore (an increase of 8.62%) and Net Profit of the Company during the financial year grew from Rs. 654 crore to Rs. 740 crore (an increase of 13%).
6. Comparison of the remuneration of KMP against the performance of the Company is given in point 1.
7. Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year, and percentage increase over decrease in the market quotations of the shares of the Company compared to the rate at which the Company came out with the last public offering in case of listed companies. In the case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year.

	As on March 31, 2016 Rs. (Crore)	As on March 31, 2015 Rs. (Crore)	Percentage increase / (decrease)
Market capitalisation	46,971	35,434	32.6%
Price earnings ratio	64	54	18.5%

The closing market price of the shares of the Company, as on March 31, 2016 on BSE, was Rs. 1379.35. The Company has not come out with any public offer since its inception in 2001.

8. The average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof:

   Total managerial remuneration comprises the remuneration of the Whole-time Directors and commission paid to Non-Executive Directors. The Whole-time Directors' remuneration is as per the resolution approved by the shareholders and will not exceed 5% of the Company's net profits as permitted by the Companies Act, 2013. The shareholders have approved Commission on Profits to Non- Executive Directors at a rate not exceeding 1% of the net profit, subject to a maximum amount of Rs. 15 lac per Director. The overall increase in managerial remuneration lies within the above limit.

   Average percentile increase in salary of employees other than managerial personnel is 28.7%. Percentile increase in managerial remuneration is given in point 1.

9. The key parameters for any variable component of remuneration availed by the directors:

   The variable component of the remuneration of the Wholetime Directors is determined on the basis of improvement in profitability and optimum utilisation of capital employed over the last year.

10. The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year.

    Because no employee of the Company receives remuneration in excess of the highest paid director, i.e. Mr Vivek Gambhir, Managing Director, the same is not applicable.

11. Remuneration is as per the remuneration policy of the company.

Form AOC-2

Form for the disclosure of particulars of contracts/arrangements entered into by the Company with Related Parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013, including certain arm’s length transactions under third proviso thereto.

1. Details of contracts or arrangements or transactions not at arm’s length basis                  NIL
1. Name(s) of the related party and nature of relationship
2. Nature of contracts/arrangements/transactions
3. Duration of the contracts/arrangements/transactions
4. Salient terms of the contracts or arrangements or transactions including the value, if any
5. Justification for entering into such contracts or arrangements or transactions
6. Date(s) of approval by the Board
7. Amount paid as advances, if any
8. Date on which the special resolution was passed in general meeting as required under first proviso to Section 188

2. Details of material contracts or arrangement or transactions at arm's length basis              NIL
1. Name(s) of the related party and nature of relationship
2. Nature of contracts/arrangements/transactions
3. Duration of the contracts/arrangements/transactions
4. Salient terms of the contracts or arrangements or transactions including the value, if any
5. Date(s) of approval by the Board, if any
6. Amount paid as advances, if any

For Godrej Consumer Products Ltd.

sd/-
Adi Godrej
Chairman

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