Final Annul A 2007

Dabur India Limited Annual Report 2006-07
CONTENTS
Board of Directors Chairman s Message Management Discussion and Analysis Report on Corporate Governance Directors Report Auditor s Report Financial Statements Consolidated Financials Statements Statements as per US GAAP 04 05 08 22 43 59 64 96 122
Ten Year Highlights

Rs Crore Operating Results: Sales Other Income EBIDTA EBIDTA Margins (%) Profit Before Tax(PBT) Taxes Tax Rate (%) Profit After Tax (PAT) PAT Margins(%) Financial Position: Fixed Assets (Net) Current Assets,Loans & Advances Current Liabilities & Provisions Net Working Capital TOTAL ASSETS Share Capital Reserves & Surplus SHARE HOLDERS FUNDS Loan Funds TOTAL CAPITAL EMPLOYED RoCE (%) RONW (%) Equity Share Data: Earnings Per Share (Rs) Dividend Per Share (Rs) No of Shares (In Crores) 15.6 3.9 2.9 17.6 5.0 2.9 27.1 10.0 2.9 2.7 1.0 28.5 2.3 0.5 28.5 3.0 1.4 28.6 3.7 2.0 28.6 5.5 2.5 28.6 3.7 1.8 57.3 3.3 1.4 86.3 206 327 87 240 497 29 199 227 270 497 15.1 20.2 239 344 83 260 556 29 233 262 295 556 15.1 19.9 251 412 108 304 609 29 292 320 289 609 17.0 24.7 243 393 158 235 558 29 334 362 196 558 19.5 22.0 371 504 183 322 705 29 365 394 304 705 12.6 16.6 257 522 241 281 640 29 388 417 964 640 16.0 20.6 250 340 294 46 433 29 256 285 132 432 28.7 38.5 295 408 400 8 543 29 335 364 164 542 31.4 43.6 512 471 436 35 624 57 439 496 121 624 39.0 46.2 379 640 452 189 670 86 393 479 160 670 45.9 61.6 FY98 811 13 86 10.6 45 1 2.2 44 5.5 FY99 915 23 98 10.7 52 2 2.9 50 5.5 FY00 1043 34 128 12.2 81 4 4.5 77 7.4 FY01* 1166 19 137 11.8 85 7 8.5 78 6.7 FY02** 1281 12 144 11.3 82 14 16.6 64 5.0 FY03 1371 7 162 11.8 106 14 13.3 85 6.2 FY04*** FY05 1330 9 164 12.3 124 15 12.0 107 8.0 1537 9 217 14.1 176 19 10.8 156 10.1 FY06# 1900 13 304 16.0 257 30 11.7 214 11.3 FY07^ 2233 26 375 16.8 319 37 11.7 283 12.7
* Stock split from Rs 10/share to Rs 1/ share ** Consolidated results from FY02 onwards ***Dabur Pharma got de-merged. #Bonus issue of 1:1 was issued during the year ^ Bonus Issue of 1:2 was issued during the year
a trusted name in natural healthcare for over 100 years, is known for providing a range of efficacious and time-tested healthcare products based on the principles of Ayurveda.
a premium brand and a leader in its category, is one of the flagship brands and a popular name in the natural personal care space.
a tasty fun-filled digestive available in various forms - from tablets, traditional Churnas to modern formats like centre-filled candy - appealing to all age groups.
countrys leading brand of packaged fruit juices, provides the largest range of refreshing and healthy fruit juices that are 100 percent natural and free of preservatives.
a relative new member in the family of Daburs key brands, provides a range of herbal and natural products across various FMCG categories with a focus on providing quality and affordability.
BOARD OF DIRECTORS
Mr V C Burman Dr Anand Burman Mr Pradip Burman Mr Amit Burman Mr P D Narang Mr Sunil Duggal His Highness Maharaja Gaj Singh Mr R C Bhargava Mr P N Vijay Dr S Narayan Chairman Vice Chairman Director Director Director Director Director Director Director Director
GM (Finance) & Company Secretary

Mr Ashok Jain
Auditors
M/s G. Basu & Co. Chartered Accountants
Internal Auditors
Price Waterhouse Coopers Pvt. Ltd.
Corporate Office
Dabur India Limited, Dabur Tower, Kaushambi, Sahibabad,
Bankers
Punjab National Bank Standard Chartered Bank HSBC Ltd. State Bank of India ABN Amro Bank NV Citibank NA United Bank of India HDFC Bank Ltd. IDBI Bank Ltd. 4
Ghaziabad - 201 010 (U.P.), India Tel: 0120 3982000, 3001000 Fax: 0120 4374935 Website: www.dabur.com Email: investors@dabur.com Registered Office 8/3, Asaf Ali Road, New Delhi-110002 Tel: 011-23253488
Chairmans Message
Dear Shareholders, Although the final estimates have not come in as yet, all indicators suggests that India will have achieved a real GDP growth of 9.2 per cent for 2006-07. Coming as it does, after a growth of 9 per cent in the previous year, we are now seeing a compounded annual growth rate in excess of 8 per cent over the last four years and 8.6 per cent over the last three. Investor interest in India is at an all time high. Our foreign exchange reserves have crossed US$ 200 billion and rising with every month. Indian companies are creating significant global footprints. Demand is buoyant throughout the economy. And except odd temporary hiccups like the current bout of inflation which I am sure will soon subside India is now clearly positioned on a higher growth path. Consistent growth over the last four years has led to higher disposable incomes throughout India and, with it, greater consumer spends. Even three years ago, when India had just about begun its journey to higher growth, the FMCG industry was having a difficult time. In most segments of the business, market growth was in mediocre single digits; in some it was flat; and there were bruising price wars and discounts being offered by all in order to retain market share. Things have changed significantly since then. Once again, the FMCG industry is seeing healthy double digit growth across most of its key segments. Despite even more intense national and local competition, prices have begun to firm up. And it is now clear that households in urban, semi urban and rural India are spending more on a gamut of FMCG products. Is this just a cyclical blip? Or could it signify a fundamental change in consumption patterns? Let me briefly try to address this issue. The largest and most comprehensive household consumption survey for India as a whole is conducted by the National Sample Survey (NSS), which is a part of the Government of Indias Central Statistical Organisation (CSO). Every five years, the NSS conducts a very large nation-wide survey on household consumption expenditure. Data for the latest survey (61st. round, 2004-05) has just been released. It is useful to compare the results of this survey with the one undertaken in 1993-94 (50th. round). Consolidated for the Dabur Group Sales grew by 17.6 per cent to Rs.2,234 crore in 2006-07. EBITDA grew by 23.5 per cent to Rs.376 crore. In 1993-94, the average household expenditure at the all-India level (consisting of a family of five people) was Rs.19,840 per year. In 2004-05, this had risen by 110 per cent to Rs.41,600 per year, or in excess of Rs.3,500 per month. Since inflation over this entire period was less than 70 per cent, it is clear that real household expenditure has increased by more than 40 per cent between 1993-94 and 2004-05. These numbers are averages. For the top 10 per cent of Indias households and there are some 22 million such units in the country the increases in disposable income and expenditure have been much greater. Such significant growth in average household expenditure has been accompanied by a major, and lasting, shift in the patterns of spending. Even on an average, there has been a marked drop in the share of the family budget spend on food, and an equally remarkable increase in the share of non-foods. In 1993, at an all-India level, 63 per cent of household expenditure comprised foods, and 37 per cent was non-foods. In 2004-05, over a 110 per cent growth in the expenditure base, the share of foods has fallen to 51 per cent, while that of non-foods has grown to 49 per cent. Thus, more people are spending greater amounts of their increased income on non-food items. This pattern will continue, indeed intensify, over the years. All over the world, as households get better off, they spend relatively less on food and more on other items of consumption. India is proving that it is no exception to this global rule. What does this mean for the FMCG business in general and your Company in particular? To my mind, this paradigm shift in both consumer incomes and spending patterns implies huge business opportunities for your Company. For 2006-07 itself, Dabur has witnessed excellent growth in both revenues and profits. Here are some of the numbers on a consolidated basis:
Chairmans Message
PAT after minority interests increased by 32 per cent to Rs.283 crore.
geographies throughout the world become important markets for your Companys products. Fifth, in addition to all our products, Dabur must now move on to the retail and the service space. I am happy to inform you that your Company has taken its first steps in that direction by announcing a plan to set up a chain of Health & Beauty retail outlets through a wholly owned subsidiary of Dabur India Limited. An investment of Rs.140 crore has been approved by your Board of Directors to be made over the next three years. The stores will cater to the requirement of health and beauty products for the entire family and would be modelled along the lines of some of the international players in this segment. The company plans to set up 350 stores in a period of 5 years. I am looking forward to your Companys management making this venture a major success. Finally, continued strong growth of Dabur depends upon the quality, motivation, integrity and value systems of its people. I am convinced that in the years to come, the difference between a company that is a winner and one which also ran will be in the quality of its employees right from the shop floor to senior management. Today, all Indian companies are facing major shortages in key talent. Offering higher compensation is only part of the answer. Your Company will have to create HR policies, structures and practices that enable and empower all employees, and make Dabur an employer of choice. I am sure that the management will deliver this objective as well. It has been a good year and there are many more to come. We need to further harness our energies, align our priorities and re-dedicate ourselves to achieving even higher goals. With your continued support, dear Shareholders, I am sure you will see your Company scaling newer heights. Yours sincerely,
Your Companys consistent and steady performance point to the fact that our strategies are in the right direction. Going forward, I am quite confident that strong growth in the business can be maintained. To be sure, there may be the odd bad years because of poor monsoons and reduced agricultural income. But even these will be less disastrous to the FMCG sector and your Company than earlier, thanks to rapid growth in urban and rural non-farm incomes. Equally, it is important to realise that these shifts in consumer expenditure and aspirations will create new challenges and opportunities, which your Company will need to surmount and leverage in order to optimise its growth opportunities. First, we will have to continuously leverage our excellence in Ayurveda and natural products built over the last 100 years to offer a wider and more innovative range of products and services across all price points throughout urban as well as rural India. My vision of Dabur is of a Company that has offerings of first choice for every Indian household, irrespective of where it is located in the rural-urban income spectrum. Therefore, we will have to constantly innovate in terms of new product development, packaging and connecting with the consumers. Simply put, Dabur must continue to be a household name irrespective of whether the family resides in a town or a village, or whether it is rich, middle-class or lower down in the income strata. Second, without compromising an iota on quality, we must be able to procure and produce so well as to make us the most efficient and lowest cost producer in the market. Supply chain optimisation, production efficiencies and scale will protect your Companys margins in the odd lean years; and shore them up in times of plenty. Third, we must build on our channels and distribution systems to create the most efficient distribution network in the country one that not only unerringly delivers those Dabur products that consumers need irrespective of where they are, but does so at a unit cost lower than its competitors. Fourth, we will need to accelerate our presence in the rest of the world. Your Companys international business has done well growing by almost 29 per cent to Rs.292 crore in 200607. We must continue to grow fast so that, over time, major
V.C. Burman Chairman
Performance At A Glance
Based on Consolidated financials of Dabur India Limited
Management Discussion and Analysis

With the Central Statistical Organisation (CSO) predicting 9.2 per cent real GDP growth in 2007-08, coming after 9 per cent growth in 2005-06, India will now register a four year compounded annual growth of over 8 per cent. Early doubts about the sustainability of a higher growth trajectory have subsided. Even the most hard-nosed economists accept that Indian can sustain an 8 per cent growth path for fairly long and scale up to closer to 9 per cent with adequate investments in physical infrastructure. The tide has definitely turned. The economic transformation of India in the last decade and a half has created profound changes to the profiles and expenditure patterns of Indian consumers. First, there has been a steady increase in the average annual nominal and real consumption expenditure and this is true in both urban and rural India.Chart A shows this very clearly. According to the National Sample Survey (NSS), average nominal household consumption in India as a whole increased by 110 per cent, from Rs.19,840 in 1993-94 to Rs.41,600 in 2004-05. Since the decadal inflation is way below this growth, it follows that real (inflation adjusted) consumption has increased substantially over the period. People are clearly earning and spending more; and that the greatest growth and shift in spending patterns are occurring in the second and third tier cities as well as in rural India.
Second, rising incomes have changed the aspiration levels of the Indian consumer. In consumer economics, there is something called the Engel Curve which plots the consumption of key items against income levels. The common story of all nations is that as disposable incomes increase, the share of expenditure on basic necessities falls, while that on others rises. This is now evident in the case of India. The share of expenditure on food items has been steadily decreasing over the years (and within it, there has been a sharp decrease in cereals and pulses, accompanied by a substitution in favour of milk, meat, eggs, fish, fruit and vegetables and processed food). Concomitantly, there has been a steady rise in the share of non-food items in the consumer basket. Chart B shows this very clearly. As Chart B shows, at the all-India level, the share of non-food expenditure in the consumption basket of the average household has increased from 37 per cent in 1993-94 to 49 per cent in 2004-05. If one were to superimpose this on the 110 per cent growth in aggregate household consumption over the period, one would immediately realise that there has been a huge increase in the absolute levels of non-food spends between 1993-94 and 2004-05. This change is pervasive throughout the country. For urban India, the household share of non-food expenditure has increased from 43 per cent in 1993-94 to 57 per cent in 200405. Today, therefore, 38 per cent of Indias households that
live in urban spaces be these metropolises, cities or small up-country towns spend more on non-food items than on food. Rural India, too, has seen a rapid growth in the share of household non-food expenditure from 34 per cent in 199394 to 45 per cent in 2004-05. What does this significant and permanent shift in consumption patterns over a rising expenditure base mean for Indian FMCG majors like Dabur India Limited? It means enormous opportunities in raising the consumption of products catering to healthcare, personal care and hygiene, and homecare. Note that the shares given above are averages for all households. It is well known that the top 10 per cent of Indian households 22 million in all spend a considerably greater percentage of their income on non-food items than the all-India average of 49 per cent. In other words, the market size for products sold by Dabur has increased significantly. So, too, has the competition. And the primary challenge for the Company today is to develop an optimal price-quality-valuefeel product mix, backed up by state-of-the art distribution systems that can reach out to consumers across the country to provide the right products and the right prices and continue to grow market shares by offering value propositions across all price points. Dabur is well prepared to meet the challenge and make most of the opportunities available for FMCG players. On the products side, with its strong heritage and positioning in Ayurveda, the Company has created a niche for itself with its offerings, and maintained steady rates of growth even in times of market downturns. Dabur continues to focus on enhancing its product portfolio by leveraging its long-standing and unmatched expertise in the herbal and natural space and by continuously stressing on focused R&D and innovation. On the distribution side, the Company has rolled out its new initiative, Project DARE (Driving Achievement of Retail Excellence), which aims to reorganise the distribution structure to meet the needs of an evolving business environment and, thereby, to influence the consumer at the point of purchase. The strength of Daburs products and sales and distribution network is evident from its performance in the FMCG space in 2006-07.
In a buoyant FMCG market, where most sub-segments recorded robust double digit growth, Dabur has performed remarkably well. Two of its major segments, toothpaste and shampoos, are fiercely competitive with several strong FMCG companies in the fray. Yet, Dabur has emerged as the leader in driving growth in the market (see Chart C). In volume terms, the Companys toothpaste brands grew by almost 29 per cent in 2006-07 while the market grew by 12.2 per cent; and sales of the Vatika brand of shampoos increased by over 25 per cent, versus a market growth of 15.8 per cent. In its traditionally strong Chyawanprash market, the Company has further strengthened its market share by achieving the highest growth in the segment in 2006-07: almost 15 per cent
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for the Company versus 11.2 per cent for the industry. With its wider presence across segments, and greater depth of presence in the larger and more competitive segments, Dabur has emerged as one of the top FMCG companies in India. The success of the Companys core consumer care business has been the main driving force behind Daburs performance in 2006-07, whose consolidated highlights are given below: Consolidated net sales from operations increased by 17.6 per cent from Rs.1899.6 crore in 2005-06 to Rs.2233.7 crore in 2006-07. Consolidated earnings before interest, depreciation, taxes and amortisation (EBIDTA) grew by 23.5 per cent from Rs.304.2 crore in 2005-06 to Rs.375.7 crore in 2006-07. Consolidated profits after tax (PAT) after accounting for minority interests and exceptional items grew by 32.1 per cent from Rs.214.2 crore in 2005-06 to Rs.283 crore in 2006-07. Net profit margin (PAT/sales) increased from 11.3 per cent in 2005-06 to 12.7 per cent in 2006-07. Return on capital employed (ROCE) has gone up from 39 per cent in 2005-06 to 45.9 per cent in 2006-07. Return on net worth (RONW) increased from 46.1 per cent in 2005-06 to 61.6 per cent in 2006-07. EPS (Earnings Per Share) post-bonus rose from Rs.2.5 in 2005-06 to Rs.3.2 in 2006-07.
South India is now firmly in place. Acquire: The Company did not make any new acquisitions and, instead, focused on getting maximum synergies out of the Balsara purchase. 2006-07 saw the technical completion of Daburs Balsara acquisition. On 13 September 2006, the High Courts of Delhi and Mumbai formally approved the merger of the three Balsara group entities Balsara Hygiene Products Limited, Balsara Home Products Ltd and Besta Cosmetics Ltd with Dabur India Limited. Even before that, the Company had successfully integrated products, people, systems, processes and brand strategies of Balsara with Dabur. Success of the Balsara acquisition has given the Company greater confidence in pursuing its inorganic growth strategy for the future. Innovate: Dabur continues to develop new products and new product variants. During 2006-07, five new products were launched in the market. There were significant innovations in packaging and enhancing manufacturing capabilities and quality of our products. Other innovations in products, packaging, formats and delivery mechanisms are in the pipeline for launch in 2007-08.
In April 2006, Dabur had unveiled a strategy christened Vision 2010 that stressed upon achieving rapid growth in revenue and profits. This was to be achieved through three pillars: Expand, Acquire and Innovate. 2006-07 is the first year of implementation of this strategy, and it is important to discuss how the Company has performed in each of these three fronts. Expand: Dabur has consolidated its share in categories like oral care, shampoos and health supplements and has strengthened its position in the new domains that it had entered recently. The entire home care portfolio part of which came into the Companys fold with the earlier acquisition of Balsara witnessed good growth. In skin care, a new soap variant was introduced, and several new products are in the pipeline. Daburs international foray continued to grow impressively, recording a growth of 29 per cent. Moreover, the Companys initiative to significantly widen its footprint in
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As a consolidated entity, Dabur is clearly structured into four different strategic business units (SBUs). The core of the business with the largest share of total revenues (68 per cent) is the Consumer Care Business. The other businesses, namely Consumer Healthcare, Foods and International account for 7 per cent, 11 per cent and 13 per cent, respectively, of the total revenue, with the residual 1 per cent in smaller operations. Chart D gives the relative shares of the different businesses in Daburs total consolidated revenues. While the International business continued to grow at a rapid pace, and the Foods business grew at an expected rate, the Consumer Healthcare business faced some challenges during the year and grew at a rate lower than 2005-06. Even so, both Foods and Consumer Healthcare continued to grow at rates that outpaced their respective markets. We now move on to an analysis of each of these SBUs.
increased by 15.2 per cent from Rs.1329 crore in 2005-06 to Rs.1530 crore in 2006-07. With net sales of over Rs.454 crore and a share of 32.4 per cent of CCD net revenue, hair care remains the largest segment in the portfolio. Within hair care, hair oils grew by 13.1 per cent. The Companys leading hair oil brand, Dabur Amla hair oil grew by 11.4 per cent over previous year, and achieved net sales of Rs.246 crore. In the economy mustard oil segment, Anmol Sarson Amla hair oil registered a healthy growth of 23.8 per cent.The Companys Anmol coconut oil did very well growing by 44.2 per cent with net sales of more than Rs.28 crore. The Vatika brand of hair oil grew by 8.8 per cent to post a net sales of over Rs.70 crore. The Amla brand was promoted extensively in rural areas through initiatives like rural beauty pageants. The brand has received another boost with the introduction of Rani Mukherjees picture on the product pack. This is the first time a Dabur hair care product has had a celebrity picture on its packaging. Despite being in a highly competitive market, the Companys shampoos did extremely well in 2006-07. This sub-segment within hair care achieved 31.1 per cent growth over the previous year, and clocked net revenue in excess of Rs.80 crore. Daburs shampoo sales have been significantly pushed by an increase in volume off-take, with increasing demand for smaller sachets and improving penetration in semi urban and rural markets. A third variant of Vatika shampoo Vatika Root Strengthening Shampoo was launched in October 2006. This has been well accepted in the market and achieved sales of Rs.6 crore.
Consumer Care Division (CCD)

The Consumer Care Division (CCD) caters to six distinct segments of the FMCG market Hair Care, Oral Care, Health Supplements, Digestives, Home Care, and Skin and Baby care. Driven by buoyancy in the FMCG market and a strong performance by key Dabur brands, revenues from CCD
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Oral Care
During 2006-07, the oral care portfolio grew by 16.8 per cent to Rs.314 crore. It now accounts for 22.4 per cent of total net sales of the CCD. With the complete integration and strategic positioning of its own and Balsaras brands, Dabur today has a market share of over 12 per cent in oral care and has emerged as a force to reckon with. Within oral care, there was strong growth in toothpaste segment. Here, Daburs Red toothpaste (Lal Dant Paste) recorded a growth of 16 per cent and has increased its market share. The Red toothpaste was re-launched with a more contemporary packaging in February 2007. Morever, there was a 49.4 per cent growth in Babool toothpaste, which clocked net revenue of over Rs.87 crore, and completely outpaced the market in its segment. The market share of Babool increased by over 100 bps. In the premium segment, Meswak has emerged as the one of leading brands in the market and enjoys significant consumer loyalty. Apart from advertising, Dabur has been arranging dentist meets to promote the efficacy of its products to the dental medical fraternity. It also continues to promote dental hygiene in rural India through melas and school programmes. A clear indication of the trickle down effect of macroeconomic growth in rural India is the revival of the toothpowder market, which has grown by a little over 13 per cent in 2006-07. Clearly, better well-being among sections of rural society is leading to a conversion from
household aids to toothpowder. This market growth benefited the Company: Daburs Red Toothpowder registered a growth of 7 per cent to achieve net sales of Rs.132 crore.
Health Supplements
This category grew by 19.5 per cent in 2006-07 to achieve net sales of almost Rs.305 crore becoming 21.7 per cent of the CCD portfolio. The three main constituents of this segment Chyawanprash, Glucose D and Honey recorded strong growth. The Companys flagship product, Dabur Chyawanprash, grew by 20.3 per cent to Rs.169 crore. The focus for Chyawanprash was to bring in new users and drive sales by growing the entire business category. Brand ambassadors Amitabh Bachchan and Vivek Oberoi were used in a new campaign that focused on bringing out the relevance of the product and educating the consumer about the benefits of Chyawanprash. While the category as a whole has registered a growth of 11.4 per cent, by growing faster Dabur increased its market share from 60 per cent in 2005-06 to 62 per cent in 2006-07. The category remains very competitive with several new product variants being launched regularly. Dabur, too, launched its variant Chyawanshakti in the latter part of 2005-06, which focuses on reducing stress levels. There has been a steady improvement in consumer sentiment for this product and is well positioned to take off in the coming financial year. Chyawanprakash, a sugar-free variant for calorie conscious consumers, was test launched in Delhi and Punjab towards the latter part of 2006-07. Dabur
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Shwaasamrit, meant to treat cough, cold and bronchitis, was test launched in South India. Glucose, which like Chyawanprash is also a seasonal product but sells in summer rather than winter, recorded a healthy growth of 26.9 per cent to touch sales of almost Rs.40 crore. This is particularly creditable for a product that relies largely on advertising to build the brand. Dabur has developed a focused advertising strategy which has worked well. In honey, Dabur is the largest branded player. During 200607, revenues from Dabur Honey increased by 15.4 per cent to touch Rs.80 crore. There is, however, a very large unbranded segment which can be further tapped by the Company. A conscious effort has been made by Dabur to promote honey as a healthier replacement of refined sugar. A new consumer friendly squeeze pack was also launched during the year.
While the Dabur Honey Saffron soap has been well received, the newly launched Saffron Sandal soap has got an even better response, the Company remains a small player in the vast soap market in India. The challenge going forward in this segment is to reorganise the brands to bring in range synergies so that the customer can be provided a portfolio of products that meet different requirements in the skin and baby-care space. Some of the new initiatives like the recent introduction of the Dabur Ayurvedic Baby range of products and Gulabari Skin Care extensions will play a role in this brand reorganisation.
Home Care
The home care portfolio has grown by 35.1 per cent during 2006-07 to Rs.97.5 crore, thus increasing its share in the CCDs total sales to 7 per cent. With the surge in mosquito carried diseases like dengue and chikunguniya in the first half of 200607, there was a huge growth in usage of mosquito-repellents. Consequently, Odomos brand grew by 70 per cent to over Rs.33 crore. The Company successfully launched Odomos coils in eastern India, and these have been well received in the market. Thereafter, the product has been extended to other parts of India. Odomos mats also received good response during the year. The Odonil brand also did very well during the year. Odonil grew by 28.2 per cent to Rs.37 crore. The Company launched Odonil aerosol at the beginning of 2006-07 and its sales have been extremely encouraging. It also relaunched its toilet cleaner SaniFresh with a new positioning of germ kill. This was well received in the market.
Digestives
Digestives in Dabur comprises the Hajmola brands, Pudin Hara, Sat Isabgol and Hingoli. This category grew by 6.1 per cent to touch Rs.130 crore. Hajmola tablets did well growing by 10.5 per cent to almost Rs.75 crore; and Hajmola candies grew by 18.4 per cent to just short of Rs.25 crore. A new variant of Hajmola with lemon flavour was launched as a tablet. Albeit on a low base, the Companys Sat Isabgol brand did well, showing almost 50 per cent growth in sales. Pudin Hara sales, however, faced some setback.
Skin and Baby Care

While this category achieved Rs.100 crore of net sales, it faced almost flat growth in 2006-07. In the baby-care category, Lal Tail performed, well growing by 11 per cent to almost Rs.41 crore. Sales of Dabur Gulabari were at Rs.22.6 crore, and could have been better had there not been some supply side issues.
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DARE initiative
The market structure of the FMCG goods has undergone significant changes in recent years. A number of trade channels grocery, chemists, convenience stores, self-service trade and speciality products stores are today competing with existing formats to cater to consumer demand. To meet the new challenges of these different channels required Dabur to move away from its traditional structure of stockists, wholesalers and retailers to much more trade-focused distribution system. This necessitated a change in the manner in which the Company approached and serviced its trade segments, as well as the way in which it was internally organised. Consequently, in 2006-07, Dabur rolled out its Retail Excellence program titled DARE Driving Achievement of Retail Excellence aimed at improving Daburs overall distribution effectiveness. The key elements of this programme are: Channel focus: A strategy to focus on key segments on the basis of strategic attractiveness and total-cost-to-serve principles. Key segments identified in urban markets are wholesale trade, grocers, chemists, and organised retail. Since almost 50 per cent of the CCDs revenues are generated from the rural markets, special focus was given to six key rural states. Sales teams have been reorganised on the lines of channel expertise, with independent channel-aligned teams in urban markets, and exclusive teams for each of the six rural focus states. In addition, a focused institutional sales system has been initiated to capitalise on opportunities in various institutional segments like hotels, housekeeping, paramilitary forces, B2B, and public sector enterprises.
Trade marketing capability: DARE also aimed to build trade marketing capabilities to get greater understanding of shoppers at the point of purchase and integrate the trade insights into market activation. This has significantly enhanced effectiveness of trade spends. Activating key customers: Key customer segments were activated through strategic programmes. The first initiative was the Dabur Kings wholesale programme that targeted key wholesalers across the country. The programme was developed after extensive research to understand the requirements of the grocery and chemist wholesalers. About 9,000 wholesalers (accounting for 80 per cent of sales in this channel) across the country are enrolled in the Kings Program, and has resulted in a growth of over 20 per cent in this channel. Pilot programs have been rolled out to perfect the activation model in other channels. Improving rural penetration: As mentioned, Dabur has identified six rural focus states in the country. The strategy focuses on improving distribution reach, developing innovative trade promotions and creating novel packaging solutions. Customer interface is facilitated through exclusive sales teams. The trade opportunity is leveraged through the programme, Dabur Apnaao, Lakshmi Laao in all rural markets across the country. Rewarding distribution efficiencies: To ensure alignment across the system, Dabur stockists in DARE markets have been given opportunity to enhance their earnings based on distribution efficiencies. The metrics are designed to deliver the priorities of the different channels.
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Brand impact: Dabur has initiated creative visibility solutions aimed at maximising brand impact at the point of sale. The scope of solutions include a retail best practices toolkit for enhancing brand impact in modern trade, chemists and groceries. Building information capability: During 2006-07, Dabur initiated the task to integrate key customers into its IT network for gathering real time market information. This was enabled through the roll out of a transaction software for Stockists called DRISHTI to improve operational efficiency, reduce costs and improve decision making at all levels. DRISHTI has been rolled out at over 410 stockist sites. DARE has already helped Dabur increase distribution reach by over 19 per cent in DARE towns. Billing efficiency has increased by 26 per cent and overall lines sold per outlet have increased by 50 per cent in such towns. Overall direct and indirect reach of consumer-care brands have moved to over 2,000,000 outlets across the country.
Moreover, the business continues to be highly profitable. Growth in revenues in CHD was driven primarily by a 12 per cent increase in sales of the ethical portfolio and a 6 per cent growth in OTCs. The ethical portfolio was promoted by strong healthcare programmes comprising health camps, doctor meets and enhanced ethical coverage. A foundation was laid for promoting ethical products by setting up Dabur Ayurvedic Centres, which created an opportunity in the market for promoting Ayurvedic treatment. The Company is focusing on strengthening controls and improving the efficacy of these centres. Under the OTC portfolio, Honitus cough syrup and Nature Care grew in excess of 20 per cent, while Shankpushpi and Shilajit registered healthy double digit growth. In the last quarter of 2006-07, the Company launched Dabur Almond Oil for various applications. This has received encouraging initial response from the trade and consumers. Going forward, there will be a structured and systematic effort at brand building for these products, many of which are new on the shelf and may need some gestation before becoming high growth items. The OTC
Consumer Health Division (CHD)

The consumer health division (CHD) deals in products on the Ayurvedic medicinal platform. The range of offerings, which are based on grantha-based formulations, can be broadly classified into over-the-counter products (OTCs), branded ethical and generic products that include Asavs and classicals. The division is supported by in-house research. There is also a tie-up with Shri Dhanwantry Educational Society, which owns and manages an Ayurvedic hospital, college and pharmacy in Chandigarh, for assistance in research and clinical trials. The business has not emulated the stupendous growth seen in 2005-06, but continues to outperform the market. Sales increased by 9.2 per cent from Rs.148.6 crore in 2005-06 to Rs.162.2 crore in 2006-07.
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segment will be developed by focused brand-building, advertising support for select brands, and by introducing new products in categories such as cough and cold, womens health, joint pain and balm, laxatives, rejuvenators, and medicated oils. The thrust in the ethical portfolio will be to grow the business by increasing coverage and through healthcare promotions targeting mainly at the medical fraternity in the Ayurvedic, alternate medicine or even the allopathic space.
production in the future. Under the Activ brand, the company launched Activ Fruit Soya juices in three different flavours. Real Apple Nectar was also launched in a 200 ml packaging. Given the strong growth in the overall segment, DFL is now entering the drinks market with its offering Real Twist. The drink, targeted at teenagers, was launched during March 2007 with three flavours Mango Apple, Mango Pineapple and Mango Orange. Sales of the Hommade range of culinary ingredients increased by 20 per cent. DFL is looking at extending this brand to the ready to cook and even the ready to eat segments. The food services business, which supplies fruit juices, culinary products and food ingredients to institutional customers, has grown to more than Rs. 50 crore. Exports continued to grow at a healthy rate of 82.2 per cent, with sales primarily to the Middle-East and Australia. While markets remained buoyant, there was pressure on margins due to sharp increase in prices of critical inputs like fruits and fruit pulps and disproportionate increase in distribution and manufacturing overheads. However the investments in distribution and manufacturing are expected to benefit the business going forward by expanding the distribution penetration and broad basing the manufacturing operations. DFL has consciously initiated efforts at creating products where blends using Indian fruits and pulps can be used to produce the same quality of output. The focus here is to be able to replace some of the costly imported ingredients with Indian substitutes. With its production facilities getting streamlined and introduction of new variants and product lines, DFL should be able to overcome some of the pressure on its margins.
Foods Business
Daburs foods business is conducted through its wholly owned subsidiary Dabur Foods Limited (DFL). The company focuses on juices, nectars and drinks. It also supplies food additives like garlic paste and tomato puree. A host of products are offered to institutional customers through the food services division. Revenues increased by 27.8 per cent from Rs.189.7 crore in 2005-06 to Rs.242.5 crore in 2006-07. DFL operates in the juice and nectar space with its three mainstay brand: Real, Activ and Coolers. The Real brand continued to perform well growing by over 32 per cent, while the Activ brand grew by 12.7 per cent. The foods business, especially the Activ brand which was entirely serviced out of Nepal, suffered a loss of almost a months supplies on account of closure of the Nepal plant due to political developments in the country during the first quarter of 2006-07. While production in Nepal is back on-stream, the company is developing a strategy to hedge against the risk of such stoppage of
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International Business Division

Daburs entire international operations, including Nepal, has been reorganised into international business with an overseeing central management based in Dubai. Sales of the international business, which includes exports from India, barring Dabur Foods, increased by 29.3 per cent from Rs.226 crore in 2005-06 to Rs.292 crore in 2006-07 The international business continues to be bifurcated into focus markets, where Dabur operates with its own manufacturing facilities / offices; potential markets, where Dabur provides promotional support to its products; and opportunistic markets, which are catered to on a case by case basis. Table 1: Key financials of International Business 2006-07 Sales EBIDTA PAT 291.8 44.1 15.1% 24.7 8.5% 2005-06 225.6 32.3 14.3% 16.5 7.3% Growth (%) 29.3% 36.4% 49.5%
business in USA by being a third-party manufacturer for a leading UK based medicinal toothpowder product to be sold in the US market. On the production side, Dabur has decided to set up a stateof-the art facility at Ras-al-Khaima (UAE) with an investment of Rs. 36 crore. The plant will be a top-end facility that meets all international standards and will cater mainly to the Middle East and North African markets.
Operations
The businesses are supported by very strong back-end operations that include manufacturing facilities, procurement, IT, and human resource management.
Manufacturing
Dabur has nine production facilities organised around three main factories at Baddi (Himachal Pradesh), Pantnagar (Uttaranchal) and Nepal; and six support factories at Sahibabad (Uttar Pradesh), Jammu, Alwar, Katni, Narendrapur and Silvassa. These factories provide the product manufacturing support to Daburs consumer-care and consumer health-care businesses. Dabur Foods has its manufacturing facilities in Nepal, Newai (Rajasthan) and Siliguri (West Bengal). The manufacturing strategy revolves around re-organising the companys productionfacilities to reap maximum benefits from maintaining strict process quality norms and leveraging economies of scale. The Company continues to stress on producing in-house formulations where Dabur holds considerable intellectual property, while outsourcing a few less complex products. Strict adherence to high production quality standards and attempts at clubbing manufacturing of products to leverage economies of scale is paying dividend. Productivity per employee has increased significantly over the last four years from 18.6 MT/Man in 2003-04 to 22.1 MT/Man in 2006-07. Chart E shows the decreasing trend in wastage to turnover ratio in the last five years. During the year, Jammu plant was expanded with state of the art equipment to add the Odomos range of mosquito
During 2006-07, while the focus markets grew by 34 per cent and the potential markets grew by 12 per cent, it was the opportunistic markets that registered the highest growth of around 50 per cent. Within the opportunistic market space, there was tremendous growth in some Middle East and North African countries like Syria, Jordan, Morocco and Sudan. Within the focus markets, GCC grew by 29 per cent and Egypt recorded a very healthy growth of around 62 per cent. Dabur Amla, Vatika branded products and oral care offerings are the mainstay of Daburs business in this region. In Pakistan, Daburs business has more than doubled. The Hajmola brand and Amla hair oil performed very impressively in Pakistan. There is now a full fledged team for the Pakistan operations including a CEO, a marketing head and a finance head. Currently, the Company is exploring avenues of scaling up its manufacturing to cater to Pakistan. The Nigerian business has stabilised with modest double digit growth. The Company has also expanded its private label
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repellants. Toothpaste capacity has also been enhanced to meet the growing sales. Similar expansions or capacity enhancements also happened in Hajmola, Shampoo, Asava, Chyawanprash, Odomos, Odonil and Sani Fresh. The entire R&D facility has been remodelled at Silvassa and the Mumbai R&D facility of the erstwhile Balsara group of companies has been shifted there. Silvassa now has a modern and well equipped R&D facility for personal care products. R&D facilities were also added for food and homecare products at Sahibabad. R&D also aggressively focused on process enhancement and improvements, which resulted in overall improved product quality and reduced cycle time. The heavy metals testing equipment atomic absorption spectrophotometer was stabilised in three locations, ensuring organisational commitment to deliver products within prescribed limits of metallic content. Many new products and additional SKUs developed in-house were introduced during the year. These included the sandal variant of Vatika soap, sugar-free Chyawanprash, the lemon variant of Hajmola, Badam Tail, extension of Vatika shampoo in root strengthening area and the cough remedy, Shwaasamrit. During 2006-07, Dabur completely restructured and reorganised its manufacturing facility at Narendrapur (West Bengal) and restarted manufacturing of Ayurvedic products in this facility. The factory was shut down for the last two years.
The procurement department continued to proactively manage the cost and availability of critical raw material by taking positions in the futures market and hedging. There were also efforts made in going down the value chain and assuring supplies by better negotiations with sellers. Thanks to these efforts, the Company managed to partially offset input price increases. Dabur also implemented a specialised software (Sourcing PRO) with ARIBA that enhances its ability to manage different cost categories with the system throwing up better processed information for improved decision making.
Information Technology
On 1 April 2006, the company went live with its SAP ERP package. This was a big bang implementation. 2006-07 has been the first full year of SAP operations. Although there have been some minor teething problems, the systems have now stabilised. All processes are today streamlined into the ERP environment. The Company is actively pursuing development of workflows within the organisation that can work with the control mechanisms built into the ERP system. Already, the material requirement plan is on the system and production processes are controlled through strict adherence to bill of materials thrown up by SAP. Dabur has now created the platform to leverage the ERP system for tangible internal benefits. In the next year, the SAP system will be rolled out to Nepal and other international locations.
Procurement
During the second half of 2006-07, inflation was pervasive in the Indian economy largely driven by increased prices of primary goods. Most of Daburs inputs are either directly agri-based primary goods or their derivatives. On most fronts, there was severe pressure in terms of high input prices both on a local and a global basis.
Human Resources
The Human Resources agenda for 2006-07 was focused on delivering distinctive people and organizational capabilities and attracting and retaining right talent.
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This year the Company undertook a major employer brandbuilding exercise in 21 leading Business Schools in the country called Navigator in which 46 teams of management students participated in formulating a virtual growth strategy and business model for the Company. Over hundred ideas, including some very innovative ones, were generated through this initiative. This has helped us to attract better talent in the era of War for Talent. Our Company initiated another exercise of measuring and acting upon Engagement Levels of employees. Hewitt Associates - a leading US based HR consulting firm conducted the survey. Engagement levels of the employees were found in performance zone which is being reflected in the companys performance. To enhance our functional capabilities, particularly, in the area of innovation, 13 employees across different functions were trained on innovation by a leading UK based consultant. The Balanced Scorecard tool which we have been using for the past three years has been further strengthened in the company and over 350 managers were covered. The International Business Division was also completely aligned to this initiative. The Company recruited 18 Management Trainees from leading B-schools this year as well. They are undergoing a rigorous induction under Young Managers Development Program (YMDP), where each one of them will be put through cross functional training program, while mentored by members of senior management. Besides this, the company also recruited lateral professionals from leading multinationals and Indian organizations at various levels. The company had 2306 employees on its rolls as on 31 st March 2007. Employee relations throughout the year were suppor tive of business performance.
Financial Review
The abridged financials of Dabur India Limited (DIL) standalone for the year 2006-07 including revenue, expenditure and profits, are presented in Table 2. The financials for the period 2006-07 include the Balsara business after it was merged with DIL in September 2006. To that extent the financials are not comparable with 2005-06 figures given in Table 2. Table 2: DIL Standalone : Abridged profit and loss account (Rs. crore) 2006-07 1 Sales 2 Other Income 3 Total Revenue 4 Total Expenditure 5 EBIDTA 6 Depreciation 7 Amortisation 8 Interest 9 PBIT 10 PBT 11 Tax 13 PAT (before exceptional item) 14 Exceptional item 15 PAT (after exceptional item) 16 EPS 17 EPS (Diluted) 1778.0 16.5 1794.5 1477.4 317.1 22.0 6.5 4.4 288.6 284.2 32.1 252.1 0 252.1 2.93 2.90 2005-06 Growth 1369.7 5.4 1375.1 1131.8 243.3 19.1 4.3 5.7 221.1 214.4 25.8 188.6 0.5 189.1 2.2 2.19 33% 33% 32% 30% 305% 31% 31% 30% 15% 51% -22% 32% 32% 24% 33%
As can be seen in Table 2, DIL continues to pursue its path of profitable growth with a commendable performance in 200607. With the renewed strength of its brands, sales increased from Rs.1369.7 crore in 2005-06 to Rs.1778 crore in 2006-07. In an inflationary year, especially in agriculture based products, DIL has successfully maintained its EBIDTA/Sales (see table 3) ratio at 17.8% in 2006-07. This was achieved through judicious price hikes, improved efficiencies at our plants and proactive procurement management. The healthy top-line growth, accompanied by steady operating margins has translated into a strong growth in operating profits (EBIDTA) from Rs.243.3 crore in 2005-06 to
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Rs.317.1 crore in 2006-07. Profit after tax (PAT) has grown impressively during the year from Rs.189.1 crore in 2005-06 to Rs.252.1 crore in 2006-07 with net profit margins (PAT/Total sales) increasing from 13.8 per cent in 2005-06 to 14.2 per cent in 2006-07. As evident in Table 3, all profitability/return ratios of the company have increased in the year under review. Table 3: DILs Profitability Ratios (Stand alone) 2006-07 EBDITA/sales PBT/sales PAT/sales ROCE RONW 17.8% 15.9% 14.2% 60.2% 65.8% 2005-06 17.8% 15.6% 13.8% 43.1% 45.5%
Consolidated Financials
Table 4 gives the abridged financials of Dabur on a consolidated basis. Table 4: DIL Consolidated, abridged profit and loss account (Rs. crore) 2006-07 Sales Other Income Total Revenue Total Expenditure EBIDTA Depreciation Interest PBIT PBT Taxes PAT Exceptional Item Minority Interest PAT after minority interest and minority interest EPS EPS (Diluted) 2,233.7 25.9 2260 1,884 375.6 41 15 334.8 319.5 37 282.2 0 1 283 3.27 3.24 2005-06 1,899.6 13.4 1,913 1,609 304.2 31 16 273 256.6 30 226.6 -12.7 0.3 214 2.50 2.48 Growth (%) 17.6% 93.3% 18.1% 17.1% 23.4% 52.4% -6% 22.6% 24.5% 24% 24.5% -100% 190% 32.1% 32.1% 29%
DILs return on net worth and return on capital employed has increased substantially during 2006-07. While a substantial part of this increase was due to the high levels of profits, some this has also been contributed by the decrease in size of DILs balance sheet post the merger of 3 Balsara group companies with Dabur India Limited with effect from 1 April 2006. In accounting terms, the goodwill generated on account of the Balsara acquisition was off-set against the reserves of the companyleading to a net reduction in the net fixed assets as well as capital employed.
Sales of the company on a consolidated basis registered a growth of 17.6 per cent from Rs.1, 899.6 crore in 2005-06 to Rs.2233.7 crore in 2006-07. Consolidated net profit before exceptional items and minority interest increased from Rs.226.6 crore in 2005-06 to Rs.282.2 crore in 2006-07. As seen in Table 5, all profitability ratios calculated on a consolidated basis have shown a marked improvement in 2005-06. Table 5: Dabur Consolidated, Profitability Ratios 2006-07 EBDITA/ sales PBT/ sales PAT/sales ROCE RONW 16.8% 14.3% 12.7% 45.9% 61.6% 2005-06 16% 13.5% 11.3% 39% 46.2%
The highlig hts of the consolidated performance are as follows: Operating profits (EBIDTA) increased by 23 per cent from
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Rs.304.2 crore in 2005-06 to Rs.375.65 crore in 2006-07. Operating margin (EBDITA/sales) also grew from 16 per cent in 2005-06 to 16.8 per cent in 2006-07 The interest coverage ratio (ratio of profit before interest and tax to interest payments) has increased from 16.7 times in 2005-06 to 22 times in 2006-07. Net profit margin (PAT/sales) increased from 11.3 per cent in 2005-06 to 12.7 per cent in 2006-07. Return on capital employed (ROCE) has gone up from 39 per cent in 2005-06 to 45.9 per cent in 2006-07. Return on net worth (RONW) increased from 46.1 per cent in 2005-06 to 61.6 per cent in 2006-07. A bonus issue of 1 share for every two shares was made during the year resulting in addition of 28,70,45,551 equity shares of Re 1 each. The company paid out dividend amounting to Rs.122.1 Crore during the year which converts into pay out ratio of 48.5% of DIL profits.
external to the company. Over these risks the company has very little control. Some of these include a general downturn in market demand conditions, loss of value to the ayurveda equity due to false claims about the product constitution or efficacy, look-alike products in the market, escalation in raw material prices and changes in regulatory frameworks pertaining to health related issues.
Internal Controls and their Adequacy

Dabur has a robust internal audit and control system which is a process overseen by the Board of Directors, management and other personnel, and provides reasonable assurance regarding the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. Price Waterhouse Coopers is the internal auditor for the company and its subsidiaries. The Companys Internal Audit function is staffed with qualified and experienced people. The Standard Operating Procedures (SOPs) put in place by the company are in line with the best global practices, and have been laid down across the process flows, along with authority controls for each activity. Dabur has implemented the COSO framework for internal controls and adequacy of internal audit. Under this framework, various risks facing the company are identified and assessed routinely across all levels and functions and suitable control activities are designed to address and mitigate the significant risks.
Risk Management
Dabur has a robust and well structured risk management system in place. The entire system is driven by its people and the process goes deep down into lower layers of management. The risk management system is championed by the Chief Risk Officer (CRO) of the company, who is responsible for, and ensures, effective risk management both risk identification and mitigation. The CRO is supported by a team of risk officers at each company location. Each employee is entitled to identify risk and report it to the concerned risk officer who in turn reports it to the CRO. The risks are reported in the Risk Register and classified in terms of their impact and probability of occurrence. The Risk Register is an inventory of risks affecting Dabur covering its various functions like marketing, operations, regulatory affairs, finance and human resource development. The risks are further mapped in terms of mitigation action to be taken and the people responsible for taking the actions. The Risk Register is reviewed periodically by senior management and is presented to the Audit Committee on a quarterly basis. While there is a systematic risk identification and mitigation framework in place, there are certain business risks which are
Cautionary Statement
Statements in this management discussion and analysis describing the companys objectives, projections, estimates and expectations may beforward looking statementswithin the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the companys operations include a downward trend in the domestic FMCG industry, rise in input costs, exchange rate fluctuations, and significant changes in political and economic environment in India, environment standards, tax laws, litigation and labour relations.
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Report on Corporate Governance

Daburs Board of Directors and Management are deeply committed to pursue growth by adhering to the highest national & international standards on Corporate Governance. As a Company, Dabur believes good Corporate Governance and transparency in actions of the management to be the key to a strong trust with the Companys Stakeholders. Good governance practices in the Company include adoption of best Board practices, respect and protection of minority views and interests and institutionalisation of fair and transparent reporting systems in true spirit, beyond merely complying with mandatory requirements. The Companys commitment towards adoption of sound governance, at par with global standards, on a sustained basis is evident from the fact that it had put in place systems and procedures well before it had become mandatory. This attitude of Dabur has strengthened the bond of trust with its stakeholders including the society at large. This chapter, along with the chapters on Management Discussion and Analysis and Additional Shareholders Information, reports Daburs compliance with the Clause 49 and highlights the additional initiatives taken in line with international best practices. and integrity across the Company. Daburs initiative towards this end include Professionalisation of the Board, fair and transparent process & reporting systems and to go beyond mandated Corporate Governance Code requirements of SEBI.
Board of Directors
Composition of the Board As on 31 March 2007 the Daburs Board consists of 10 Members. Apart from the Chairman, who is a Non-Executive Promoter Director, the Board comprises of three Executive Directors (of whom one is Promoter Director), two Non Executive Promoter Directors and four Non-Executive Independent Directors. The composition of the Board is in conformity with Clause 49 of the listing agreement, which stipulates that 50 per cent of the Board should comprise of Non-Executive Directors, and if the Chairman is Non-Executive, one-third of the Board should be Independent. Number of Board Meetings The Board of Directors met 5 times during the year on 25th April 2006, 19th July 2006, 31st October, 2006, 19th January, 2007 and 13th March,2007. The maximum gap between any two meetings was less than 4 months as stipulated under clause 49. Directors attendance record and Directorship held As mandated by the Clause 49, none of the Directors are members of more than ten Board level committees nor are they Chairman of more than five committees in which they are members. Table 1 gives the details of the Board as on 31st March 2007.
Companys philosophy on Corporate Governance

Daburs philosophy of corporate governance is based on preserving core values and ethical business conduct. Commitment to maximising shareholder value on a sustained basis, while looking after the welfare of multiple stakeholders is a fundamental shared value of Daburs Board of Directors, management and employees and critical to the companys success. This value system translates into institutionalising structures and procedures that enhance the efficacy of the Board and inculcates a culture of transparency, accountability
Table 1: Composition of the Board of Directors of Dabur India Limited

Category # Name of the Directors Number of Board Meetings Held Attended V C Burman Pradip Burman Dr. Anand Burman Amit Burman P D Narang Sunil Duggal HH Gaj Singh P N Vijay S. Narayan R C Bhargava Stuart E Purdy* PD / NED PD / ED PD / NED PD / NED ED ED ID ID ID ID ID 5 5 5 5 5 5 5 5 5 5 2 5 5 2 4 5 5 1 5 3 4 2 Last AGM Yes No No Yes Yes Yes No Yes No Yes No Attendance Particulars No. of other Directorships and committee membership/chairmanships** Other Directorships 2 6 5 7 8 2 5 4 1 10 1 Committee Memberships 0 1 2 5 2 2 0 2 1 5 0 Committee Chairmanships 0 0 1 0 4 0 0 2 0 3 0
# PD Promoter Director, NED Non-Executive Director, ID Independent Non-Executive Director, ED Executive Director *Ceased to be a member from 31st October 2006 ** Excluding private limited companies
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Shareholding of Non Executive Directors Name of Director V C Burman Dr Anand Burman Amit Burman Maharaja HH Gaj Singh R C Bhargava P N Vijay S. Narayan Status PD / NED PD / NED PD / NED ID ID ID ID No of shares held 15000 111000 0 6000 0 0 0
Information on recruitment and remuneration of senior officers just below the level of Board, including the appointment or removal of Chief Financial Officer and Company Secretary Materially important show cause, demand, prosecution notices and penalty notices Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems Any material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company Details of any joint venture or collaboration agreement Transactions that involve substantial payment towards goodwill, brand equity or intellectual property Significant labour problems and their proposed solutions. Any significant development in human resources/ industrial relations front like signing of wage agreement, implementation of voluntary retirement scheme, etc. Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as nonpayment of dividend, delay in share transfer, etc Details of investment of surplus funds available with the company Minutes of the Board Meetings of the subsidiary companies Statement showing significant transactions & arrangements entered into by the subsidiary companies
Details of Other Board Directorships is separately mentioned in Annexure 1 As mandated by the Clause 49, the Independent Directors on Daburs Board: Apart from receiving Directors remuneration, do not have any material pecuniary relationships or transactions with the company, its promoters, its Directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the Director Are not related to promoters or persons occupying management positions at the board level or at one level below the board Have not been an executive of the company in the immediately preceding three financial years Are not partners or executives or were not partners or executives during the preceding three years of the: Statutory audit firm or the internal audit firm that is associated with the company Legal firm(s) and consulting firm(s) that have a material association with the company
Are not material suppliers, service providers or customers or lessors or lessees of the company, which may affect independence of the Director Are not substantial shareholders of the company i.e. do not own two percent or more of the block of voting shares.
Information Supplied to the Board The Board has complete access to all information with the Company. Inter-alia, the following information is regularly provided to the Board as a part of the agenda papers well in advance of the Board meetings or is tabled in the course of the Board meeting. Annual operating plans & budgets and any update thereof Capital budgets and any updates thereof Quarterly results for the Company and operating divisions and business segments Minutes of the meetings of the audit committee and other committees of the Board
The Board has established procedures to enable the Board to periodically review compliance reports of all laws applicable to the company, prepared by the company as well as steps taken by the company to rectify instances of noncompliances.
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Responsibilities of the Chairman and CEO The current policy of the company is to have a Chairman Mr. V.C. Burman and a Chief Executive Officer (CEO) Mr. Sunil Duggal. There are clear demarcations of responsibility and authority between the two. The Chairman is responsible for monitoring the core management team and in transforming the company into a world class, next generation organization that is dedicated to the well being of each and every household not only within India but also across the globe. Also as the chairman of the board he is responsible for all the board matters. He is also responsible for formulating the corporate strategy along with the BOD. The CEO is responsible for implementation of corporate strategy, brand equity planning, external contacts, and other management matters. He is also responsible for achieving the annual business plan.
The selection of board members is based on recommendations of the nomination committee The skill profile of independent board members will be driven by the key tasks defined by the board, which are broadly based on: Independent Corporate Governance Guiding strategy and Enhancing Shareholders Value Monitoring Performance, Management Development & Compensation Control & Compliance The constitution of the board will be as follows: Non Executive Chairman Promoters Family Members Executive Member/s Independent Directors and Non Executive Members Constituting 50% of the board The matrix below highlights the skill and expertisation called from established member of profession of accountancy, finance and law for the office of directors of the Company.
Board Membership Criteria: The nomination committee works with the entire board to determine the appropriate characteristics, skills and experience for the board as a whole as well as its individual members.
Key Skill Area Strategy/Business Leadership Corporate Strategy Consultant Sales and Marketing experience
Essential 2-3 years experience as a CEO, preferably of an MNC in India
Desirable FMCG experience
Consultant/Academician with experience in Basic Under-standing of Finance FMCG Industry and business strategy. At least 10 years experience in sales and marketing Good understanding of commercial processes 2-3 years as head of sales or marketing Experience with FMCG or other consumer products
Corporate law Finance Trade Policy & Economics Administration & Government Relations Ayurvedic specialist
Expert knowledge of Corporate Law At least 5 years as a CFO or as head of a merchant banking operation Expert Knowledge of Trade & Economic Policies Retired Beaurocrat Ayurvedic doctor with a minimum of 20 years experience as a practitioner/ researcher
Experience in trade/consumer related laws FMCG experience FMCG Experience Basic Understanding of Finance and Business. Basic understanding of finance and business
Other directors could be based on companys priority at a particular time viz: Knowledge of export markets that Dabur is focusing on Commodity procurement expert
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Remuneration paid to Directors Table 2 gives details of remuneration paid to Directors for the year 2006-07
Name of the Director V C Burman Pradip Burman Dr. Anand Burman Amit Burman P D Narang Sunil Duggal HH Gaj Singh P N Vijay S Narayan R C Bhargava Stuart E Purdy* Total Sitting Fees 225000 0 30000 60000 0 0 15000 315000 150000 165000 90000 1050000
st
Salary and Perquisites 0 8560511 0 0 13220279 14843061 0 0 0 0 0 36623851
Superannuation Fund 0 705001 0 0 1120357 977876 0 0 0 0 0 2803234
Stock Option 0 0 0 0 20603081 19872592 0 0 0 0 0 40475673
Commission 9000000 0 0 0 0 0 0 0 0 0 0 9000000
Total 9225000 9265512 30000 60000 34943717 35693529 15000 315000 150000 165000 90000 89952758
* Ceased to b a member from 31 October 2006. During 2006-2007 the company did not advance any loans to any of its Directors. Mr P D Narang and Mr Sunil Duggal were issued 542052 and 535907 Stock Options respectively during the year having vesting period spread from 1 to 5 years and exercisable over a period of 3 years after vesting. The Options are exercisable at par. Pursuant to the approval of shareholders in the Annual General Meeting held on 9th September, 1998 and subsequently on 5th September 2002, in addition to the above remuneration certain Directors are entitled to severance fee as contained in the resolution passed in the aforesaid meeting on cessation of their employment and directorship with the company. The notice period for the three executive Directors namely Mr. Pradip Burman, Mr. P.D. Narang, and Mr. Sunil Duggal is 3 months. Code of Conduct Daburs Board has laid down a code of conduct for all Board members and senior management of the company. The code of conduct is available on the website of the company www.dabur.com. All Board members and senior management personnel have affirmed compliance with the Code of Conduct. A declaration signed by the Chief Executive Officer (CEO) to this effect is enclosed at the end of this report. Risk Management Dabur has established robust risk assessment and minimization procedures, which are reviewed by the Board periodically. At Dabur we have a structure in place to identify and mitigate the various risks faced by the company from time to time. At every board meeting, the risk register is reviewed by the board, new risks are identified, the same are then assessed, controls are designed, put in place and enforced through the process owner and a fixed timeline is set for achieving the same. The company has adopted COSO framework for internal control. Under this framework risks are identified as per each process flow and control systems instituted to ensure that the risks in each business process is mitigated. The Chief Risk Officer (CRO) is responsible for the overall risk governance in the company and reports directly to the Management Committee (MANCOM), which consists of various functional heads. The Board provides oversight and reviews the risk management policy quarterly. Committees of the Board Dabur has four Board level committees Audit Committee, Remuneration cum Compensation Committee, Nomination Committee and Shareholders/Investors Grievance and Share Transfer Committee. All decisions pertaining to the constitution of committees, appointment of members and fixing of terms of service for committee members is taken by the Board of Directors. Details on the role and composition of these committees, including the number of meetings held during the financial year and the related attendance, are provided below: a) Audit Committee
As on 31st March 2007, the Audit Committee comprises of three independent Directors. They are Mr. P N Vijay (Chairman), Mr. R. C. Bhargava and Dr. S. Narayan. The Audit Committee held eight meetings during 2006-07 on 25th April 2006, 10th May 2006 19th July, 2006, 21st August, 2006, 31st October, 2006,
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11th December, 2006, and 23rd February, 2007. The time gap between any two meetings was less than four months. The details of the audit committee are given in Table 3: Table 3: Attendance record of Daburs Audit Committee Name of Members (Category) Status No. of Meetings Held Attended Mr. P N Vijay (ID) Mr. Stuart E Purdy (ID)* Mr. R C Bhargava (ID) Dr. S Narayan)(ID) Chairman Member Member Member 8 2 8 8 7 2 7 5
Significant adjustments made in the financial statements arising out of audit findings Compliance with listing and other legal requirements relating to financial statements Disclosure of any related party transactions Qualifications in the draft audit report Reviewing, with the management, the quarterly financial statements before submission to the board for approval Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit Discussion with internal auditors any significant findings and follow up there on Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors To review the functioning of the Whistle Blower mechanism, in case the same is existing Carrying out any other function as is mentioned in the terms of reference of the Audit Committee
* Ceased to b a member from 31st October 2006. The Director responsible for the finance function, the head of internal audit and the representative of the statutory auditors, internal auditors and cost auditors are permanent invitees to the audit committee. Mr. A K Jain, General Manager (Finance) & Company Secretary is the secretary to the committee. All members of the Audit Committee have accounting and financial management expertise. Mr. P N Vijay, Chairman of the Audit Committee, has accounting and financial management expertise. The Chairman of the Audit Committee attended the Annual General Meeting (AGM) held on 8th July 2006 to answer shareholder queries. The functions of the Audit Committee include the following: Oversight of the companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible Recommending to the Board, the appointment, reappointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees Approval of payment to statutory auditors for any other services rendered by the statutory auditors Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: Matters required to be included in the Directors Responsibility Statement to be included in the Boards report in terms of clause (2AA) of section 217 of the Companies Act, 1956 Changes, if any, in accounting policies and practices and reasons for the same Major accounting entries involving estimates based on the exercise of judgment by management
The Audit Committee is empowered, pursuant to its terms of reference, to: Investigate any activity within its terms of reference and to seek any information it requires from any employee Obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise, when considered necessary
Dabur has systems and procedures in place to ensure that the Audit Committee mandatorily reviews: Management discussion and analysis of financial condition and results of operations
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Statement of significant related party transactions (as defined by the audit committee), submitted by management Management letters/letters of internal control weaknesses issued by the statutory auditors Internal audit reports relating to internal control weaknesses The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee The uses/applications of funds raised through public issues, rights issues, preferential issues by major category (capital expenditure, sales and marketing, working capital, etc), as part of the quarterly declaration of financial results (whenever applicable)
On an annual basis, statement certified by the statutory auditors, detailing the use of funds raised through public issues, rights issues, preferential issues for purposes other than those stated in the offer document/prospectus/ notice (whenever applicable)
The audit committee is also presented with the following information on related party transactions (whenever applicable): A statement in summary form of transactions with related parties in the ordinary course of business Details of material individual transactions with related parties which are not in the normal course of business Details of material individual transactions with related parties or others, which are not on an arms length basis along with managements justification for the same.
Audit Committee report for the year ended 31st March, 2007
To the shareholders of Dabur India Limited: Each member of the audit committee is an independent Director, according to the definition laid down in the Clause 49 of the Listing Agreement with the relevant stock exchanges. The Management is responsible for the Companys internal controls and financial reporting process. The independent auditors are responsible for performing an independent audit of the Companys financial statements in accordance with the Indian GAAP (generally accepted accounting principles) and for issuing a report thereon. The committee is responsible for overseeing the processes related to the financial reporting and information dissemination. In this regard the Committee discussed with the companys internal auditors and independent auditors the overall scope and plan for their respective audits. The Committee also discussed the results of their examinations, their evaluation of the Companys internal controls and the overall quality of financial reporting. The Management also presented to the committee, the companies financial statements and also represented that the companys financial statements had been drawn in accordance with the Indian GAAP. Based on its review and discussions conducted with the management and the independent auditors, the audit committee believes that the Companys financial statements are fairly presented in conformity with Indian GAAP in all material aspects. The Committee has also reviewed the internal controls put in place to ensure that the accounts of the Company are properly maintained and that the accounting transactions are in accordance with prevailing laws and regulations. In conducting such reviews, the committee found no material discrepancy or weakness in the Internal Control Systems of the Company. The Committee has also reviewed Management Discussion and Analysis, Statement of Significant Related Party Transactions, Directors Responsibility Statement, compliance relating to financial statements and draft auditors report. The Committee also affirms that in compliance with Whistle Blower Policy no personnel had been denied access to the Audit Committee. The committee is recommending to the board the re-appointment of M/s G Basu & Co., Chartered Accountants as statutory auditors of the company, to carry out audit of the accounts of the company for the financial year 2007-08. In Conclusion, the committee is sufficiently satisfied that it has complied with the responsibilities as outlined in the Audit Committees responsibility statement. Sd/P N Vijay Chairman, Audit Committee
New Delhi May 8th, 2007
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b) Remuneration cum Compensation Committee As of 31st March 2007, the Remuneration cum Compensation Committee comprises of Mr. P N Vijay (Chairman) and Mr. S. Narayan, being independent Directors and Mr. V C Burman, being Non Executive Promoter Director. The Remuneration cum Compensation Committee held five meetings during 2006-07 on 25th April 2006, 19th July 2006, 31st October 2006, 23rd February 2007 and 13th March 2007. Table 4 gives the details. Table 4: Attendance details of Daburs Remuneration cum Compensation Committee Name of Members (Category) Mr. P N Vijay (ID) Mr. S. Narayan (ID)* Mr. Stuart E Purdy** Mr. V C Burman (PD/NED) Status No. of Meetings Held Chairman Member Member Member 5 3 2 5 Attended 3 2 2 5
Scheme (ESOS) which inter-alia include the following: Quantum of options to be granted under the Scheme per employee and in aggregate; Vesting Period; Conditions under which option vested in employees may lapse in case of termination of employment for misconduct; Exercise period within which the employee should exercise the option and that option would lapse on failure to exercise the option within the exercise period; Specified time period within which the employee shall exercise the vested options in the event of termination or resignation of an employee; Right of an employee to exercise all the options vested in him at one time or at various points of time within the exercise period; Procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of rights issues, bonus issues and other corporate actions; Grant, vest and exercise of option in case of employees who are on long leave; and Procedure for cashless exercise of options. Forfeiture/cancellation of Options granted; All other issues incidental to the implementation of ESOS. To issue grant/award letters. To allot shares upon exercise of vested options.
*Appointed as a member w.e.f. 31/10/2006. ** Ceased as a member w.e.f . 31/10/2006
The Remuneration cum Compensation Committee of the Company recommends to the Board the compensation terms of executive Directors, approves and evaluates the executive Directors and senior management compensation plans, policies and programs of the Company. The responsibilities of the Committee include: Framing and implementing on behalf of the Board and on behalf of the shareholders, a credible and transparent policy on remuneration of executive Directors including ESOP, pension rights and any compensation payment. Considering, approving and recommending to the Board the changes in designation and increase in salary of the executive Directors. Ensuring that remuneration policy is good enough to attract, retain and motivate the Directors. Bringing about objectivity in determining the remuneration package while striking a balance between the interest of the Company and the shareholders. To frame the ESPS/ESOS and recommend the same to the Board/Shareholders for their approval and to implement the Scheme approved by the Shareholders. To suggest to Board/Shareholders changes in the ESPS/ ESOS. To decide the terms and conditions of Employees Share Purchase Scheme (ESPS) and Employees Stock Option
Remuneration policy The remuneration paid to the non-executive Directors of the Company is decided by the Board of Directors on the recommendations of the Remuneration cum Compensation Committee.The existing remuneration policy of the Company is directed towards rewarding performance, based on review of achievements on a periodical basis. The remuneration policy is in consonance with the existing industry practice. As per the shareholders approval obtained at the Annual General Meeting of the Company held on 5th September, 2002, commission is paid at the rate not exceeding one per cent of the net profits per annum of the Company, calculated in accordance with the provisions of Sections 198, 349 and 350 of the Companies Act, 1956.
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1.
Non-executive Chairman Besides sitting fees, the non-executive Chairman is also entitled to commission out of profits of the Company as approved by the Board and within the overall limits prescribed by the Companies Act, 1956.
non-executive promoter Director, Mr. Pradip Burman, executive promoter Director, and HH Maharaja Gaj Singh, independent Director. The Nomination Committee did not meet during the year under review. The functions of the Nomination Committee include: To identify and recommend candidates to the Board of Directors for appointment as members of the Board. To engage the services of consultants and seek their help in the process of identifying candidates for appointments to the Board. To decide the remuneration of consultants engaged by the Committee.
2.
Independent Directors Non-executive independent Directors are paid sitting fees for attending the meetings of the Board of Directors and committees thereof within the prescribed limits.
3.
Executive Directors Remuneration of the executive Directors consists of a fixed component and a variable performance incentive. The Remuneration cum Compensation Committee makes annual appraisal of the performance of the executive Directors based on a detailed performance evaluation and recommends the compensation payable to them, within the parameters approved by the shareholders, to the Board for their approval.
d) Shareholders/Investor Grievance and Share Transfer Committee The Committee consists of three members, Mr. P N Vijay (Chairman), Mr. V C Burman and Mr. P D Narang. The Committee met five times in the year under review on 25th April 2006, 19th July 2006, 31stth October 2006, 19th January 2007 and 12th February 2007. Table 5 gives the details. Table 5: Attendance Details of Daburs Shareholders/ Investor Grievance and Share Transfer Committee Name of Members Mr P N Vijay (ID) Status Chairman No. of Meetings Held Attended 5 5 5 5 5 5
Remuneration cum Compensation Committee Report for the Year Ended 31st March 2007 To the Shareholders of Dabur India Limited: The Remuneration cum Compensation Committee comprises of 2 independent directors and 1 Non Executive Promoter Director. The main responsibility of the Remuneration cum Compensation Committee is to incentivize and reward executive performance that will lead to long-term enhancement of shareholder performance. The Committee reviewed and approved the stock options payable to all Executive Directors, within the overall limits approved by shareholders. The committee also reviewed and approved the stock options of all MANCOM members for the year 2006-2007. In addition, the committee reviewed the grant of sign-on and regular stock options to various other employees of the Company during the year. The Committee also reviewed and approved the revision in remuneration of Mr. P D Narang and Mr. Sunil Duggal, Executive Directors. The committee was also provided information on appraisal systems, the outcome of performance assessment programs, compensation policies for employees and the information to decide on grant of options to various employees. New Delhi May 8th, 2007 c) Nomination Committee Daburs Nomination Committee consists of Mr. V C Burman, Sd/P N Vijay Chairman, Remuneration cum Compensation Committee
Mr V C Burman (PD / NED) Member Mr P D Narang (ED) Member
Mr. A K Jain, General Manager (Finance) and Company Secretary, is the Compliance Officer. The committee supervises the mechanism for redressal of investor grievances and ensures cordial investor relations. Apart from looking into redressal of shareholders and investors complaints like transfer of shares, non-receipt of annual reports, non-receipt of dividend and allied matters, the committee performs the following functions: Transfer/Transmission of shares/Debentures. Split-up/Sub-division and Consolidation of shares, debentures, letters of rights, renewals, letters of allotment, call notices. Issue of new and duplicate share/debentures certificates. Registration of Power of Attorneys, Probate Letters of transmission or similar other documents. Grant extension of time for making allotment/First Call/ Second and Final Call Payments. To open/close Bank Account(s) of the Company for
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depositing share/debenture application, allotment and call monies, authorize operation of such account(s) and issue instructions to the Bank from time to time in this regard. To look into the redressing of shareholder and investors complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. Any allied matter(s) out of and incidental to these functions and not herein above specifically provided for.
of Transfer/Transmission/ Split-up/Sub-division and Consolidation of shares, issue of new and duplicate share certificates and allied matter(s). The Committee approved the 2346 cases of transfer, 222 cases of re-materialisation, 8 cases of sub-division and 34 cases of issue of duplicate share certificates. The committee reviewed the status of investors grievances on quarterly basis. As at the close of the Financial Year there were only 2 complaints pending for redressal which have since been redressed.
Details of queries and grievances received and attended by the Company during the year 2006-07 are given in Table 6. There were only 2 number of complaints which were pending as on 31st March07. In order to provide efficient services to investors and for speedy redressal of the complaints, the Board of Directors has delegated the power of approving transfer and transmission of shares and other matters like split up / sub-division, and consolidation of shares, issue of new certificates on rematerialization, sub-division, consolidation and exchange severally to Mr A K Jain, General Manager (Finance) and Company Secretary, and Mr. R B Sachan, Asst. Manager Secretarial, subject to a maximum of 5000 shares per case. Shareholders/Investor Grievance and Share Transfer Committee Report For The Year Ended 31st March2007 To the Shareholders of Dabur India Limited: The Shareholders/Investor Grievance and Share Transfer Committee comprises of 3 members. The main responsibility of the Committee is to ensure cordial investor relations and supervise the mechanism for redressal of investor grievances pertaining to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. It performs the functions New Delhi May 8th, 2007 Management Committees
Sd/P N Vijay Chairman, Shareholders/ InvestorGrievance and Share Transfer Committee
The Company has constituted separate Management Committees to look after the operations of each of its Division. The Charter of each Management Committee has been clearly defined. The Committees are broadly responsible for implementing the overall business strategy, identifying areas of further value creation, new initiatives for enhancing the business competitiveness and implement the business plans as approved by the Board of directors. Investor Relations Boosting Investor Confidence The role of investor relations at public companies continues to expand, due in part to increased disclosure and reporting requirements, more IROs (Investor relations Officer) providing more input to the Board of Directors and becoming members of their Companys disclosure committee. At Dabur India the
Table 6: Nature of complaints received and attended to during 2006-2007 Nature of Complaint Pending as on as 1st Apr06 Nil Nil Nil Nil Nil Nil Nil Nil Nil Received during the year 18 85 5 96 57 11 Nil Nil 272 Answered during the year 18 85 5 96 57 9 Nil Nil 270 Pending as on as 31st March 2007 Nil Nil Nil Nil Nil 2 Nil Nil 2
1. 2. 3. 4. 5.
6.
Transfer / Transmission / Duplicate Non-receipt of Dividend Dematerialisation /Rematerialisation of shares Others (Non receipt of bonus shares/ POA/ change of signatures/ etc.) Complaints received from: - Securities and Exchange Board of India - Stock Exchanges - Registrar of Companies/ - Department of Company Affairs Others Total
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job responsibilities of the IRO are clearly defined as under: 1. 2. 3. 4. 5. 6. 7. Building Interest in the firm on the buy side Being a strategic advisor to the Senior Management General market intelligence, including data on stock trading and shareholder characteristics General shareholder feedback/opinions Peer comparisons Intelligence on competitors Anticipated market reaction toward planned corporate developments such as mergers and acquisitions or divestitures Coping with the short term perspective of the investment committee Building Investor Confidence in the firm
Disclosures Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. The Senior management personnel make disclosures to the Board periodically regarding their dealings in Companys share; and all material financial and commercial transaction with the company;
8. 9.
where they have personal interest. The said dealings and transactions, if any had no potential conflict with the interest of the company at large. The material, financial and commercial transactions where Key Management Personnel have personal interest forms part of the disclosure on related parties referred to in Note in Schedule P to Annual Accounts which was reported to Board of Directors. Related Party Transactions Significant related party transactions are summarised herein below:1. Subsidiaries: Collaterals and guarantees have been given by the Company on behalf of Dabur Foods Ltd amounting to Rs. 63.00 crore. Goods worth Rs. 9.30 crores were sold to Dabur International Limited. Goods worth Rs. 1.11 crores were sold to Dabur Foods Limited. Dabur Foods Ltd. was given a loan of Rs. 17.00 crores by the company. Sale of Assets for an amount of Rs. 1.64 crores. Was made by the Company to Dabur International Limited. Dabur Foods Ltd. had repayed the Loan of Rs. 20.00 crores given by the company. Dabur International Limited had repayed the loan of Rs. 17.00 crores given by the Company.
10. Being a part of the companys disclosure team At Dabur, we have various avenues to ensure that investors get a good understanding of the company and its strategies. In order to achieve this Dabur holds: 1. One-on-one meetings and quarterly conference calls - to show case the companys performance and also highlight the companys forward looking strategy Webcasting - Daburs presentations are webcast. Webcasts are left up on corporate Web sites for upto 1 month Group Analyst Meeting both in India and outside (During the year Analyst Meetings were held at New York, London, Hong Kong & Singapore). These analyst meets are held for the benefit of FIIs (Foreign Institutional Investors) and Research Analysts to enable them understand the Operations at Dabur better.
2. 3.
2.
Subsidiary Companies The Clause 49 defines a material non-listed Indian subsidiary as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. Dabur does not have a material non-listed Indian subsidiary.
Management
Management Discussion and Analysis Annual Report has a detailed Chapter on Management Discussion and Analysis which forms part of this report.
Fellow Subsidiaries (subsidiary of a subsidiary): Goods worth Rs. 3.24 crores were sold to Asian Consumer care Private Limited. Goods worth Rs. 65.64 crores were purchased from Dabur Nepal Pvt Ltd.
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Collateral and guarantees have been given on behalf of Dabur Egypt Limited amounting to Rs. 4.90 crores and on behalf of Dabur Nepal Pvt. Ltd. amounting to Rs. 3.13 crores . Goods worth Rs. 6.96 crores were sold to Weikfield International (UAE) LLC. Goods worth Rs. 1.38 crores were sold to African Consumer Care Limited.
to bring to the management notice concerns about suspected unethical behavior, malpractice, wrongful conduct, fraud, violation of policies Ensure timely and consistent organizational response Build and strengthen a culture of transparency and trust Provide protection against victimization
3.
Key Management Personnel & their Relatives: For key management personnel kindly refer to Table 2 of this report. There were no relatives of key management personnel who were paid remuneration / pension of Rs. 1 crore or more during the year.
The above mechanism has been appropriately communicated within the Company across all levels and has been displayed on the Companys intranet as well as on companys website www.dabur.com. The Audit Committee periodically reviews the existence and functioning of the mechanism. The Committee has in its Report affirmed that no personnel has been denied access to the Audit committee. Dividend Policy To bring transparency in the matter of declaration of dividend and to better protect the interests of investors, Dabur has adopted a Dividend Policy which has been displayed on the Companys website, www.dabur.com Policy for Environment & Pollution Control The Company has a dedicated Policy for Environment & Pollution Control with a commitment to minimize any impact that its business operations may have on the environment and to improve the quality of life of the community around its manufacturing facilities as it constitute one of its most important group of stakeholders. The companys plans are primarily based on consideration of resource conservation and pollution abatement. The Company is dedicated towards promoting sustainable growth of herbal-based plantations in different climatic zones of the country through its Agrobiotechnology Division. Occupational Health & Safety Policy The Company has adopted Occupational Health & Safety Policy to provide a safe and healthy working environment to its employees. It recognizes its human force as the most important asset thus totally committed to this Policy of prevention / elimination of all undesirable incidents, which may result in loss of lives/ injuries to personnel and damage to property. CEO/ CFO certification The CEO and CFO certification of the financial statements and the cash flow statement for the year is enclosed at the end of the report. Shareholders Reappointment/Appointment of Directors As per the articles of association of Dabur, one-third of its
The detailed related party transactions can be referred to in Note in Schedule P to Annual Accounts. Disclosure of accounting treatment in preparation of financial statements Dabur has followed the guidelines of accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) in preparation of its financial statements. Details of non-compliance by the Company Dabur has complied with all the requirements of regulatory authorities. No penalties/strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years. Code for prevention of insider-trading practices In compliance with the SEBI regulation on prevention of insider trading, the Company has instituted a comprehensive code of conduct for its management and staff. The code lays down guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with shares of Dabur, and cautioning them of the consequences of violations Whistle-Blower Policy In line with the best international governance practices, Dabur has put in place a system through which employees and business associates may report unethical business practices at work place without fear of reprisal. The Company has set up a direct touch initiative under which all employees/business associates have direct access to the Chairman of the Audit Committee and also to a three member direct touch team established for this purpose. The whistle blower protection policy aims to: Allow and encourage employees and business associates
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Directors retire every year and, if eligible, offer themselves for re-election at every Annual General Meeting. Consequently, Mr. Amit Burman, Mr. Pradip Burman and Mr. V C Burman would retire this year and being eligible, offer themselves for reappointment in accordance with the provisions of the Companies Act, 1956. Their brief CVs are given below: Mr. Amit Burman: MBA. (Cambridge University, England) was born in 1969 and was appointed as a member on the Board in 2001. He is the Promoter Non-Executive Director of the Company. He currently has no shareholding in the Company. Mr. Pradip Burman: B.Sc (Mech. Engg.) MIT (USA) was born in 1942 and joined the Board in 1979. Currently he is the Whole time-Director of the Company. His current shareholding in the Company is 306000 shares. Mr. V C Burman: B Sc in Business Administration was born in 1937 and joined the Board in 1979. He is the Promoter. NonExecutive Director and presently he is the Chairman of the Company. His current shareholding in the Company is 15000 shares. Means of Communication with Shareholders Half yearly financial information, including summary of significant events, for the half-year ended 30 September 2006 was sent to the households of all shareholders. The quarterly and half yearly financial results are normally published in The Economic Times/ Times of India and Navbharat Times/ Rashtriya Sahara /Jansatta newspapers. Table 7 gives details of the publications of the financial results in the year under review. The quarterly, half yearly and annual financial statements are promptly and prominently displayed on the Companys web site i.e. www.dabur.com. The Company also displays the official news releases and presentations made to institutional investors and to analysts on this website. Further, the Company has also been complying with SEBI regulations for filing of its financial results under the EDIFAR system. These are available on the SEBI web-site www.sebiedifar.nic.in. Table 8: Location and time of the last 5 General Meetings. Financial Year 2002-2003 2003-2004 2003-2004 2004-2005 2005-2006 2006-2007 Category * AGM EGM AGM AGM AGM EGM (Court Convened Meeting)
Table 7: Publications of the financial results during 2006-2007 Description Unaudited Financial Results for the quarter ended on 30th June, 2006 Audited Financial Results for the quarter / half year ended on 30th September, 2006 Unaudited Financial Results for the quarter / Nine months ended on 31st December, 2006 General Body Meetings Table 8 gives the details of the last five General Meetings. The following Special Resolutions were taken up in the last three AGMs, and were passed with requisite majority. 6th July, 2004 Keeping of records at the place other than registered office of the Company. Date 21st July 06
2nd November 06
21st January 07
15th July, 2005 Reappointment of Mr. Sunil Duggal as Whole-time Director of the Company Appointment of Mr. Amit Burman as Whole-time Director in Dabur Foods Limited. Appointment of Mr. Mohit Burman as Whole-time Director in Balsara Home Products Limited. Appointment of Mr. Chetan Burman as Executive Director in Dabur Nepal Private Limited.
8th July, 2006 Appointment of Mr. Mohit Burman as Wholetime Director in Dabur International Limited.
Location of the meeting Air Force Auditorium Subroto Park, New Delhi - 110010 Same as above Same as above Same as above Same as above Same as above
Date 2nd August 2003 2nd August 2003 6th July 2004 15th July 2005 8th July, 2006 8th July, 2006
Time 9.30 AM 2.00 PM 11.00 AM 11.00 AM 9.30 AM 11.00 AM
*AGM - Annual General Meeting, EGM - Extraordinary General Meeting
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Postal Ballot During the year under review, in pursuance to section 192A of the Companies Act, 1956 and Companies (Passing of the Resolution by Postal Ballot) Rules, 2001, postal ballot(s) were conducted seeking approval of the shareholders for 1. 2. Issue of Securities in International and/or Domestic Market. Capitalization of General Reserve Account and issue of bonus shares in the ratio of 1:2 to existing equity shareholders of the company.
Compliance
Mandatory requirements Dabur is fully compliant with the applicable mandatory requirements of the Clause 49. Table 10: Compliance report Particulars Clause of listing agreement 49 I 49(IA) Compliance status Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes NA Yes Yes Yes Yes Yes Yes
The result of postal ballot (Table 9A) in respect of Issue of Securities in International and/or Domestic Market were published in The Statesman, Delhi and Jansatta Hindi, Delhi on 18th September 2006 and result of postal ballot (Table 9B) in respect of Capitalization of General Reserve Account and issue of bonus shares in the ratio of 1:2 to existing equity shareholders of the company was published in The Statesman, Delhi and Jansatta Hindi Delhi on 30th December 2006. Mr. V.K. Jhalani, Chartered Accountant was appointed as Scrutinizer for conducting the postal ballot process. He reported the vote count on 13th September 2006 and 26th December 2006 respectively. The results of the ballot are given below: Table 9A: Result of the Postal Ballot (Issue of Securities in International and/or Domestic Market) Particulars Number of Postal Ballot Forms received In Favour Against Invalid Ballots Total Receipts No. of Votes 1542 435672587 10939174 48603 446660364 %
97.54% 2.45% 0.01% 100.00%
Table 9B: Result of the Postal Ballot (Capitalization of General Reserve Account and issue of bonus shares in the ratio of 1:2 to existing equity shareholders of the company) Particulars Number of Postal Ballot Forms received In Favour Against Invalid Ballots Total Receipts No. of Votes 3129 447253847 1570 49716 447305133 %
I. Board of Directors (A) Composition of Board (B) Non-executive Directors Compensation & Disclosures 49 (IB) (C) Other provisions as to Board and Committees 49 (IC) (D) Code of Conduct 49 (ID) II. Audit Committee 49 (II) (A) Qualified & Independent Audit Committee 49 (IIA) (B) Meeting of Audit Committee 49 (IIB) (C) Powers of Audit Committee 49 (IIC) (D) Role of Audit Committee 49 II (D) (E) Review of Information by Audit Committee 49 (IIE) III. Subsidiary Companies 49 (III) IV. Disclosures 49 (IV) (A) Basis of related party transactions 49 (IV A) (B) Board Disclosures 49 (IV B) (C) Proceeds from public, rights, preference issues etc 49 (IV C) (D) Remuneration of Directors 49 (IV D) (E) Management 49 (IV E) (F) Shareholders 49 (IV F) V. CEO/CFO Certification 49 (V) VI. Report on Corporate Governance 49 (VI) VII. Compliance 49 (VII) Adoption of non-mandatory requirements a) Maintenance of the Chairmans office
99.9885% 0.0004% 0.00111% 100.00%
The company maintains the office of the non-executive Chairman and provides for reimbursement of expenses incurred in performance of his duties. b) Tenure of Independent Directors No specific tenure has been specified for the Independent Directors c) Remuneration Committee Dabur has Remuneration cum Compensation Committee that comprises of three members, two members being
The Chairman after receiving the Scrutinizers Report announced that the Special Resolutions at Item No.1 and 2 of the Postal Ballot Notice were duly passed with the requisite majority and directed that the resolutions be recorded in the minute book recording the proceedings of general meetings of the members.
34
independent directors and one being non-executive director. The Chairman of the Committee is an independent director. d) Half-yearly Declaration Dabur has a practice of preparing half-yearly report of financial performance including a section on Management Discussion and Analysis since last two years, which is sent to all Shareholders. The half-yearly report for the year 200607 was sent to all shareholders on 4th December 2006. c) Audit Qualifications The Auditors have raised no qualification for the Financial Statements of the Company. d) Mechanism for evaluation non-executive Directors The performance evaluation of non-executive directors is done through a peer-to-peer performance evaluation of the Board of Directors. The Directors are marked on a scale of 1 to 5, with respect to three broad parameters namelyguiding strategy, monitoring management performance and development /compensation and statutory compliance & Corporate Governance. e) Whistle Blower Policy Dabur has whistle-blower policy in place. The details with regard to the functioning of the whistle-blower policy have been mentioned earlier in this report.
End April 2008: Fourth Quarter and Annual
Book Closure The dates of book closure are from Monday the 2nd July 2007 to Friday the 13th July 2007 inclusive of both days. Dividend Payment First interim dividend of Re. 1.00 per equity share was paid on 23rd November 06 and Second interim dividend of Rs. 0.75. per equity share was paid on 28th March 07. Dates of Transfer of unclaimed Dividend Pursuant to section 205A of the Companies Act, 1956 unclaimed dividend upto and including Financial Year 1999-2000 have been transferred to the General Revenue Account of the Central Government/ Investor Education and Protection Fund (IEPF) established by the Central Government. The dividends for following years, which remain unclaimed for seven years, will be transferred to IEPF in accordance with the schedule given below. Shareholders who have not enchased their dividend warrants relating to the dividends specified in Table below are requested to immediately send their request for issue of duplicate warrants. Once unclaimed Dividend is transferred to IEPF, no claim shall lie in respect thereof either with the Company or IEPF. Table 11: Financial Year Type of Dividend Interim Final Interim Interim Final Interim Final Interim Final Interim Final Interim Interim Date of Declaration 01/06/2001 18/09/2001 27/11/2001 30/10/2002 02/08/2003 04/11/2003 06/07/2004 27/10/2004 15/07/2005 24/10/2005 08/07/2006 31/10/2006 13/03/2007 Due for transfer to IEPF 02/07/2008 28/09/2008 24/12/2008 29/11/2009 29/08/2010 04/12/2010 05/08/2011 03/12/2011 20/08/2012 01/12/2012 08/08/2013 04/12/2013 16/04/2014
Additional Shareholder Information

Annual General Meeting Date: 13th July 2007 Time: 11:00 am Venue: Air Force Auditorium, Subroto Park, New Delhi - 110010 Financial Calendar Financial year: 1st April to 31st March For the year ended 31st March 2007, results were announced on: 19th July 2006: First Quarter 31st October 2006: Half Yearly 19th January 2007: Third Quarter 8th May 2007: Fourth Quarter and Annual For the year ending 31 March 2008, results will be announced by: End July 2007 First Quarter End October 2007: Half Yearly End January 2008: Third Quarter
2000-2001 2000-2001 2001-2002 2002-2003 2002-2003 2003-2004 2003-2004 2004-2005 2004-2005 2005-2006 2005-2006 2006-2007 2006-2007 Listing
At present, the equity shares of the Company are listed on Mumbai Stock Exchange (BSE), and the National Stock Exchange (NSE). The annual listing fees for the financial year 2006-2007 to NSE and BSE has been paid.
35
Table 12: Daburs Stock Exchange codes ISIN No: Mumbai Stock Code: National Stock Code: Bloomberg Code: Reuters Code: INE016A01026 500096 DABUR DABUR IB DABU.BO
Equity Evolution during the year As on March 31, 2006 the paid up Equity Share Capital of the Company was Rs. 573302784 consisting of 573302784 equity shares of Re.1/- each. The table 13 gives details of equity evolution of the Company during the year under review:
Table 13: Equity Evolution during the year Date Particulars Issued No. of equity shares of Re.1 each during the year . 374468 350514 63336 287045551 1747155 Cumulative
May 25, 2006 August 21, 2006 October 31, 2006 February 12, 2007 March 13, 2007 Stock Market Data
Allotment pursuant to exercise of Stock Options Allotment pursuant to exercise of Stock Options Allotment pursuant to Scheme of Amalgamation Bonus Issue Allotment pursuant to exercise of Stock Options
573677252 574027766 574091102 861136653 862883808
Table 14 and Chart A gives details Table 14: High, lows and volumes of Daburs shares for 2006-07 at BSE and NSE Bombay Stock Exchange Ltd. Date Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Adjusted High (Rs.) 111.33 115.86 98.60 100.96 95.93 97.40 104.00 105.86 100.10 117.53 107.20 98.90 Adjusted Low (Rs.) 79.33 70.66 73.73 84.06 87.03 87.73 91.00 91.66 91.96 97.33 92.00 83.40 Volume 7,540,681 10,365,521 9,319,162 6,655,355 4,676,870 4,019,603 5,240,423 7,348,459 2,857,641 12,503,682 4,710,652 4,928,381 National Stock Exchange Ltd. Adjusted High (Rs.) 111.00 115.86 97.60 101.00 96.00 97.60 104.00 104.63 100.46 118.66 107.00 99.00 Adjusted Low (Rs.) 78.00 71.40 73.40 84.33 87.26 87.76 89.66 91.50 91.76 98.00 92.00 83.10 Volume 26,596,204 40,857,968 33,683,920 22,535,250 14,155,785 14,149,758 17,817,372 21,844,316 10,819,288 19,386,282 15,761,276 19,768,220
Note: The value of Dabur share has been adjusted to two thirds of its market price For April 06 to January 07 to give effect to Bonus of 1:2 allotted on 12.02.07
36
Chart A: Daburs Share Performance versus BSE Sensex
Note: Share prices and BSE Sensex indexed to 100 as on the first working day of the financial year 2006-07 i.e. 3 April 2006
Chart B: Daburs Share Performance versus Nifty
Note: Share prices and Nifty indexed to 100 as on the first working day of the financial year 2006-07 i.e. 3 April 2006
37
Distribution of Shareholding
Table 15 and 16 lists the distribution of the shareholding of the equity shares of the Company by size and by ownership class as on 31st March 2007. Table 15: Shareholding pattern by size Number of equity shares held Physical Form No. of share holders up to 5000 5001 10000 10001 and above Total 6637 133 14 6784 No. of shares 8176441 893006 246600 9316047 Dematerialisation Form No. of share holders 128245 753 576 No. of shares 45198450 5184938 803184373 Total number of share holders 134882 866 590 136358 % of share holders Total number of shares % of share holding
98.92% 0.65% 0.43% 100.00%
53374891 6077944 803430973 862883808
6.19% 0.70% 93.11% 100.00%
129574 853567761
Table 16: Shareholding Pattern by ownership Particulars No. of share Holders Directors, promoters and family members FIIs Mutual Funds Financial Institutions/Banks NRIs Corporates Individuals Total 31 61 41 37 3061 1909 131218 136358 As on 31st March 2007 % of share Holders 0.02% 0.04% 0.03% 0.03% 2.24% 1.40% 96.24% 100.00% No. of shares held 636841973 90264228 4662537 49704093 5219897 10056512 66134568 862883808 % of share Holding 73.80% 10.46% 0.54% 5.76% 0.60% 1.17% 7.67% 100.00% No. of share Holders 34 51 44 29 2418 1675 79309 83560 As on 31st March 2006 % of share holders No. of % of shares share held holding 74.31% 9.70% 1.46% 4.80% 0.71% 1.60% 7.42%
0.04% 426004818 0.06% 55620603 0.05% 8354761 0.03% 27529700 2.89% 4064240 2.00% 9170725 94.91% 42557937
100.00% 573302784 100.00%
Dematerlisation of Shares and Liquidity Trading in equity shares of the Company in dematerialized form became mandatory from 31st May 1999. To facilitate trading in demat form, in India, there are two depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Dabur has entered into agreement with both these depositories. Shareholders can open their accounts with any of the Depository Participant registered with these depositories. As on 31st March 2007, over 98.92% shares of the Company were held in dematerialized form. The equity shares of the Company are frequently traded at Mumbai and National Stock Exchange.
Details of Public Funding Obtained in the last three years Dabur has not obtained any public funding in the last three years. Registrar and Transfer Agent Securities and Exchange Board of India (SEBI), through its circular No.DandCC/FITTC/CIR-5/2002 dated 27 December 2002, has made it mandatory for all work related to share registry, both in physical and electronic form, to be handled either wholly in house by companies or wholly by a SEBI registered external registrar and transfer agent. Dabur had appointed MCS Limited as its registrar and transfer agent in 1994 for both segments, much before this was mandated by SEBI. Details of the registrar and transfer agent are given belowMCS Limited Unit: Dabur India Limited Sri Venkatesh Bhawan, W-40 Okhla Industrial Area Phase II, New Delhi 110020 Phone: 011-41406149/51/52, 41609386, and 41709885 Fax: 011-41709881
Outstanding GDRs/ADRs/Warrants/Options The Company has 6124608 outstanding Options as on 31st March 2007 with vesting period from 1 to 5 years from the date of grant.
38
Share Transfer System All share transfer and other communications regarding share certificates, change of address, dividends, etc should be addressed to Registrar and Transfer Agents. Shareholders/Investor Grievance and Share Transfer Committee is authorized to approve transfer of shares in the physical Companys Registered Office Address: 8/3, Asaf Ali Road, New Delhi-110002 Ph: 011-23253488. PLANT LOCATIONS Sahibabad
segment. With effect from January 2004. Mr. A K Jain and Mr. R B Sachan, has been delegated the responsibility of approving transfer and transmission of shares and other related matters. Such transfers now take place on fortnightly basis. All share transfers are completed within statutory time limit from the date of receipt, provided documents meet the stipulated requirement of statutory provisions in all respects.
Unit I & II 22, Site IV, Industrial Area, Sahibabad, Ghaziabad (U.P.) Tel: 0120 3982000, Fax: 0120 2779914; 4376924 Unit III Plot No. 5/1, Site IV, Sahibabad 201 010, Ghaziabad (U.P.) Tel: 0120 4181011, 4181003: Fax: 0120 2772407
Baddi
Chyawanprash Unit 220-221, HPSIDC Industrial Area, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax : 01795-244090 Hajmola Unit 109, HPSIDC Industrial Area, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax : 01795-244090 Red Toothpaste Unit Village Billanwali Lavana, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax: 01795-244090 Amla/Honey Unit Village Billanwali Lavana, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax: 01795-244090 Glucose Unit Plot No. 12, Industrial Area, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax: 01795-244090 Shampoo Unit Village Billanwali Lavana, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax : 01795-244090 Honitus/Nature Care Unit 109, HPSIDC Industrial Area, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax: 01795-244090 Fit N Activ Unit 221, HPSIDC Industrial Area, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax : 01795-244090 601, Malku Majra, Nalagarh Road, Baddi ,Distt Solan, HP, Tel : 01795 -246363
Narendrapur Alwar Katni Jammu Uttarakhand Pithampur Silvassa
9, Netaji Subhash Chandra Bose Road, Narendrapur 743 508 Distt. 24 Parganas, West Bengal, Tel: 033-24772324 Fax : 033-24772621 S-PC 162, Matsya Industrial Area, Alwar 301 030, Rajasthan, Tel: 0144-2881217/ 2881319 Fax: 0144-2881302 10.4, Mile Stone, Village Padia, Katni, Madhya Pradesh, Tel: 07622-262317 Fax: 07622-262297 Unit I & II Lane No. 3, Phase II, SIDCO Ind. Complex, Bari Brahmna, Jammu, Tel: 01923-220123,222341/54 Fax: 01923-221970 Plot No.4, Sector-2, Integrated Industrial Estate, Rudrapur Dist. Udham Singh Nagar. Uttarakhand. Tel: 05944-246039/40/41 Fax: 05944-242502 86-A, Kheda Industrial Area, Sector 3, Pithampur 454774, Distt Dhar (M.P) Tel: 07292 400046 to 51, Fax: 400112 Unit I & II Sur vey No 225/4/1. Village Saily, Silvassa 396230. Daddra & Nagar Haveli (UT of India), Tel 0260 26458671/72/73
39
Address for Correspondence For share transfer / dematerialisation of shares, payment of dividend and any other query relating to the shares MCS Limited, Sri Venkatesh Bhawan W-40 Okhla Industrial Area, Phase II New Delhi 110020 Phone: 011-41406149/51/52, 41609386, 41709885, Fax: 011-41709881 Mrs Gagan Ahluwalia Dabur India Limited, Punjabi Bhawan 10 Rouse Avenue, New Delhi 110002 Tel: 011-42786000; Fax: 011-23222051 Mr. A K Jain For investors assistance General Manager (Finance) and Company Secretary, Dabur India Limited, Punjabi Bhawan, 10, Rouse Avenue, New Delhi 110 002., Tel: 011 42786000, Fax: 011 2322 2051
For queries of Analysts, FIIs, Institutions, Mutual Funds, Banks and others
Certification by Chief Executive Officer and Chief Financial Officer of the Company
We, Sunil Duggal, Chief Executive Officer and Rajan Varma, Chief Financial Officer, of Dabur India Limited, to the best of our knowledge and belief certify that: 1. 2. We have reviewed the Balance Sheet and Profit and Loss Account of the company for the year ended 31st March, 07 and its entire schedule and notes on accounts, as well as the Cash Flow Statement. To the best of our knowledge and information: a. b. 3. 4. These statements do not contain any materially untrue statement or omit to state a material fact or contains statement that might be misleading; These statements together present a true and fair view of the companys affairs and are in compliance with existing accounting standards, applicable laws and regulations.
We also certify, that based on our knowledge and the information provided to us, there are no transactions entered into by the company, which are fraudulent, illegal or violate the companys code of conduct. The companys other certifying officers and we are responsible for establishing and maintaining internal controls for financial reporting and procedures for the company, and we have evaluated the effectiveness of the companys internal controls and procedures pertaining to financial reporting. The companys other certifying officers and we have disclosed, based on our most recent evaluation, wherever applicable, to the companys auditors and thru them to the audit committee of the companys board of Directors: a. b. c. d. All significant deficiencies in the design or operation of internal controls, which we are aware and have taken steps to rectify these deficiencies; Significant changes in internal control over financial reporting during the year; Any fraud, which we have become aware of and that involves management or other employees who have a significant role in the companys internal control systems over financial reporting; Significant changes in accounting policies during the year.
5.
We further declare that all board members and senior management have affirmed compliance with the code of conduct for the current year. New Delhi May 8th , 2007 Sd/Sunil Duggal CEO, Dabur India Limited Sd/Rajan Varma CFO, Dabur India Limited
40
Annexure 1 - Details of other Directorships Held

Name of Director V C Burman Status PD/NED Directorship Dabur India Limited Committee Membership Shareholders/Investors Grievance Committee Remuneration cum Compensation Committee Committee Chairmanship
Dabur Ayurvedic Specialities Limited Burmans Finvest Limited Dr Anand Burman PD/NED Dabur India Limited Dabur Pharma Limited Audit Committee Compensation Committee
Shareholders/Investors Grievance Committee
Dabur Pharmaceuticals Limited Dabur UK Limited Dabur Oncology Plc Hindustan Motors Limited Pradip Burman PD/ED Dabur India Limited Ayurvet Limited Sanat Products Limited Dabur Exports Limited Dabur Investment Corporation Limited Burmans Finvest Limited CNS Infotech Ltd. Dabur India Limited Dabur Pharma Limited Dabur Foods Limited Dabur Exports Limited` Q H Talbros Limited Radico Khaitan Limited Burmans Finvest Limited PVR Ltd.
Audit Committee
Amit Burman
PD/NED
Audit Committee Remuneration Committee
Shareholders Grievance Committee Audit Committee Remuneration Committee Shareholders/Investors Grievance Committee
P D Narang
ED
Dabur India Limited Dabur Egypt Limited Welltime Housing & Finance Limited A.V.B. Finance Limited Dabur Foods Limited
Audit Committee Audit Committee Remuneration Committee Shareholders/Investors Grievance Committee Compensation Committee
Dabur Pharma Limited
Audit Committee
Dabur International Limited African Consumer Care Ltd. Punjab Tractors Limited
41
Sunil Duggal
ED
Dabur India Limited Dabur Foods Limited Dabur International Limited
Remuneration Committee Audit Committee
HH Mah. Gaj Singh
ID
Dabur India Limited Jodhna Medical & Research Centre Limited Maharaja Heritage Resorts Limited Shankar Packagings Limited Fortune Park Hotels Limited Birla Sunlife Insurance Company Limited Dabur India Limited Shareholders/Investors Grievance Committee Remuneration cum compensation committee Audit Committee Shareholders/Investors Grievance Committee Audit Committee
P N Vijay
ID
Eicher Limited Reed Relay & Electronics Limited Gujarat Narmada Valley Fertilizers Co Limited. Eicher Motors Limited Stuart Edward Purdy* ID Dabur India Limited
Shareholders/Investors Grievance Committee Audit Committee Remuneration cum Compensation Committee Audit Committee Remuneration cum Compensation Committee Audit Committee Audit Committee
Audit Committee
Eagle Insurance Company Ltd. Dr. S Narayan ID Dabur India Limited
Apollo Tyres Ltd. R C Bhargava ID Dabur India Limited ILFS Limited Polaris Software Lab Ltd. Taj Asia Ltd. Grasim Industries Limited Lord Krishna Bank Ltd. Optimus Outsourcing Co. Ltd. Maruti Udyog Limited Omax Auto Ltd. Thomson Press Ltd. UltraTech Cement Co.Ltd.
Audit Committee Audit Committee Audit Committee Audit Committee Shareholders/Investors Grievance Committee Audit committee Shareholders/Investors Grievance Committee Audit Committee
* Ceased as director w.e.f. 31st October , 2006
42
Directors Report
To, The Members, Your Directors have pleasure in presenting the 32nd Annual Report on the business and operations of the Company together with the Audited Accounts for the year ended 31st March, 2007. Financial Results Financial results are presented in Table 1. Table1: Financial results
(Rs. crore) 2006-07 Turnover (including other income) Profits before Tax Add: Provisions of earlier years written back 1794.54 284.22 0.23 284.45 Less: Provision for Taxation Current Provision for Taxation Deferred Provision for Taxation Fringe Benefit Provision for Taxation for earlier year Profit after Tax Add: Balance in Profit & Loss Account brought Forward from the previous year Transferred from Capital Redemption Reserve Profit available for appropriation Appropriation to: General Reserve Capital Reserve Interim Dividend Paid Final Dividend Proposed Corporate tax on Dividend Balance carried over to Balance Sheet Total 30.00 3.35 122.13 0 17.13 254.35 426.96 25.20 0.19 42.99 57.33 14.07 175.00 314.67 31.52 -2.66 3.28 0.36 251.95 175.01 2005-06 1375.03 214.36 0.29 214.65 18.08 4.00 3.70 188.87 125.23
2006-07 fiscal. The Board of Directors do not propose any final dividend this year and recommend that the interim dividends already paid be treated as final dividend. The Dividend Payout Ratio for the current year, inclusive of corporate tax on dividend distribution, is at 48.45%. Operations and Business Performance Kindly refer to Management Discussion & Analysis covered under Corporate Governance which forms part of this Report. Amalgamation of Subsidiary companies with the Company During the year amalgamation of three Balsara Group of companies namely Balsara Hygiene Products Limited, Balsara Home Products Limited and Besta Cosmetics Limited with effect from 1st April, 2006 with the Company was completed on 28th September, 2006 on filing of the Order of Honble Delhi and Mumbai High Court(s) with the respective office of Registrar of Companies. Pasadensa Foods Limited, a step down subsidiary, was also amalgamated with Dabur Foods Limited, subsidiary of the Company w.e.f. 1st April, 2006 on filing of order of Honble Delhi High Court with the office of Registrar of Companies on 26th December, 2006. Corporate Governance It has always been the Companys endeavour to excel through better Corporate Governance and fair and transparent practices, many of which have already been in place even before they were mandated by the law of the land. The Company complies with all the provisions of revised clause 49 of the Listing Agreement. The Compliance Report on Corporate Governance forms part of this Annual Report. The Auditors certificate on the compliance of Corporate Governance Code embodied in Clause 49 of the Listing Agreement is attached as Annexure 1 and form part of this Report. Directors During the reported period Mr Stuart E Purdy had resigned from the directorship of the Company w.e.f. 31st October, 2006. The Board places on records its gratitude for the valuable guidance provided by Mr Purdy during his tenure as director of the Company. At the ensuing Annual General Meeting Mr Pradip Burman, Mr Amit Burman and Mr P D Narang will retire by rotation and being eligible offer themselves for reappointment in terms of provisions of Articles of Association of the Company.
0 426.96
0.57 314.67
Dividend The Company has already paid an interim dividend of Re.1 per share (i.e. 100%) on 23rd November, 2006. Further, the Company has paid second interim dividend of Re.0.75 per share (i.e. 75%) on the enhanced capital (post-Bonus issue) on 28th March, 2007. With this, the Company has announced a total dividend of (213% on pre-bonus capital) 175% for the
43
Directors Report
The brief resume/details relating to directors who are to be appointed/re-appointed are furnished in the explanatory statement to the notice of the ensuing annual general meeting. Directors Responsibility Statement Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, the Directors confirm: i) That in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same; That they had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give 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;
for reappointment as statutory auditors for the financial year 2007-08. Cost Auditors M/s Ramanath Iyer & Company, Cost Accountants were reappointed as Cost Auditors to conduct cost audit of the accounts maintained by the Company in respect of its Formulations and Cosmetics & Toiletries products for the financial year 2007-08. Consolidated Financial Statements In compliance with the Accounting Standard 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year 2006-07. Consolidated sales grew by 17.6 % to Rs. 2233.72 crore as compared to Rs. 1899.57 crore in the previous year. Similarly, net profit after tax and after minority interest for the year at Rs. 283.04 crore is higher by Rs. 68.86 crore as compared to Rs. 214.18 crore in the previous year. Internal Control System The Companys internal control system comprises audit and compliance by in-house Internal Audit Division supplemented by internal audit checks from Price Waterhouse Coopers Private Limited, the Internal Auditors. The internal auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit and compliance is ensured by the direct reporting of Internal Audit Division and Internal Auditors to the Audit Committee of the Board. Fixed Deposits During the year the Company has not accepted any fixed deposits from the public. However, as on 31st March, 2007 the Company had unclaimed deposits of Rs.6.04 lacs due to 40 depositors. In addition to this an amount of Rs.5.45 lacs is outstanding as unclaimed towards interest accrued and due to 519 depositors. During the year, the Company has deposited a sum of Rs.61,875/- towards unclaimed deposits and interest in the Investors Education & Protection Fund. Nature of business The Board of Directors of the Company in its meeting held on 13th March, 2007 has approved the plans to enter the highgrowth organized retail market in India through a whollyowned subsidiary, H&B Stores Limited (under incorporation). Under the plan the Company will invest Rs 140 crores by 2010 to establish its presence in the retail market in India with a chain of stores on the Health & Beauty format. As part of its plans to provide a world-class retailing experience to consumers across India, The Company plans to establish stores ranging from 1,500 sq ft to 6,000 sq ft in size, offering international quality store environment and product range.
ii)
iii) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) That they had prepared the annual accounts on a going concern basis. Change in Capital Structure and Listing of shares The Companys shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) and are actively traded. In the year under review, the following shares were admitted for trading in NSE and BSE:a) Equity shares allotted against the options exercised by employees pursuant to Employees Stock Option Scheme of the Company; b) 3,74,468 equity shares allotted on 25th May 2006. 3,50,514 equity shares allotted on 21st August 2006. 17,47,155 equity shares allotted on 13th March, 2007.
63,336 equity shares allotted on 31st October, 2006 to the shareholders of erstwhile Balsara Hygiene Products Limited in terms of Scheme of Arrangement and Amalgamation as approved by the Honble Delhi High Court. 28,70,45,551 equity shares allotted on 12th February, 2007 as bonus shares.
c)
Auditors M/s G. Basu & Company, Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of ensuing Annual General Meeting and being eligible offer themselves
44
There has been no change in the nature of business of other subsidiary companies during the year. Subsidiaries During the year Balsara Hygiene Products Limited, Balsara Home Products Limited, Besta Cosmetics Limited and Pasadensa Foods Limited have ceased to be subsidiary companies of the Company due to their amalgamation with the holding companies. A new step down subsidiary company with the name Asian Consumer Care Pakistan Private Limited was incorporated in Pakistan to sell FMCG products in that country. Similarly, one more step down subsidiary company was incorporated under the name Naturelle LLC in Ras-Al-Khaimah, UAE with the object of manufacturing and trading of cosmetics, foodstuffs, personal care products, home care products, health foods and ayurvedic preparations. As required under the provisions of Section 212 of the Companies Act, 1956, a statement of the holding companys interest in the subsidiary companies is attached as Annexure 2 and form part of this report. In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of Balance Sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors of the subsidiary companies have not been attached with the Balance Sheet of the Company. The Company will make available these documents/details upon request by any Shareholder of the Company or Subsidiary interested in obtaining the same. The Annual accounts of the Subsidiary Companies are also available for Inspection by the Shareholders at the Head Office of the Company and also that of its respective Subsidiaries. However, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company includes the financial Information of its Subsidiaries. The Financial Statements of each subsidiary shall also be available on Companys website www.Dabur.com. The following information in aggregate for each Subsidiary are also being disclosed (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend. The said information is given in Annexure 3 and form part of this report. Auditors Report The observations of Auditors in their report read with the relevant notes to accounts in Schedule P are self-explanatory and do not require further explanation.
Employees Stock Option Plan During the year 34,06,123 options in 9 trenches were granted to eligible employees of the Company in terms of Employees Stock Option Plan (Dabur ESOP 2000). During the year, 24,72,137 options were exercised by the employees after vesting. Accordingly, the Company made the allotment of 3,74,468 equity shares on 25th May, 2006, 3,50,514 equity shares on 21st August, 2006 and 17,47,155 equity shares on 13th March, 2007 against the options exercised by the employees. The particulars of options issued under the said Plan as required by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are appended as Annexure 4 and form part of this report. Particulars of Employees Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended are given in Annexure 5 and form part of this report. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo A. Conservation of energy: a) Energy conservation measures taken: Various energy conservation techniques were initiated at large scale and successfully implemented. Improvement in Boiler steam generating efficiency by improvement in Modulating system & routine flue gas parameters analyses. Synchronization of DG Sets for optimum utilization. Incorporation of variable frequency drive in mfg. Pumps resulting into saving of around 30% energy. Replacement of Thermodynamic type steam traps with Float type steam traps to reduce steam loss. Optimizing use of Comfort AC in offices, Incorporation of efficient AC Controls with Digital Temp controllers Resulting in Energy saving. Replacement of Aluminium Fan with Poly Fan in Cooling Towers. Effimax 2000 installed in Steam Boilers for improving efficiency. Heat recovery from AC Compressors thus saving of steam.
45
Directors Report
b)
Maintained high PF > 0.99 throughout the year. Multi Track Form Fill Machines introduced in place of single track being used.
Geographical expansion
Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Introduction of Screw Air compressor with Variable frequency Drive to suit the load Fluctuations in plant. Segregation of cooling water/Vacuum pump water from Trade effluent to reduce Effluent qty & load on ETP. Coil cooler system for DG Set to increase load factor from 65 to 80% during summer. Incorporation of instrumentation for usages monitoring viz Power, Compressed Air, Steam. Guar production switch over from LDO to FO Boiler.
The company has built a strong and robust brand architecture with four mega brands for international business across all geographies Dabur, Vatika, Hajmola and Meswak. The key contributing markets to the international business growth have been GCC, Egypt, Pakistan, Nigeria, Sudan, Iraq, Jordan, Libya and Morocco. GCC, the largest market in the International Business Division, has registered an impressive 30% growth fuelled by innovations in the Hair care and Oral care business. Dabur Amla Hair Oil, the largest brand in the portfolio has increased value market share from 39.5% to 41.6% in the last 12 month period. Extending the life cycle of Dabur Amla Hair oil, the company launched Dabur Amla Gold Hair Oil in November06 targeting the younger generation. The brand has already notched up 4% Value MS in the hair oil category and a 8% Value MS in the Supermarket channel. Identifying Olive oils as a key business opportunity, company has successfully launched Vatika Naturals Olive Hair oil, extending the Vatika brand equity. Vatika Hair oils range has registered a healthy 30% growth. The company has launched its new range of Dabur Vatika Naturals Styling hair cream across the MENA region. The brand has gained a 6% Value MS in KSA with a 10% Value MS in the supermarket channel despite aggressive competition from big companies. Implementing the open innovation strategy the company has outsourced Italian technology and launched a range of intensive hair treatment masks under the Vatika brand. Dabur Egypt Limited has yet again been one of the top performers of the International business with a 61% year on year value growth and a PAT growth of more than 100%. Dabur Amla grew by 65%, while the Vatika brand grew 30% year on year. Dabur has also extended the Vatika brand into the Male grooming category with the launch of Vatika Men Herbal Shaving Cream. Daburs foray in Pakistan through its subsidiary Asian Consumer Care (Pakistan) Ltd., has registered a 125% business growth. The key growth drivers of the business were Dabur Amla Hair oil, Dabur Hajmola and the launch of Dabur Meswak. Both Amla and
c)
Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:The energy conservation measures taken during the year have resulted into yearly saving of approximately Rs 99 Lacs and thereby lowered the cost of production by the equivalent amount. These measures have also lead to better pollution control, reduced maintenance time and cost, improved hygienic condition and consistency in quality and improved productivity.
d)
Total energy consumption and energy consumption per unit of production as per Form A Attached herewith as Annexure 6
B.
Technology Absorption: Efforts made in technology absorption as per Form B is attached herewith as Annexure 7.
C.
Foreign Exchange earnings and outgo: i) Activities and initiatives relating to exports; International Business Division recorded an impressive sales growth of 20% from Rs.152 crores in 2005-06 to Rs.183.5 crores in 2006-2007 with a 70% growth in PAT from Rs.10 crores to Rs.17 crores, contributing to 8.2% of overall Daburs Business. The Key Strategic Drivers for this growth have been : Sharply defined Brand portfolio strategy Successful new Product launches
46
Hajmola are now market leaders in the respective categories. ii) Development of new markets for Products & Services Nigeria has been identified as one of the key markets for future growth for Dabur in Africa. The company, African Consumer Care Limited is looking at doubling its turnover with a slew of new product launches planned in the oral care and skin category over the next 12 months. The company is also actively exploring strategic alliances in Nigeria. Following distribution realignments and aggressive ATL inputs on Pan Arab channels the markets of Sudan, Jordan, Libya and Iraq have grown by 45%, 75%, 165% and 215% respectively. Dabur has also geographically expanded into new markets such as Yemen, Syria, Ethopia, Kenya, Uganda and Tanzania. However Daburs performance in the CIS markets has been below expectations. Dabur has made a strategic exit from the Russian Oral care business but will continue to focus on other CIS markets like Ukraine and Central Asia. Following the Hub and Spoke model for manufacturing, UAE has been developed as a supply base for markets of GCC, Yemen, Iraq and Levant. Egypt is a supply base for North African markets such as Libya, Sudan and Morocco. iii) Export Plans Expanding its production base in the UAE to meet the increasing demand in the region , a new manufacturing facility is being set up on a green field site in the Emirate of Ras Al Khaimah. Dabur is also planning to more than double its manufacturing capacity in Egypt to cater to the growing needs of the North African markets for the next 3 years. Organic and inorganic growth will be pursued as usual in the coming years to gain economies of scale and thereby increase profitability. The manufacturing facility in Nigeria was also upgraded during 06-07 with the installation of new toothpaste manufacturing equipment. Total Foreign Exchange used during 2006-07: Rs. 1082.03 lacs. Total Foreign Exchange Earned during 2006-07 Rs. 6918.60 lacs.
Group for interse transfer of shares As required under Clause 3 (1) (e) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 persons constituting Group (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of aforesaid SEBI Regulations, are given in the Annexure 8 attached herewith and form part of this report. Operations Review For detailed operational review kindly refer to Management Discussion and Analysis covered under Corporate Governance, which forms part of this Annual Report. Environmental Review The company has a defined environmental policy which is being followed rigorously by one and all across the organization. There were no environmental issues at any of the Dabur plants and the statutory compliance was in line with Governmental requirements. The Pollution Control parameters as defined by the State Pollution Control Board were totally adhered and effluent discharge level was well within the prescribed limits. Air pollution has been tested and was in line with the requirement. Noise pollution level was contained by fixing all the generators in sound proof acoustic enclosures. Industrial Relations The Company has taken various steps to improve productivity across organization. Industrial relations remained harmonious across all manufacturing locations in India. Acknowledgements Your Directors place on record their gratitude to the Central Government, State Governments and Companys Bankers for the assistance, co-operation and encouragement they extended to the Company. For the continuing support and unstinting efforts of Investors, Dealers, Business Associates and Employees in ensuring an excellent all around operational performance, your directors also wish to place on record their sincere thanks and appreciation. For and on behalf of the Board New Delhi 8th May, 2007 (V C BURMAN) CHAIRMAN
47
Directors Report
Annexure 1
Annexures to Directors Report

Auditors Report on Corporate Governance
To The Members of Dabur India Limited We have examined the compliance of conditions of corporate governance by Dabur India Limited, for the year ended on 31st March, 2007, as stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchanges. The compliance of conditions of corporate governance is the responsibility of the management. Our examination is limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We state that no investor grievance is pending for a period exceeding one month against the Company as per the records maintained by the Shareholders/ Investors Grievance Committee. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For G. BASU & CO. Chartered Accountants (S. Lahiri) Partner New Delhi 8th May, 2007
48
Annexure 2
Statement pursuant to Section 212 Of The Companies Act, 1956 Relating to Subsidiary Companies
*Dabur Napal Pvt. Ltd. *Dabur Overseas Ltd. Dabur Foods Ltd. Dabur International Ltd. *Dabur Egypt Ltd. *Asian Consumer Care Pvt. Ltd. *Weikfield *African International Consumer Ltd. Care Ltd. *Asian *Naturelle Cansumer LLC Care Pakistan Ltd.
1 Name of the Subsidiary
2 Holding Companys Interest
20,000,000 1,600,000 Equity Equity Shares of Pens Shares of Rs. 10 Sterling 1 each each fully paid up fully paid up 100% 31.03.2007 31.03.2007 31.03.2007 31.03.2007 100% 31.03.2007
3 Extent of Holding 31.03.2007 31.03.2007
31.03.2007 31.03.2007
31.03.2007
4 Subsidiary financial year ended on
5 Net aggregate amount of subsidiaries Profit/(Loss) not dealt within the holding companys accounts : Rs. (2,71,10,735) Rs. 11,59,60,325 AED 96,25,674 Rs. 8,12,66,000 Rs 12,44,00,565 AED 1,05,15,686
(i) For the financial Year of the subsidiaries
(ii) For the previous financial year of the subsidiaries since they become the holding companys subsidiaries.
6 Net aggregate amount of subsidiaries Profit/(Loss) dealt within the holding companys accounts :
(i) For the financial Year of the subsidiaries
(ii) For the previous financial year of the subsidiaries since they become the holding companys subsidiaries.
* Subsidiary Undersection 4(1)(c) Exchange Rate as on 31.03.2007 - 1AED = Rs. 11.83
49
Annexure 3 (Amount in lacs) Dabur Foods Ltd. 2,000.00 24.52 9,298.38 AED 786.00 9,298.38 AED 786.00 3,203.36 AED 270.78 11,271.98 AED 952.83 1,205.12 AED 101.87 0.00 1,205.12 AED 101.87 0.00 0.00 -123.86 AED - 10.47 0.00 0.00 -123.86 AED - 10.47 3,879.44 AED 327.93 1,356.81 910.02 BDT 2087.39 ND 2600.06 -97.71 -161.88 BDT -150.33 ND -462.50 0.00 0.00 0.00 0.00 1,877.30 AED 158.69 596.56 1,084.21 BDT 917.79 ND 3097.75 1,164.34 USD 26.80 0.00 2,069.33 USD 47.64 322.59 USD 7.43 0.00 322.59 USD 7.43 0.00 0.00 0.00 1,877.30 AED 158.69 596.56 1,084.21 BDT 917.79 ND 3097.75 1,164.34 USD 26.80 4,346.93 AED 367.45 278.71 AED 23.56 -161.57 -304.21 BDT -248.57 ND -869.18 360.55 USD 8.30 -13.03 USD -0.30 205.91 USD 4.74 205.91 USD 4.74 192.00 USD 4.42 0.00 -6.52 USD -0.15 0.00 -6.52 USD -0.15 0.00 1,164.07 AED 98.40 189.40 AED 16.01 97.34 154.17 BDT 149.76 ND 440.49 228.49 USD 5.26 217.20 USD 5 67.39 PR 89.85 247.40 PR 329.87 1,049.76 PR 1399.68 1,049.76 PR 1399.68 0.00 1,972.64 PR 2630.19 325.13 PR 433.50 76.94 PR 102.59 -97.71 -161.88 BDT -150.33 ND -462.50 248.19 PR 331.91 0.00 Dabur International Ltd. Weikfield International (UAE) Ltd. Asian African` Consumer Consumer care Ltd. care Ltd. Dabur Egypt Ltd. Dabur U.K. Ltd. Asian Naturelle Consumer Care LLC (Pak) P. Ltd 29.58 AED 2.50 0.00 86.13 AED 7.28 86.13 AED 7.28 0.00 0.00 0.00 0.00 0.00 0.00
Directors Report
50
Dabur Nepal Pvt. Ltd. 499.08 NR 798.52 6,463.30 NR 10341.28 18,056.56 11,038.19 NR 28890.49 18,056.56 11,038.19 NR 28890.49 0.20 21,988.32 24,247.04 NR 35181.32 678.91 NR 1086.25 145.96 NR 233.54 532.94 NR 852.70 0.00 0.00 812.66 294.29 1,106.95
Details of Subsidiary Companies
Particulars
1.
Capital
Reserves
3.
Total Assets
4.
Total Liabilities
5.
Details of Investments
6.
Turnover
Profit Before Taxation
8.
Provision for Taxation
9.
Profit after Taxation
10.
Proposed Dividend
Exchange Rate as on 31.03.2007 1 US $ = Rs. 43.44 1 NR=Rs.0.625 1 AED=Rs. 11.83 1BDT= Rs 0.65 1 ND=Rs.0.35 I PR = Rs 0.75
Annexure 4
Disclosure regarding Employees Stock Option Plan pursuant to the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and forming part of the Directors Report for the year ended 31st March, 2007.
For the Year 1. Number of Options granted 2. Pricing formula 34,06,123 Cumulative 1,13,81,660
Each option carries the right to the holder to apply for equity shares of the Company at par. 24,81,287 24,72,137 24,72,137 15,00,862 None Rs.24,72,137/61,24,608 34,33,590 34,06,940 39,08,699 18,50,112 None Rs.38,90,399/61,24,608
3. Options vested 4. Options exercised 5. Total number of shares arising as a result of exercise of option 6. Options lapsed/Cancelled 7. Variation in terms of options 8. Money realized by exercise of options 9. Total number of options in force
12. The Company had been using intrinsic value method of accounting ESOP expenses as prescribed by SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines 1999, to account for stock options issued under Dabur ESOS 2000, the Companys stock option scheme. Under this method, compensation expenses is recorded on the basis of excess of the market price of share at the date of grant of option over exercise price of the option. As allowed by the above referred SEBI Guidelines the company has decided to continue to apply the intrinsic value method of accounting and the disclosure required as per para 12 (l) of the Guidelines are given herein below:(Rs. in lacs) Net profit after tax, as reported in audited accounts Add: Stock Option compensation expenses charged in above reported profit Deduct: Stock option compensation expenses determined under fair value method (black scholes model) Net profit after tax, as adjusted Impact on profit (i.e. profit would have been lower by) Earning per share (Rs.) - As reported - As adjusted -Impact on EPS Basic 2.93 2.93 0.003 25207.63
10 Employee-wise details of options granted during the year to : i. Senior managerial personnel: Mr P D Narang Group Director Corp. Affairs Mr Sunil Duggal Chief Executive Officer Mr Charanjit Mohan Executive DirectorOperations Mr V S Sitaram Executive DirectorCCD Mr Nitin Ghadiyar Executive DirectorCHD Mr N Venkatakrishnan Executive VP Commercial Mr Jude Magima Executive VP CPPD Mr A Sudhakar Mr Devender Garg Mr Rajan Varma Mr George Angelo Executive VPHuman Resources Executive VP Marketing (CCD) Chief Financial Officer VP - Sales
1035.37 1058.59 25184.41 23.22 Diluted 2.90 2.90 0.003 Re.1 Rs.119.84 Rs.118.61
542052 535907 263497 130208 183614 154437 192906 154437 188347 122007 120000
ii. Employees who received the options amounting to 5% or more of options granted during the year: Mr P D Narang Group Director Corp. Affairs 542052 Mr Sunil Duggal Chief Executive Officer 535907 Mr Charanjit Mohan Executive DirectorOperations 263497 Mr Nitin Ghadiyar Executive DirectorCHD 183614 Mr Jude Magima Executive VP CPPD 192906 Mr Devender Garg Executive VP Marketing (CCD) 188347 iii. Employees who received the options during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant: 11. Diluted earning per share (EPS) pursuant to issuance of options under ESOP None
13. Weighted average exercise price (per option) Weighted average fair value of per option: (per intrinsic value method) (per black scholes model)
14. The fair value of each option is estimated using the Black Scholes model after applying the following weighted average assumptions:- Risk free interest rate - Expected life - Expected volatility - Expected Dividend - Price of underlying shares in the market at the time of option grant 6.27 1 to 5 years 7.42% 175 Rs. 120.84
Rs.2.90
51
Directors Report
52
Name Designation/ Nature of Duties (in yrs) Vice President - Sales (Consumer Care Division) Head - Corporate Quality Assurance Senior General Manager -S&M (Consumer Health Division) Director Chairman Qualifications Experience (In Yrs) 23 Remuneration (Rs.) 4,125,745 Date of Appointment 4/3/2006 Age (in yrs) 44 1 Angelo Geoge B.Sc.,P.G.D.M.M. 2 3 Bhaumik Asim Bhujbal Dilip M.Sc.,M.Phil. B.Sc.,M.B.A. 19 30 2,628,763 3,511,436 4/25/2005 4/1/2002 45 53 4 5 Burman Pradip Burman Vivek Chand B.Sc. (Mech.Engg.), MIT (USA) B.Sc. in Business Admn. (USA) B.E.,P.G.D.I.E. B.Com., P.G.D.C.M.,M.B.A. B.Com.,M.B.E. 40 43 9,265,512 9,000,000 11/2/2002 1/7/1963 64 70 6 7 8 Chaudhry Sandeep(*) Chhabra Dinesh Kumar Chutani Krishan Kumar General Manage Manufacturing General ManagerFinancial Planning General Manage Marketing (Consumer Care Division) Additional General Manager - Internal Audit Additional General Manager - Operations Head of Manufacturing 16 27 14 2,467,090 2,571,661 2,453,275 4/3/2006 9/2/1985 3/1/1997 39 48 37 9 10 11 Dani R S Dawar T K Deshpande S.W.(*) B.Sc.,C.A. B.Sc.,B.Pharma B.E.,P.G.D.M. 27 30 35 2,447,837 2,505,429 1,975,107 12/30/1993 5/1/1992 4/1/2005 56 53 57 12 Duggal Sunil Chief Executive Officer B.E.(H),P.G.D.M. 26 15,820,937 5/20/1995 50 13 Garg Devendra Executive Vice PresidentMarketing (Consumer Care Division) Vice President - Projects B.Sc.,P.G.D.M. 19 4,887,002 12/3/1993 42 14 Garg Rajiv B.Sc.-Engg 34 3,130,646 7/31/1993 58 15 Ghadiyar Nitin(*) Executive DirectorConsumer Health Division B.A.(Eco & Stats), M.M.S. 28 5,359,485 10/26/2004 49
Annexure 5
Statement of particulars of employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors Report for the year ended 31st March, 2007
Particulars of Last employment General Manager - Sales & Marketing, EID Parry (India) Ltd. Factory Manager,Britannia Industries Limited General Manager, Weikfield International (UAE) Limited Director, The Printers House Private Limited Managing Director, Dabur (Dr. S.K. Burman) Private Limited Factory Manager, Asian Paints Cost Assistant, J K Industries Ltd Account Manager, Trikaya Grey Advertising AGM - Finance, Stanford Engineering Limited Production Administrator, Pharmax Corp Limited Executive Director Production and Operations, Balsara Home Products Limited All India Sales Operations Manager, Pepsi Foods Limited Sales Operation Manager, Pepsi Foods Ltd Dy General Manager (Engg), Vam Organics Chemicals Limited President & CEO, Morepen Laboratories
Name
Designation/ Nature of Duties (in yrs) Head - Home Care Business B.Com.,P.G.D.M. 29 3,283,765 4/1/2006 53 Executive Director - Sales & Mktg, Balsara Home Products Limited Head - Supply Apollo Tyres Limited Assistant Vice President Finance, Dabur Finance Limited Sr Manager - Corp Personnel, Dabur Pharmaceuticals Limited 43 48 7/1/2004 39 Director - Corporate HR, Whirlpool of India Limited Chief Executive Officer Redrock Limited Marketing Manager, Britannia New Zealand Foods Pvt Ltd 2/25/2002 43 General Manager Materials, Marico Industries Limited 1,201,288 9,092,694 1/4/2007 7/26/1999 39 53 Regional Marketing Director, Friesland Foods General ManagerTechnical,Hindustan Lever Limited 31 14,340,636 7/1/1983 53 Management Accountant, Dabur (Dr S K Burman) Pvt Limited 18 592,509 6/5/2002 42 Vice President -Sales & Distribution, Home Trade 21 B.Sc., M.D.P.T. 18 2,559,871 2,567,770 9/16/1991 9/19/2002 44 38 Assistant Sales Manager, UniPepsi Bottlers Limited Sr Packaging Development Manager, Hindustan Lever Limited B.Tech,P.G.D.M. 26 8,387,289 1/18/2006 49 Vice President -Strategy, Unilever UK
Qualifications
Experience (In Yrs)
Remuneration (Rs.)
Date of Appointment
Age (in yrs)
Particulars of Last employment
16
Guha Subhasish(*)
17 General Manager (Finance) & Company Secretary Sr General ManagerHR & IR M.A.(Socio), P.G.D.I.R.&P.M., Dip in T&D,Dip in Labour Laws B.Sc.- Engg,M.B.A. B.A.(Hons),P.G.D.M. B.Tech,P.G.D.M. 14 3,247,194 26 2,344,885 21 3,218,437 4/22/2004 5/22/2006 32 3,252,382 4/22/1997 53 B.Com.,C.A.,C.S. 20 2,481,081 8/17/1999 44
Guha Sujit
General ManagerSupply Chain,
B.Tech,P.G.D.M.
19
3,004,802
9/1/2005
41
18
Jain Ashok Kumar
19
Jain Suresh
20 CEO - International Operations Senior General ManagerMarketing Executive Vice President supply Management Vice President - Marketing ( Consumer Care Division) Executive DirectorOperations Group Director Corporate Affairs Executive Vice President Sales (Consumer Care Division) General Manager - Sales Head of Packaging Development Executive Director Consumer Care Division B.E.,P.G.D.M. B.Com.,F.C.A., F.C.S.,A.I.C.W.A., M.I.I.A. B.E. 33 B.E., P.G.D.M. 16 M.A.(Eco) 22 5,097,436
Krishnan V
Head - Talent Management
21
Kumar Arvind(*)
22
Kumar Girish
23
Magima Jude
24
Mittal Vikas(*)
25
Mohan Charanjit
26
Narang P.D.
27
Raghunandan S(*)
28
Sharma Adarsh
B.Com.,M.B.A.
29
Sharma Maneesh
30
Sitaram V.S.
53
Directors Report
54
Designation/ Nature of Duties (in yrs) Executive Vice President Human Resources Chief Financial Officer B.Com(Hons),C.A. 34 5,633,635 11/1/2000 57 Vice President & CFO, Carrier Aircon Limited Manager -Special Projects ,Hindustan Lever Limited M.Sc.,M.A. (Social Work), L.L.B,P.G.D.P.M 31 4,891,171 9/17/2001 56 Vice President HR,Owens Brockway Qualifications Experience (In Yrs) Remuneration (Rs.) Date of Appointment Age (in yrs) Particulars of Last employment Executive Vice President Commercial B.Com(Hons), C.S.,I.C.W.A.,C.A. 21 4,505,030 2/6/2003 46
Name
31
Sudhakar A.
32
Varma Rajan
33
Venkatakrishnan N
Notes:
Gross remuneration shown above is subject to tax and comprises salary including arrears, allowances, rent, medical reimbursements, leave travel benefits, provident fund, superannuation fund & gratuity under LIC scheme in terms of actual expenditure incurred by the Company and commission.
All the employees have adequate experience to discharge the responsibilities assigned to them.
None of the employees mentioned above is a relative of any director .
Asterisk against a name indicates that the employee was in service for part of the year.
The nature of employment is on contractual basis except in the case of directors whose terms have been approved by shareholders.
Annexure 6 FORM - A (See Rule 2) Form of Disclosure of particulars with respect to Conservation of Energy
A.
Power and Fuel Consumption 2006-07 1. Electricity a) Purchased Units Total amount (Rs) Rate per unit b) Own Generation: i) Through diesel generator Units Unit per litre of diesel oil Cost per unit Total cost (Rs.) ii) Through Steam Turbine/Generator Units Unit per litre of Fuel Oil Cost/Unit (Rs.) 2. Coal (specify quality and where used) Quantity (tonnes) Total cost Average rate per tonne (Rs) 3. Furnace Oil Quantity (tonnes) Total cost Average rate per tonne (Rs) 4. Others/internal generation HSD Quantity (Kilo ltr) Total cost Average rate per Kilo ltr (Rs) LDO Quantity (Kilo ltr) Total cost Average rate per Kilo ltr (Rs) 218.24 6137023 28120.52 378.39 9313336 24613.13 280.98 8590843 30574.57 399.76 9944437 24875.83 6309.11 125968139 19966.06 5559.71 105698335 19011.49 Nil Nil Nil Nil 5690668 3.17 9.66 45311929 4158856 3.03 8.20 34112919 25488531 102855528 4.04 21660770 89448110 4.13 2005-06
B.
Consumption per unit of production The Company is engaged in production of variety of products, hence the figures of consumption per unit of production are not ascertainable.
55
Directors Report
Annexure 7 FORM - B (See Rule 2) Form of Disclosure of particulars with respect to Technology Absorption Research & Development 1. Specific area in which R & D carried out by the Company
The R&D efforts involves development of new products, continuous improvement in process/delivered cost/quality. During the year the company has developed products with proven safety and efficacy in the categories of Ayurvedic, Health Care Products, Personal Care Products, Home Care Products and Foods Products.
2. Benefits derived as a result of the above R & D

As a result of above R&D efforts the company has developed/improved upon the products such as Sugar Free Chyawanprash, Super Thanda Tail, Shampoos, Shwaasamrit, Air Fresheners range, Mosquito repellents & Toilet Cleaners etc. The Company was also able to develope the range of single & double Herbs vegetable capsules of Neem, Karela, Garlic, Tulsi, and Spirulina etc. R&D also aggressively pursued process enhancement & improvement, which resulted in overall improved Product Quality and reduced cycle time of many products.
3. Future plan of action:

To develop Ayurvedic products by continuous Research & Development for lifestyle ailments & other niche areas. In the Home Care segment, to develop new product in different categories of Repellents, Air care & Cleaners by development of cost effective formulations. Further developments of new product & technologies in the Personal care area for domestic & International market. There are more than 12 products in various categories, which are in advanced stage of development for local & overseas markets.
4. Expenditure on R&D (2006-07)

a) b) c) d) Capital Recurring Total Total R&D expenditure as a percentage of Total Turnover Rs.Nil Rs. 651 lacs Rs. 651 lacs 0.37%
56
Technology Absorption, Adoption and Innovation

1. Efforts, in brief, made towards technology absorption, adoption and innovation Energy Conservation Energy Conservation Techniques initiated at large scale Efficiency improvement at Steam generation Boiler Auto modulation system installed in Boiler feed system at Baddi. Effimax 2000 installed for Efficiency Monitoring System at Pant Nagar to check and control the steam generation efficiency. Maintained / controlled the mixing of Fuel & Air ratio resulting into maximization of boiler efficiency. Online monitoring of Boiler Efficiency through LAN resulting into improvement of Efficiency by 3%. New Technology Atomic Absorption Spectrophotometer installed at Baddi, Pantnagar & Sahibabad. Thermic Fluid Heater for Guar Food grade Odomos Coils at Jammu. Tilting Kettles for Pisthi Frying. Acoustic enclosures for DG Set done at all Plants. Innovative Packaging Concept 3. Sanifresh - Nozzle Shape & label graphics change. Dabur Amla Hair Oil & Lal Tail 25 ml ISBM PET bottle. Red Toothpaste & Amla Hair Oil graphics. Badam Tail Vatika Sandal Soap Chyawanprash & Chyawanshakti 100 gm Trial Pack. Different appearance / Aesthetic appeal / Trend setting / Environmental friendly and better shelf-life of Products. Consistency in Quality of Products. Detection & Control of heavy metals in product. Better working condition. Better R&D controls. Improve Hygiene condition and Safety. Noise pollution level contained. Fuel saving of Rs 7.73 Lacs. Better pollution control. Reduced maintenance time and cost. Successfully implemented and resulted in Saving per Annum of Rs 99 Lacs 2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution etc.
In case of imported technology (imported during the last 5 years reckoned from the beginning of this financial year) following information may be furnished: Technology imported Year of import Has technology been fully absorbed If not absorbed, areas where this has not taken place, reason therefore and future plan of action Odomos Coil manufacturing Technology from Malaysia 2006-07 Yes NIL
a) b) c) d)
57
Directors Report
Annexure 8 Group for interse transfer of shares under clause 3(1) (e) of Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. Mr Ashok Chand Burman Mrs Sudha Burman A C Burman HUF Mr Vivek Chand Burman Ms Sujata Burman Mrs Asha Burman Mr Amit Burman Mrs Gauri Tandon G C Burman HUF Mr Pradip Burman Mr Chetan Burman Pradip Burman HUF Mr Sidharth Burman Mrs Indira Burman Dr Anand Burman Mrs Minnie Burman Mr Aditya Burman V C Burman HUF Mrs Monica Burman Mr Mohit Burman Mr Gaurav Burman Sidharth Burman (HUF) Mr Saket Burman Upvan Farms & Services Pvt. Ltd. Sahiwal Inv. & Trading Company Maneswari Trading Company Milky Investment & Trading Company Poonmudi Chowdry Associates VIC Enterprises Private Limited Acee Enterprises Gyan Enterprises Private Limited Puran Associates Private Limited Ratna Commercial Ent. Pvt. Ltd. Ms Anisha Burman Mrs Meera Burman Mrs Pooja Burman Ms Devika Burman Mrs Divya Burman Master Adhiraj Burman Ms Diya Burman Mr Sandeep Tandon Mrs. Shivani Burman 44. Mrs. Karima Burman 45. Dabur Invest Corp 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. Dabur Investment Corporation Southern Enterprises Western Enterprises Eastern Enterprises Dr S K Burman Charitable Trust Dabur Foundation Chunnilal Medical Trust Mateshwari Dham Trust Estate of Durga Prasad Makkar Trust Amit Laboratories Private Limited Angel Softech Private Limited Barcelona Inv. & Trading Company Burmans Finvest Limited Cavendish Hotels Private Limited Dabur Exports Limited Dabur Securities Private Limited Flagship Trading Company Interx Laboratories Private Limited KBC India Private Limited Margdarshak Constructions Pvt. Ltd. Miracle Commercial Private Ltd. Prayag Commercial Private Limited Wakarusa Laboratories Private Ltd. Welltime Gold & Investment Pvt. Ltd. Dabur Ayurvedic Specialities Ltd. B R Bee Products Pvt Ltd. Dabur Research Foundation Vansh Holdings Pvt. Ltd. A.V.B. Finance Ltd. Dabur Investment Corporation Limited Dabur Pharmaceuticals Ltd. Excellent (India) Private Limited Malhotras Trading Company Pvt. Ltd. Moonlight Ranch Private Ltd. Shree Investments Limited Adbur Pvt Ltd. Newage Capital Services Pvt Ltd.
83. Natures Bounty Wines & Allied Products Pvt. Ltd. 84. Promethean India Finance Pvt. Ltd. 85. Promethean India Advisors Pvt. Ltd.
58
Dabur India Limited Financials Annual Report 2006-07
Auditors Report
To the Members of Dabur India Limited, We have audited the attached Balance Sheet of Dabur India Limited as at 31st March, 2007 and its Profit & Loss Account and the Cash Flow Statement for the year ended on that date attached thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as, evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. i. ii. iii. iv. v. vi. As required by the Companies (AuditorsReport) Order 2003 issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, we enclose herewith in the annexure a statement of the matter specified therein. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of audit. In our opinion, proper books of accounts, as required by law have been kept by the Company so far as appears from our examination of books of accounts. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts. Balance Sheet and Profit & Loss Account have been prepared in due compliances of Accounting Standards referred to in sub section (3C) of section 211 of Companies Act, 1956. On the basis of written representations received from the directors as on 31st March, 2007 and taken on record by the Board of Directors, we report that none of the directors of the company is disqualified for the Office of the director within the meaning of section 274 (1) (g) of the Companies Act, 1956. In our opinion and according to the information and explanations given to us, the said accounts read with other notes appearing in Schedule P give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. a) b) c) In the case of Balance Sheet, of the State of Affairs of the company as at 31st March, 2007, and, In the case of Profit and Loss Account, of the Profit for the year ended on that date; and In the case of cash flow statement, of the cash flows for the year ended on that date.
vii.
For G Basu & Co Chartered Accountants S. LAHIRI Partner Membership No. 51717 New Delhi 8th May 2007
59
ANNEXURE TO THE AUDITORS REPORT AS REFERRED TO IN PARA I OF THE SAID REPORT OF EVEN DATE
1 a) b) c) 2 a) b) c) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The fixed assets have been physically verified by the Management at reasonable intervals. No material discrepancies between book records and the physical inventories have been noticed on such verification. Fixed assets disposed of during the year were not material enough to affect the going concern identity of the company. The inventories have been physically verified at reasonable intervals by the management. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of accounts. The company has granted unsecured advances of the nature of loan aggregating Rs.1000 lacs to One body corporates covered in register maintained under section 301 of the act. However, total number of advances at any point of time during the year was two involving maximum due of Rs. 4400 lacs. Terms and conditions of the loans are prima-facie not prejudicial to the interest of the company. The borrowers are regular in payment of principal and interest dues. The company has not taken any loan, secured or unsecured from companies, firms and other parties covered in register under section 301 of the Act maintained by the company.
a)
b) c) d) 4
In our opinion and according to the information and explanations given to us there is an adequate internal control system commensurate with the size of the company and the nature of its business for purchase of inventory and fixed assets and on the sale of goods. During the course of our audit no major weakness has been noticed in the internal controls. We have not observed any failure on the part of the company to correct major weakness in internal control system. a) Based on audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section. According to information and explanations given to us, the transactions of purchase and sale of goods/services made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.
b)
6.
In our opinion and according to information and explanations given to us, the company has complied with the provisions of section 58A and 58AA or any other relevant provision of the Act and rules framed thereunder where applicable. Neither CLB nor RBI or National Company Law Tribunal or any other Tribunal/court has passed any adverse order against company. In our opinion the company has an internal audit system commensurate with its size and nature of its business. On the basis of records produced we are of the opinion that prima facie cost records and accounts prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956 in respect of products of the company covered under the rules under said section have been maintained. However we are neither required to carry out nor have carried out any detailed examination of such accounts and records. a) According to information and explanations given to us, the company is depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance , income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues to the extent applicable to it.
7. 8.
9.
60
b)
There is no disputed due on account of wealth tax, service tax and cess. Dues on account of Sales Tax/ Income Tax/ Excise Duty disputed by the company and not being paid, vis--vis forums where such disputes are pending are mentioned below. Rs. in lacs Amount Period to which the amount relates 1996-97 1997-98 1998-99 1999-2000 2000-01 2002-03 2002-03 1991-2002 1990-93 1993-94 1999-00 2000-01 1998-99 2001-02 2002-03 2003-04 2002-03 2001-02 2002-03 1986-87 1997-98 1991-92 1998-99 2000-01 2001-02 2004-05 2004-05 2004-05 2004-05 2000-01 1999-00 1998-99 2001-02 2001-03 2001-02 2001-03 Dy. Commissioner Appeals Dy. Commissioner Appeals Dy. Commissioner Appeals Sales Tax Tribunal High Court High Court Dy.Commissioner Appeals Dy.Commissioner Appeals Dy. Commissioner Appeals Dy. Commissioner Dy. Commissioner Dy. Commissioner Dy. Commissioner Appeals Dy. Commissioner Appeal Dy. Commissioner Appeal High Court Dy. Commissioner Appeals Dy. Commissioner Appeals Dy. Commissioner Assessment Tribunal Tribunal Dy.Commissioner Assessment Tribunal Dy.Commissioner Assessment Dy. Commissiner Assessment High Court Dy. Commissioner Dy. Commissioner Forum where the dispute is pending Sales Tax Tribunal Dy. Commissioner (Appeal) Sales Tax -do-doDy. Commissioner (Appeal) Sales Tax Dy.Commissioner (Appeal) Sales Tax
Sales Tax :Name of Statute Sales Tax -do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-dodo-do-do-do-do-do-do-do-do-do-do-do-do-do-doNature of the dues
Demand on Hajmola Candy -do-do-doClassification of Hajmola Candy Classification of Hajmola Candy Non Submission of CST Form Sales Tax on Stock Transfer Classification of L.D.M. Classification of L.D.M. Classification of Gulabari Classification of LDM Short payment of VAT Short payment of VAT Short payment of VAT Short payment of VAT Short payment of Entry tax Intt. On TOT & Surcharge Intt. On TOT & Surcharge Rejection of branch transfer Check Post Matter Rejection of branch transfer Demand on Excise matter u/s 21 C.S.D. claim rejected. CSD claim rejected Check Post Check Post Check Post Check Post Excise Information dispute Form 18A disputed Non-filing of Form-F Dispute on Taxability of Coconut Oil Dispute on taxability odonil tax rate Damage destruction disallowed
27.78 25.88 27.05 70.35 12.36 4.88 9.63 28.60 89.00 1.44 0.74 0.03 41.44 117.63 120.09 140.88 0.57 2.84 3.70 0.49 0.45 7.20 0.43 31.90 9.86 0.14 0.37 0.42 0.60 40.00 0.45 0.60 4.47 7.20 0.48
Dispute tax perfered dealer and stocks tfr price 14.19
61
Income Tax :Rs. in lacs Name of Statute Nature of the dues Amount Period to which the amount relates 1998-99 2003-04 Forum where the dispute is pending ITAT CIT
Income Tax Demand u/s 263/143(3) -doDemand u/s 143(3)
34.80 336.49
Excise Duty :Excise Duty Classification of Anmol Coco-nut Oil -do-do-do-do-do-do-do-do-doService Tax Excise -do-do-do-do-doClassification of Saunf Ka Ark/ Clove Oil Modvat on Capital goods Modvat on in-puts (57H) Hajmola Candy Classification on Animal Feed supplement Post manufacturing expenses Post manufacturing expenses Classification of Janma Ghunti MOT charges Import of service Classification of Processed Tamarind Kewra Water Supplementary invoice Service Tax credit Additional trade discount Valuation of Docetaxel/Paclitaxel 514.60 27.20 0.82 2.42 113.07 174.75 0.30 0.38 388.96 0.23 3.07 28.95 3.00 3.29 0.53 6.67 498.34 1993-2001 1998-2004 1996 1998 2004-05 1994-2003 2002-2003 2004-05 1994-2000 2003 2004-05 2004-05 2001-02 2001 2005 2001 1997-2003 Dy.Commissioner Commissioner - Appeals Dy.Commissioner Tribunal Commissioner Appeals/High Court Commissioner- Appeals Tribunal Commissioner Commissioner Tribunal Commissioner - Appeals Tribunal Commissioner - Appeals Commissioner - Appeals Commissioner - Appeals Commissioner - Appeals Tribunal
10. Based on the audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank or debenture holder. 11. The company has not granted any loan or advance secured by pledge of share, debenture or other security.
12. Based on our examination of the records and evaluations of the related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts relating to shares, securities, debentures and other investments dealt in by the company and timely entries have been made in the records. We also report that the company has held the shares, securities, debentures and other investments in its own name except for those pending transfer in Companys name. 13. The company has given guarantees for loans taken by others from banks or financial institutions. The terms and conditions thereof are not prima facie prejudicial to the interest of the company.
14. The term loans taken by the company have been applied for the purpose for which they were raised. 15. No fund raised on short term basis has been used by the company for long term investment. 16. The company has made preferential allotment of shares under their ESOP Scheme to the parties covered in the register maintained under section 301 of the Companies Act, 1956 during the year. The price at which these shares were issued are not prima-facie prejudicial to the interest of the company.
62
17.
The Company has not issued any secured debenture during the year.
18. The Company has not raised any fund through public issue during the year 19. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit. 20. Other clauses of the order are not applicable to the Company.
For G. BASU & CO. Chartered Accountants S. LAHIRI Partner Membership No 51717 New Delhi 8th May 2007
63
Balance Sheet as at 31st March 2007

(As at 31st March) Schedule 2007 (Rs. Lac) 2006
Sources of Funds:
Shareholders Funds:
(A) Share Capital (B) Reserves and Surplus A B C D EB 8,628.84 31,690.08 1,927.71 80.28 2,007.99 2,263.99 44,590.90 40,318.92 5,733.03 39,053.84 1,923.23 134.29 2,057.52 1,671.50 48,515.89 44,786.87
Loan Funds:
(A) Secured Loans (B) Unsecured Loans Deferred Tax Liability Total
Application of Funds : Fixed Assets :

(A) Gross Block (B) Less : Depreciation (C) Net Block F 40,801.12 16,897.07 23,904.05 G EB H 15,736.94 6,097.87 5,024.75 12,781.66 39,641.22 EA 27,859.39 7,749.08 35,608.47 4,032.75 IA P 44,590.90 For Dabur India Ltd. V.C. Burman P.D. Narang Sunil Duggal A.K. Jain Chairman Director Director GM (Finance) & Company Secretary 48,515.89 1,981.92 19,342.06 11,388.94 30,731.00 (2,294.78) 3,287.48 11,560.90 2,694.25 3,804.41 10,376.66 28,436.22 14,535.08 137.10 34,129.37 14,245.69 19,883.68 27,507.77 131.74
Investments Deferred Tax Assets Current Assets, Loans and Advances:

(A) (B) (C) (D) Inventories Sundry Debtors Cash & Bank Balances Loans & Advances
Less: Current Liabilities and Provisions:

(A) Liabilities (B) Provisions
Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Notes to Accounts
Total As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007
64
Profit and Loss Account

Income :
Sales Less Returns Other Income Total Income
for the year ended 31st March 2007 (Year ended 31st March) Schedule J 2007 177,802.43 1,651.17 179,453.60 K L M N O IB 76,798.44 3,693.22 5,393.94 11,865.88 49,989.64 443.01 649.36 2,197.81 151,031.30 28,422.30 3,152.16 (265.64) 328.15 25,207.63 0.00 25,207.63 17,500.64 22.82 36.22 0.00 42,694.87 12,212.54 0.00 1,712.81 0.00 334.82 3,000.00 25,434.71 42,694.87 2.93 2.90 860,884,512 869,534,762 For Dabur India Ltd. V.C. Burman P.D. Narang Sunil Duggal A.K. Jain Chairman Director Director GM (Finance) & Company Secretary (Rs. Lac) 2006 136,968.29 535.02 137,503.31 57,511.22 2,689.48 3,745.55 9,830.78 39,394.05 565.87 426.24 1,904.59 116,067.78 21,435.53 1,808.11 400.00 370.25 18,857.17 51.20 18,908.37 12,522.97 28.61 7.62 56.93 31,509.26 4,299.29 5,733.03 602.97 804.06 19.27 2,550.00 17,500.64 31,509.26 2.20 2.19 859,723,793 866,287,499
Expenditure :
Cost Of Materials Excise Duty Manufacturing Expenses Payments to and Provisions for Employees Selling and Administrative Expenses Financial Expenses Miscellaneous Expenditure Written Off Depreciation Total Expenditure
Balance being Operating Net Profit before Taxation Provision for Taxation: Current Deferred Fringe Benefit Net Profit after Taxation and before Extraordinary Items Extraordinary Item (Profit/(Loss) on Long Term Tarde Investments Net Profit after Taxation and Extraordinary Item Balance Brought Forward Provision for Taxation of earlier years written back Provision for Taxation for earlier year Transferred From Capital Redemption Reserve
Appropriations
Interim Dividend Proposed Final Dividend Corporate Tax on Interim Dividend Corporate Tax on Proposed Dividend Transferred to Capital Reserve Transferred To General Reserve Balance carried over to Balance Sheet Earning per Share (in Rs.) (Face Value Re 1/- each) Basic Diluted No of Shares Basic Diluted Notes to Accounts P As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007
65
Statement of Cash Flow (Pursuant to AS-3 Issued by ICAI)

(Year ended 31st March) 2007 A. Cash Flow from Operating Activities Net Profit Before Tax and Extraordinary Items Add: Depreciation Loss on Sale of Fixed Assets Fixed Assets impairment loss Miscellaneous Exp. written off Miscellenous Exp. written off (Included in Director Remun.) Interest 28,422.30 (Rs. Lac) 2006 21,435.53
2,197.81 10.30 649.36 404.76 443.01 3,705.24 32,127.54
1,904.59 (69.33) 426.24 369.67 565.87 3,197.03 24,632.57 0.48 96.09 69.33 932.41 31,195.13 165.90 24,466.67 (1,241.67) (2,234.83) 4,553.36 920.90 30,274.23 1,076.87 23,389.80 563.68 2,186.09 1,205.54 6,831.48 3,955.31 19,434.49 (3,324.80) 785.73 (6,279.88) 6,067.63 0.48 (2,750.83) 23,442.75 (3,305.13) 586.80 (144,095.83) 140,756.49 0.30 (6,057.37)
Less: Dividend Received Profit on Sale of Investment Profit on Sale of Assets Operating Profit Before Working Capital Changes Working Capital Changes: Increase/(Decrease) in Inventories Increase/(Decrease) in Debtors Decrease/(Increase) in Trade Payables Increase/(Decrease) in Working Capital Cash Generated from Operating Activities Interest Paid Tax Paid Corporate Tax on Dividend Cash Used(-)/(+) Generated for Operating Activities (A) B. Cash Flow from Investing Activities Purchase of Fixed Assets Sale of Fixed Assets Purchases of Investment including investment in Subsidiaries Sale of Investments Dividend Received Cash Used(-)/(+) Generated for Investing Activities (B)
0.30 533.90 398.21
2,442.69 2,479.60 (4,001.38)
446.99 3,867.62 2,516.87
66

(Year ended 31st March) 2007 C. Cash Flow from Financing Activities Proceeds From Share Capital & Premium Repayment(-)/Proceeds(+) of Long Term Secured Liabilities Repayment(-)/Proceeds(+) from Short Term Loans Repayment (-)/Proceeds(+) from Deposits Repayment (-)/Proceeds(+) from Other Unsecured Loans Payment of other Advances Payment of Dividend Cash Used (-)/+(Generated) in Financing Activities (C) Net increase (+)/Decrease (-) in cash and Cash Equivalents (A+B+C) Cash and Cash Equivalents Opening Balance Cash and Cash Equivalents Closing Balance Opening Cash Balance includes Rs. 640.89 Lacs TRF from Merged Entities (Rs. Lac) 2006
24.72 (375.65) (295.86) 7.66 (99.34) 1,616.84 (17,684.31) (16,805.93) 579.45 4,445.30 5,024.75
2.31 (253.87) 606.72 (44.97) (3,151.40) (2,532.61) (8,570.82) (13,944.63) 2,739.03 1,065.38 3,804.41
As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007
For Dabur India Ltd. V.C. Burman P.D. Narang Sunil Duggal A.K. Jain Chairman Director Director GM (Finance) & Company Secretary
67
Schedules annexed to and forming part of Balance Sheet as at 31

Schedule A - Share Capital
Authorised :
1250000000 Equity shares of Re. 1 each (Previous year 1250000000 equity shares of Re. 1 each)
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
12,500.00 12,500.00
12,500.00 12,500.00
Issued and subscribed:

862883808 Equity shares of Re.1 each fully called up (Previous year-573302784 equity shares of Re. 1 each fully called up) Total Notes : 1. Of the above Shares 45543336 (previous year 45480000) shares have been allotted as fully paid up persuant to schemes of amalgamation/merger without payment being received in cash. 2. Of the above shares 755717743 (previous year 468672192) shares have been allotted as fully paid up as bonus shares by way of capitalization of the free reserves (469066351 shares) and from share premium account (286651392 shares). 3. Of the above shares 2472137 (previous year 231679) shares have been allotted during the year and 6124608 (previous year 6691484) shares are outstanding under Employees Stock Option Scheme. 8,628.84 5,733.03
8,628.84
5,733.03
68

Schedule B - Reserves and Surplus
Capital reserve As per last account Add : Transferred from Merged Entities Add : Transferred from Profit & Loss A/c Share Premium Account Add: Premium on issue of Shares Add : Transferred from Merged Entities Less : Utilized for Merger Less : Allotment of Bonus Shares General Reserve : As per Last Account Add : Transferred from Merged Entities Add : Transferred from Profit & Loss Account Less : Utilized for Merger Less: Deferred Tax of Merged Entitites Less : Issue of Bonus Shares Profit and Loss Account Less : Transferred from Merged Entities Employee Stock Option Scheme outstanding As per Last Account Add: Addition during the year Less: Allotted during the year Less: Deletion during the year Total
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
1,647.63 308.62 1,956.25 334.82 3,051.45 713.83 2,426.00 6,191.28 5,835.35 355.93 355.93 2,291.07
1,628.36 1,628.36 19.27 5,758.08 159.88 5,917.96 5,917.96 2,866.51 3,051.45 1,647.63
12,611.14 943.60 3,000.00 16,554.74 10,040.37 809.24 2,870.46 25,434.71 2,519.06 4,242.98 862.00 5,104.98 713.83 1,098.39
10,061.14 2,550.00 12,611.14 17,500.64 915.66 3,503.78 4,419.44 176.46
2,834.67
12,611.14
22,915.65
17,500.64
3,292.76 31,690.08
4,242.98 39,053.84
69

Schedule C - Secured Loans
A. Term loans :
PICUP under trade tax loan scheme Secured by: First charge on the movable and immovable assets inlcuding plant and machinery (present and future) situated at plot no. 5/1 and 5/13, Site IV Industrial Area Sahibabad, Ghaziabad and second charge on moveable assets including plant and machinery of the company (present and future) located at Plot No 22, Site IV. Industrial Area, Sahibabad, Ghaziabad Short Term Loans - from Banks : Secured by : Hypothecation of inventories and book debts ranking pari-passu among Punjab National Bank, Standard Chartered Bank Ltd, Hongkong & Shanghai Banking Corporation Ltd., State Bank of India, ABN Amro Bank, IDBI Bank Ltd., United Bank Of India, CITI Bank NA, and HDFC Bank Ltd Total
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
379.57
755.22
1,548.14
1,168.01
1,927.71
1,923.23
Schedule D - Unsecured Loans

Security Deposit from dealers and others Other Loans : Book overdraft of current account with banks Total 54.33 25.95 80.28 9.00 125.29 134.29
70

Schedule EA - Current Liabilities and Provisions
A. Current Liabilities :
Acceptance Amount due to SSI units (goods) Creditors for goods Creditors for expenses and other liabilities Advances from customers Interest accrued but not due on loans Deposits - others Investor Education and Protection Fund to be Credited by : Unpaid dividend Unpaid matured public deposit Interest accured on public deposit
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
6,722.60 1,254.30 4,424.57 14,734.22 325.36 0.35 4.05
4,933.26 1,037.21 2,574.26 10,594.82 51.24 4.33 12.65
382.45 6.04 5.45 27,859.39
121.19 7.53 5.57 19,342.06 5,733.03 804.06 480.00 18.50 2,917.99 2,178.36 5,096.35 743.00 4,353.35
B. Provisions :
For dividend (proposed) - final For corporate tax on proposed final dividend For others For leave salary For taxation : Brought forward Transferred from merged entities Provision for the year Adjusted during year Total 4,353.36 754.24 3,516.48 8,624.08 875.00 7,749.08
7,749.08 35,608.47
11,388.94 30,731.00
Schedule EB - Deferred Tax Liaibility (Net) :

Depreciation Less: Deferred Tax Assets : VRS payment Other disallowances under Section 43B of Income Tax Act 1961 Total 2,263.99 59.71 77.38 74.55 57.19 1,671.50
137.10
131.74
2,126.90
1,539.76
71
72
st

March 2007
Gross Block Opening 01.04.2006 234.29 755.03 10,060.83 14,556.70 2,666.89 775.36 2,677.22 1,095.97 0.00 0.22 0.00 1,306.86 34,129.37 32,672.44 4,446.33 2,989.40 34,129.37 13,511.83 4,027.88 6,376.98 3,733.11 40,801.12 14,245.69 915.96 0.00 10.30 0.00 0.00 0.00 2,135.71 0.00 10.30 3,071.84 0.22 0.00 370.73 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,197.81 1,904.59 148.82 16.90 0.00 97.58 0.00 569.44 64.56 0.00 0.00 2,859.06 1,112.87 569.44 1,459.73 363.37 0.00 67.89 7.04 0.00 156.79 106.48 113.89 1,612.14 284.75 82.37 1,945.61 225.39 295.65 358.35 38.52 140.29 17,756.10 3,138.51 1,013.09 7,376.53 1,709.54 374.33 383.96 208.35 28.82 1,042.21 273.41 139.12 270.56 36.08 89.01 42.12 0.00 0.00 0.00 0.00 0.00 462.38 1,170.74 0.84 1,679.30 58.53 881.02 0.00 49.12 814.40 12,572.03 44.59 2,917.60 0.26 219.64 8.05 357.86 0.00 24.61 192.46 168.04 0.12 594.67 0.00 0.00 0.00 0.00 0.00 52.90 3,470.49 8,532.14 2,155.22 453.26 1,642.29 476.89 113.89 0.00 0.00 0.00 16,897.08 14,245.68 Balsara 31.03.2007 01.04.2006 Balsara 31.03.2007 Trf from Addition Deletion Gross Block Opening Trf from Addition Deletion Accmu. Dep. 31.03.2007 31.03.2006 594.67 761.50 9,101.54 9,223.96 983.29 559.83 1,216.77 635.98 455.55 0.22 0.00 370.73 23,904.04 19,883.68 234.29 710.44 7,143.23 7,180.17 957.35 401.03 1,217.49 732.60 0.00 0.22 0.00 1,306.86 19,883.68 Depreciation Net Block
Schedules F - Fixed Assets

(Rs. Lac)
Name of Assets
Freehold Land
Leasehold Land Building, Road and Culverts
Plant/Machinery Computers Vehicles
Furniture & Fixtures TM, Patent/Rit Software
Live Stock Goodwill CWIP
Total
Previous Year
Capital work in progress Includes advance against capital goods Rs. 242.72 (previous year Rs. 1,075.84)

Schedule G - Investments
A 1 Current Investments Quoted-other than Trade Fidelity Cash Fund (Purchased during the year) Units 1000000 (Sold during the year) Units 1000000 LIC Mutual Fund (Purchased during the year) Units 271343945.219 (Sold during the year) Units 250782042.366 Birla Mutual Fund (Purchased during the year) Units 34127197.78 (Sold during the year) Units 34127197.78 CHOLA Liquid Fund - Institutional Plus-Growth (Purchased during the year) Units 90110366.63 (Sold during the year) Units 96232012.38 DSP Mutual Fund (Purchased during the year) Units 1160898.88 (Sold during the year) Units 1260898.88 Deutsche Bank Mutual Fund (Purchased during the year) Units 63873772.2 (Sold during the year) Units 63873772.2 Lotus Liquid Fund (Purchased during the year) Units 11000000 (Sold during the year) Units 1000000 JM Floter Fund- S T P Growth (Purchased during the year) Units 22078914.479 (Sold during the year) Units 22078914.479 Kotak Mahindra Mutual Fund (Purchased during the year) Units 67720717.59 (Sold during the year) Units 49881012.39
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March) Number (As on 31.03.2007)
0.00
0.00
20,561,902.85
2,462.00
0.00
0.00
0.00
0.00
871.00
0.00
1,000.00
0.00
0.00
10,000,000.00
1,000.00
0.00
0.00
0.00
30,000,000.00
3,000.00
1,716.00
10 Principal Mutual Fund (Purchased during the year) Units 202087898.72 (Sold during the year) Units 202087898.72 11 Prudential Mutual Fund (Purchased during the year) Units 82286044.72 (Sold during the year) Units 86796522.56
0.00
0.00
0.00
500.00
73

Schedule G (Contd.)
12 Reliance Liquid Fund (Purchased during the year) Units 21132951.12 (Sold during the year) Units 21132951.12 13 Sahara Mutual Fund (Purchased during the year) Units 19223.82 (Sold during the year) Units 19223.82 14 SCB Mutual Fund (Purchased during the year) Units 17798310.73 (Sold during the year) Units 12798310.73 15 Sundram Mutual Fund (Purchased during the year) Units 10000000 16 TATA Mutual Fund (Purchased during the year) Units 44354161.93 (Sold during the year) Units 44354161.93 17 UTI Mutual Fund (Purchased during the year) Units 8306045.42 (Sold during the year) Units 8306045.42 18 ING Mutual Fund (Purchased during the year) Units 56601809.84 (Sold during the year) Units 56601809.84 19 Templeton Mutual Fund (Purchased during the year) Units 374438.53 (Sold during the year) Units 374438.53 B. Long Term Investments I) Quoted Equity Shares - Other than Trade 1 Dabur Pharma Ltd (Sold during the year) Shares 364400 II) Unquoted Equity Shares - Trade Investments 1 Sanat Products Ltd 2 Dabon International Pvt Limited III) Unquoted Equity Shares - Trade Investments in Subsidiary Companies 1 Dabur Foods Limited 2 Dabur International Limited (6,00,000 shares allotted during the year)
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March) Number (As on 31.03.2007)
0.00
0.00
0.00
0.00
5,000,000.00
500.00
0.00
10,000,000.00 -
1,000.00 0.00
0.00 0.00
0.00
0.00
0.00
0.00
0.00
0.00
115,000.00
1.15
4.79
50,000.00 270,000.00
105.00 27.00
105.00 27.00
20,000,000.00 1,600,000.00
2,000.00 4,465.50
2,000.00 2,287.50
74

Schedule G (Contd.)
3 4 5 Balsara Hygeine Products Limited (600 Shares purchased during the year) Balsara Home Products Limited (759300 shares held by Balsara Hygeine Products Ltd.) Besta Cosmetics Limited (Entities referred to on 3,4" & 5 merged with Dabur india Ltd)
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March) Number (As on 31.03.2007) -
0.00 0.00 0.00
11,650.73 3,404.55 1,790.01
IV) Unquoted Equity Shares - Other than Trade 1 Commerce Centre Cooperative Housing Society Limited 2 Capexil (Agencies) Limited 3 Dabur Employees Consumers Co-op Stores Limited 4 Dabur Employees Cooperative Credit Society Ltd 5 Co-operative Stores Limited, Super Bazar 6 National Saving Certificates 7 Kisan Vikas Patra 8 Saraswat Co-op Bank Ltd C. Share Application money Pending Allotment Total Less provision for diminution in long term trade investment Total Notes : Aggregate Book Value of Unquoted Investments Aggregate Book Value of Quoted Investments Aggregate Market Value of Quoted Investments (Based on 30th March 2007 Quotes)
15.00 3.00 250.00 650.00 500.00 1,000.00 -
0.02 0.01 0.03 0.07 0.05 1.07 0.07 0.10 0.00 14,562.07 26.99 14,535.08 6,598.92 7,963.15 8,081.91
0.02 0.01 0.03 0.07 0.05 0.00 0.00 0.00 2,178.00 27,534.76 26.99 27,507.77 23,442.97 4,091.79 4,342.80
Notes : 1 All Equity shares are fully paid up. 2 Provision for dimunition in long term trade investment pertains to investment in Dabon International Pvt. Ltd. 3 Disclosure of shareholding in subsidiaries/step down subsidiaries is as follows: Name of Subsidiaries Dabur International Ltd Dabur Foods Ltd. African Consumercare Ltd Dabur (U.K.) Ltd Asian Consumer Care Pvt Ltd Asian Consumer Care Pakistan Pvt Ltd Naturelle LLC Dabur Egypt Ltd. Weikfield International (UAE) Ltd Dabur Nepal Pvt. Ltd % Stake 100% held by Dabur India Limited 100% held by Dabur India Limited 90% held by Dabur International Ltd 10% held by Dabur (UK) Ltd 100% held by Dabur International Ltd 76% held by Dabur International Ltd 100% held by Dabur International Ltd 100% held by Dabur International Ltd 24% held by Dabur International Ltd 76% held by Dabur (UK ) Ltd 38.41% held by Dabur International Ltd 97.5% held by Dabur International Ltd
75

Schedule H - Current Assets, Loans and Advances
A. Current Assets :
Inventories - Raw Materials - Packing Materials, Stores and Spares - Stock in Process - Finished Goods Sundry Debtors (Unsecured) : - Debts Outstanding for a period exceeding six months : Considered Good Considered Doubtful Less : Provision for Doubtful Debts - Other Debts (Considered Good) Cash and Bank Balances : - Cash in Hand - Balances with Scheduled Banks In Current Accounts (Includes Rs. 382.45 in Unpaid Dividend Account ; Previous Year Rs. 121.19) In Fixed Deposit Accounts (Pledged with Government Authorities Rs. 10; Previous Year Rs. 10) - Balance with Non Scheduled Banks In Current Accounts In Fixed Deposit Accounts - Postal Savings Bank Accounts (deposited With Excise Authority) - Remittance-in-transit & Cheques-in-hand Total A B. Loans And Advances (Unsecured, Considered Good) Loans & Advances to Subsidiaries Security Deposit with Various Authorities (including Deposit With Govt. Authorities Rs. 338.25 Previous Year Rs. 264.54) Advance Payment of Tax Advances to Suppliers (Including due from Subsidiaries Rs.1.34 Previous Year Rs. 142.14) Advances to Employees Balance with Excise Authorities Other advances recoverable in cash or in kind or for value to be received Total B Total (A+B)
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
4,134.61 2,476.82 2,517.15 6,608.36 15,736.94
3,464.00 2,059.37 794.39 5,243.14 11,560.90
445.11 205.60 650.71 205.60 445.11 5,652.76 13.32 6,097.87
23.62 119.89 143.51 119.89 23.62 2,670.63 28.63 2,694.25
4,883.24 120.70
3,661.55 49.71
61.32
7.49
5,024.75 26,859.56
0.95 2.25
3,804.41 18,059.56
1,000.00 980.59
3,000.00 758.39
8,133.41 771.21 214.28 1,124.37 557.80 12,781.66 39,641.22
4,353.53 1,326.52 158.16 434.39 345.67 10,376.66 28,436.22
76

Schedule H (Contd.)
Notes : 1. In the opinion of Board, the Current Assets, Loans and Advances have realizable value at least equal to the amount at which they are stated. Loans and Advances Debts due from director/officer of the company Maximum amount due from director/office of the company at any time during the year Debts due from private companies in which any of the Director is a director or a member - Dabur research foundation (A company under section 25 of the companies act 1956 Additional disclosure as per clause 32 of Listing Agreement
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
2. A. B. C.
0.60 0.60
0.00 0.00
16.90
17.32
3.
A) loans and Advances to Subsidiaries Dabur Foods Ltd; amount outstanding Maximum outstanding during the year Dabur International Ltd; amount outstanding Maximum outstanding during the year B) loans and Advances to Associates
1,700.00 1,000.00 2,700.00 0.00
300.00 300.00 2,700.00 2,700.00 0.00
Schedule IA - Miscellaneous Expenditure

(To the extent not written off or adjusted) Technical knowhow fees paid Less: Amortised during the year Deferred employee compensation under ESOP Opening balance Addition during the year Less: Cancelled during the year Less: Amortised related to subsidiary Less: Amortised during the year Total 46.87 18.75 28.12 65.62 18.75 46.87
3,240.61 862.00 915.77 3,186.84 197.67 1,035.37
515.42 3,503.78 1.43 4,017.77 91.17 685.99
1,953.80 1,981.92
3240.61 3,287.48
77
Schedules annexed to and forming part of the Profit & Loss Account for year ended 31 March 2007
st
(Year ended 31st March) 2007
(Rs. Lac) 2006
Schedule IB - Miscellaneous Expenditure Written Off

Technical knowhow fees paid Deferred employee compensation under ESOP Less: Transferred to director remuneration Total 18.75 1,035.37 404.76 630.61 649.36 685.99 278.50 18.75 407.49 426.24
Schedule J - Sales and Other Income

A. Sales : Domestic Sales Less Returns Export sales B. Other Income : Export Subsidy Rent Realised (Tax deducted at source Rs. Nil Previous Year Rs. Nil) Sale of Scrap Dividend - (from current Investment other than Trade Investments) Royalty Miscellaneous Receipts Profit on Sale of Long Term Investment - other than Trade Profit on Sale of Current Investments - Other than Trade (Net of Loss of Rs. Nil; Previous Year Rs. 1274.05) Profit on Sale of Fixed Assets (Net of loss of Rs. 41.72; Previous year Rs. 366.92) (Including Capital Profit of Rs. 334.82; Previous Year Rs. 19.27) Total Notes : 1. Dividend from Current Investments 2. Dividend from Long Term Investments 170,549.27 7,253.16 177,802.43 110.55 15.22 294.60 0.30 298.39 241.99 291.91 398.21 132,454.64 4,513.65 136,968.29 48.06 13.46 196.78 0.48 26.36 84.46 96.09 69.33
1,651.17 0.30 0.00
535.02 0.48 0.00
78
Schedules annexed to and forming part of the Profit & Loss Account for year ended 31
st
March 2007 (Rs. Lac) 2006
Schedule K - Cost of Materials

Raw Materials Consumed : i) Opening stock ii) Add : Inherited through Merger iii) Add : Purchases iv) Less : Closing Stock Packing Materials Consumed : i) Opening Stock ii) Add : Inherited through Merger iii) Add : Purchases iv) Less : Closing Stock Purchase of Finished Products Adjustment of Stocks in Process and Finished Goods Opening Stock : Stock in Process Finished Products Stock in Process inherited through Merger Finished Goods inherited through Merger Closing Stock : Stock-in-Process Finished Products Increase(-)/decrease in stock in Process and Finished Goods Total Opening Stock as on 1st April06 includes Stock of Merged entities as follows :Raw Materials Packing Materials Stock in Process Finished Goods 3,464.00 421.32 36,635.03 40,520.35 4,134.61 36,385.74 4,383.16 0.00 25,015.34 29,398.50 3,464.00 25,934.50
1,728.47 432.70 23,488.56 25,649.73 2,471.84 23,177.88 19,453.89
1,491.43 0.00 14,454.12 15,945.55 1,728.47 14,217.08 16,935.43
794.39 5,243.14 42.34 826.57 6,906.44 2,517.15 6,608.36 9,125.51 (2,219.07) 76,798.44
614.82 5,846.92 0.00 0.00 6,461.74 794.39 5,243.14 6,037.53 424.21 57,511.22
421.32 432.70 42.34 826.57
Schedule L - Manufacturing and Operating Expenses

Power and Fuel Stores & Spares Consumed Repairs & Maintenance: - Building - Plant & Machinery - Others Processing Charges Total 3,058.55 1,028.32 179.29 234.74 262.58 630.46 5,393.94 2,627.96 731.90 51.12 27.34 252.44 54.79 3,745.55
79
st
Schedule M - Payments to and Provisions for Employees

Salaries, Wages and Bonus Contribution to Provident and Other Funds Workmen and Staff Welfare (Net of Excess Provision written back Rs. 480.00; Previous Year Rs. Nil) Directors Remuneration (Including Perquisites Rs. 404.76; previous Year Rs. 326.03 under ESOP) Total 8,326.29 991.05 1,659.51 889.03 11,865.88 6,053.70 861.31 2,208.23 707.54 9,830.78
Schedule N - Selling and Adminstrative Expenses

Rent Rates and Taxes Insurance Sales Tax Freight and Forwarding Charges Commission, Discount and Rebate Advertising and Publicity Travel & Conveyance Legal & professional Telephone, fax Expenses Security Expenses General Expenses Directors Fees Auditors Remuneration: - Audit Fee - Branch Auditors Fee - Reimbursement of Expenses - Provident fund and Certificates Donation Contribution for Scientific Research Expenses Provsion for doubtful debts Provision for Diminution in Long Term tTrade Investment Notes : 1. Bad Debts written off due from Related Parties 2. Commission, Rebate & Discount includes Commission to Selling Agents other than Sole Selling Agent 637.84 141.62 236.93 14,234.64 4,850.34 1,496.76 19,759.89 1,712.86 892.39 298.18 194.19 4,317.60 10.50 16.84 2.51 12.11 14.54 11.22 7.04 11.55 5.85 629.23 67.76 192.53 11,173.54 4,050.33 1,256.61 15,165.85 1,485.94 687.43 261.11 146.02 3,114.19 9.00
46.00 414.05 651.00 94.85 49,989.64 0.00 811.60
35.66 320.50 663.00 108.36 26.99 39,394.05 0.00 367.21
Schedule O - Financial Expenses

Interest Paid on : Fixed Period Loan Others (Net of Int. Received Rs. 237.94; Previous Year Rs. 6.81, T.D.S. thereon Rs. 26.77; Previous year Rs. Nil) Bank Charges Total 2.70 195.84 198.54 244.47 443.01 57.34 247.73 305.07 260.80 565.87
80
Schedule P - Accounting Policies & Notes to Accounts

(All amounts in Indian Rupees in lacs except share capital) A. ACCOUNTING POLICIES Significant accounting policies are summarized below: 1. Accounting Convention: The accounts have been prepared in accordance with the historical cost convention. 2. Fixed Assets and Depreciation: Fixed assets are stated at carrying amount i.e. subject to deduction of accumulated depreciation. Cost includes inward freight, duties, and taxes and expenses incidental to acquisition and installation. Depreciation on Fixed Assets have been provided on written down value method at rates specified in Schedule XIV of the Companies Act except for Baddi, Katni, 5/1 Unit Sahibabad, Jammu, Rudrapur and Corporate Office, Sahibabad, Pitampur, Silvasa, Kanpur where depreciation have been provided on straight line methods at the rates specified in the aforesaid Schedule. Patents are being amortized over the period of ten years on straight line basis. Software are being amortized over the period of five years on straight line basis. For New Projects, all direct expenses and direct overheads (excluding services provided by employees in companys regular payroll) are capitalized only.
3.
Impairment of Assets : The company identifies impairable fixed assets based on cash generating unit concept at the year-end in term of para-5 to 13 of AS 28 issued by ICAI for the purpose of arriving at impairment loss thereon, if any, being the difference between the book value and recoverable value of relevant assets. Impairment loss when crystallizes is charged against revenue of the year.
4.
Investments : Current investments are held at lower of cost and NAV/Market value. Long term investments are held at cost less diminution, if any, in carrying cost of investment other than temporary in nature. Loss, if any, sustained by any subsidiary is not recognized.
5.
Deferred Entitlement on LTC : In terms of the opinion of the Expert Advisory Committee of the ICAI, the Company has provided liability accruing on account of deferred entitlement towards LTC in the year in which the employees concerned render their services.
6.
Inventories: Stocks are valued at lower of cost or net realizable value. Basis of determination of cost remain as follows: Raw materials, Packing materials, stores & Spares Work-in-process Finished goods Weighted Average Basis cost of input plus overhead upto the stage of completion. cost of input plus appropriate Overhead.
7.
Research and Development Expenses: Contributions towards scientific research expenses are charged to the Profit & Loss Account in the year in which the contribution is made.
8.
Retirement Benefits: Liabilities in respect of retirement benefits to employees are provided for as follows : Leave Salary of employees on the basis of payment advice from Life Insurance Corporation of India from whom Company has taken coverage in this connection. Gratuity Liability on the basis of payment advice from Life Insurance Corporation of India from whom the Companys gratuity trust has taken the Group Gratuity Insurance Policy. Liability for superannuation fund on the basis of the premium paid to the Life Insurance Corporation of India in respect of employees covered under Superannuation Fund Policy. VRS, if paid, is charged to revenue in the year of payment.
81
9.
Recognition of Income and expenses: Sales and purchases are accounted for on the basis of passing of title to the goods. Sales comprise of sale price of goods including excise duty and sales tax but exclude discount. All items of incomes and expenses have been accounted for on accrual basis.
10. Income Tax & Deferred Taxation The liability of company on account of income tax is estimated considering the provisions of the Income Tax, 1961. Deferred tax is recognized subject to the consideration of prudence, on time differences being the difference between taxable income and accounting income that originate in one year and capable of reversal in one or more subsequent years. 11. Contingent Liabilities: Disputed liabilities and claims against the company including claims raised by fiscal authorities (e.g. Sales Tax, Income Tax, Excise etc.), pending in appeal/court for which no reliable estimate can be made of the amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed in notes to accounts. However, present obligation as a result of past event with possibility of outflow of resources, when reliably estimable, is recognized in accounts. 12. Foreign Currency Translation: In respect of foreign branches/offices, the company has adopted integral foreign operation approach as per revised AS 11 and accordingly revenue items have been converted at average of month end exchange rates during the year. Fixed assets have been converted at the rates prevailing on dates of purchase. Assets & Liabilities other than fixed assets are converted at the year-end exchange rate. Exchange gain or loss arising out of above is charged to Profit & Loss Account. Receivables/payables (excluding for fixed assets) in foreign currencies are translated at the exchange rate ruling at the year end date and the resultant gain or loss, is accounted for in the Profit & Loss Account. Increase / decrease in foreign currency loan on account of exchange fluctuation are debited / credited to profit and loss account.
13 Employee Stock Option Purchase (ESOP): Aggregate of quantum of option granted under the scheme in monetary term net of consideration of issue to be paid in cash has been shown as Employees Stock Option Scheme outstanding in Reserve and Surplus head of the Balance Sheet by way of debiting deferred Employee Compensation under ESOP as per guideline to the effect issued by SEBI. With the exercise of option and consequent issue of equity share corresponding ESOP outstanding is transferred to share premium account. 14. Miscellaneous Expenditure: Technical know-how fee paid to Technical Collaborators upto 31.03.2004 are being amortized equally over a period of six years. Subsequent expenses are charged to revenue in the year of incurrence. Deferred Employees Compensation under ESOP are being amortized on straight line basis over vesting year. Employee compensation in respect to option granted to subsidiary company employees is being reimbursed by subsidiary companies to holding company. Share issue expenses are charged to revenue in the year of its occurrence.
B.
NOTES TO ACCOUNTS 1. Building constructed on leasehold land included in the value of building shown in Fixed Assets Schedule: As at 31st March 2007 Cost/Revalued Written Down 8493.29 6143.57 As at 31st March 2006 6757.63 4781.37
82
2.
Loans and Advances include Rs. 48.64 (Previous year Rs .48.64) paid by the Company to Excise authorities on behalf of Sharda Boiron Laboratories Limited, now known as SBL Limited, in respect of excise duty demand of Rs. 68.13 raised by the District Excise Officer, Ghaziabad, against the Company and Sharda Boiron Laboratories Limited. The Honble Supreme Court of India had concurred with the order of the District Excise Officer, Ghaziabad. The Company had filed the review petition before Division Bench of the Honble Supreme Court of India, which was also decided against the Company. Pursuant to the indemnity bond executed by M/s Sharda Boiron Laboratories Limited in favour of the Company and as per the terms and conditions of the contract executed with them, the recovery proceedings have been initiated by the Company against Sharda Boiron Laboratories Limited for Rs. 48.64 by invoking the arbitration clause. The matter is pending before Honble High Court of Delhi for the appointment of an arbitrator. The balance amount of Rs. 21.46, along with interest demanded by the Excise Authorities has been paid directly by Sharda Boiron Laboratories Limited to Excise Authorities. During the year 1991-92 the company had received a refund of Rs. 5.95, pursuant to the decision of Honble Supreme Court in this regard. Necessary adjustments in respect of recovery/refund will be made as per the arbitration proceedings.
3.
a)
b) c) 4. 5.
Further to para A(3) above, company has assessed recoverable value of cash generating units (CGUs) based on value-in-use method which for each CGU worked out to much higher than corresponding book value of net fixed assets thereby not warranting further exercise of arriving at their net-selling-price. This further confirmed absence of exigency of making any provision against impairment loss. However goodwill is inherited from one of the erstwhile subsidiaries merged during the year valuing Rs.10.30 has been impaired following virtual laps of utilitarian consideration there from for obvious reasons. CGUs include Narenderpur plant, Sahibabad plant, Baddi plants, Jammu plants, Rudrapur Plant , Silvasa Plant, Pitampur Plant, Kanpur Plant all belonging to FMCG segments. Annual discount rate considered for arriving at value-in-use of assets of each CGUs is 6.50% i.e the average interest rate of external borrowing plus risk factor @ 2.00% per annum.
Consequent upon change in valuation of inventories from FIFO to Weighted Average Method the value of closing inventories as on 31.03.07 has been reduced by Rs.46.01 with corresponding decline in profit of the year by said amount. Contingent Liabilities/Capital Contract : a) Claims against the company not acknowledged as debts: i. ii. iii. iv. v. vi. vii. viii. b) c) In respect of civil suits filed against the company Rs.261.78 (previous year Rs.235.13) In respect of claims by employees Rs. 0.50 (previous year Rs 0.50) In respect of letters of credit Rs. 81.35 (previous year Rs.NIL) In respect of Bank Guarantees executed Rs 187.93 (previous year Rs.811.41) In respect of Sales Tax under appeal Rs.860.30 (previous year Rs.592.65) In respect of excise duty disputes pending with various judicial authorities Rs.1766.58 (previous year Rs.2798.56). In respect of Corporate Guarantees given by the Company Rs.11519.92 (previous year Rs.14759.72) In respect of Income tax under appeal Rs.423.85 (previous year Rs.173.67)
Estimated Amount of contract remaining to be executed on capital Account Rs.491.75 (previous year Rs.441.49). Information pursuant to AS 29 issued by ICAI: i) Existing provision relates to disputed liability of Rs. 62.64, Rs.26.15 and Rs.0.29 towards liabilities on account of VAT, Sales Tax and Entry Tax respectively carried forward from previous year in view of absence of any additional provision therefor during the year. ii) Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCTs, if mature, are expected to be in succeeding financial year. iii) Provisions are made herein for medium risk oriented issues as a measure of abundant precaution.
83
iv) Brief particulars of provision under AS 29: Nature of liabilities Particular of dispute VAT Sales Tax Sales Tax Sales Tax Entry Tax v) 6 a) Short Payment of VAT Classification of Lal Dant Manjan Classification of Gulabari Exemption Forms from Dealers Entry Tax on Car Amount 62.64 24.32 0.74 1.08 0.29 Forum under the dispute is pending IInd appeal Filed Filed review application with High Court Appeal Filed before the D.C. Appeal Iind Appeal filed before D C Appeal Appeal pending before D.C.
Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 5 (a) above.
Pursuant to merger of two wholly owned subsidiaries namely, Balsara Home Products Ltd and Besta Cosmetics Limited and one subsidiary namely Balsara Hygiene Ltd with effect from April 01, 2006, the company has inherited assets and liabilities of these entities in terms of scheme of the merger approved by Honble High court of Mumbai on 8th September 2006 and High court of Delhi on 12th September 2006 and subsequent filing of the certified copy of the order with Registrar on 28th September 2006. Consequent assets and liabilities inherited by the company as on April 01, 2006 includes following: Particulars Assets Fixed Assets Investments Current Assets Loan & Advances Total Assets Liabilities Reserve & Surplus Secured Loan Deferred Tax Liability Current Liability Provisions Total Liability Net Assets Balsara Home Product Ltd 2600.50 1.12 3031.70 671.96 6305.28 (32.23) 675.97 0.00 3973.37 462.36 5079.47 1225.81 Balsara Hygiene Products Ltd 508.89 0.10 15.71 719.61 1244.31 1163.98 0.00 42.71 50.28 331.10 1588.07 (343.76) Besta Cosmetics Ltd 2.53 0.00 10.63 167.93 181.09 26.92 0.00 0.85 4.51 58.80 91.08 90.01 Total
3111.92 1.22 3058.04 1559.50 7730.68 1158.67 675.97 43.56 4028.16 852.26 6758.62 972.06 972.06 16487.15 0.64 15875.75 5835.36 10040.37
A. Net Assets (As per above) B. Investment in Subsidiaries as on 31.03.06 C. Additional issue of 63336 equity shares (pending allotment) of Rs.1/- each pursuant to merger D. The difference between the value of investment and consideration value of additional issue vis a vis net identifiable assets : (A-B-C) E. Adjusted against : Share Premium General Reserve Considering these, figures of previous year are not comparable with those of current year. 6 b) All transferor companies were engaged in FMCG business.
84
7a) Particulars of Consumption of Important Raw Materials Class Of Goods Sugar and Molases Vegetables Oils Herbs, Jari Booti & Raw Madhu Chemicals & Perfumery Compounds Others Raw Materials Total Raw Materials Unit Tonnes Tonnes Tonnes Tonnes Assorted Quantity 15683.47 (14915.24) 13705.13 (10376.90) 16032.29 (5782.65) 25489.90 (17378.12)
(Rs. in Lacs) Value 2821.47 (2610.45) 8388.26 (5293.98) 7268.66 (7144.41) 11051.49 (8479.39) 6855.86 (2406.27) 36385.74 (25934.50)
Glass Containers Plastic Containers/Caps/Jar Printed Packing Materials Laminates & Lamitubes Other Packing Materials Total Packing Materials
Pcs.in Lacs Pcs.in Lacs Assorted Assorted Assorted
956.64 (1017.76) 5625.69 (5660.96)
2165.06 (2198.58) 7223.55 (4914.42) 5459.24 (3429.28) 4676.54 (2134.87) 3653.49 (1539.93) 23177.88 (14217.08)
85
7b) Particulars in Respect of Goods Manufactured Licenced Capacity Installed Capacity 20000.00 (20000.00) 22000.00 (20000.00) 6000.00 (6000.00) Production Qty 19544.31 (13261.90) 13389.84 (11049.86) 4719.47 (4531.64) Opening Stock Qty Value 771.14 (475.02) 262.88 (665.88) 136.19 (162.28) Closing Stock Qty Value 999.18 (717.35) 281.14 (248.21) 179.60 (142.05) 876.35 (771.14) 177.76 (262.88) 188.02 (136.19) Sale Qty 19262.48 (12961.09) 13356.92 (11413.13) 4681.92 (4516.30) Value 37581.19 (26809.57) 17931.41 (15006.62) 8923.44 (7814.50)
Class Of Goods Hair Oils
Unit Kilo-ltrs
717.35 (416.53) 248.21 (611.47) 142.05 (126.71)
Chyawanprash Tonnes
Honey
Tonnes
Tooth Powder & Paste
Tonnes
7200.00 (7200.00) 6000.00 (6000.00) 12000.00 (12000.00)
15509.70 (3292.45) 4737.26 (4006.07) 6158.56 (6153.92)
170.13 (143.63) 324.94 (419.15) 556.11 (811.67)
176.29 (178.03) 506.57 (423.62) 250.19 (316.42) 2113.42 (2038.74) 4216.68 (4259.99)
858.96 (170.13) 257.57 (324.94) 739.21 (556.11)
687.03 (176.29) 243.49 (506.57) 322.23 (250.19) 2997.80 (2113.42) 5492.67 (4216.68)
14820.87 (3265.96) 4804.63 (4100.28) 5975.45 (6409.47)
21803.99 (6318.88) 8210.11 (7264.94) 5054.27 (5315.99) 48636.37 (36107.80) 148140.78 (104638.30)
Hajmola
Tonnes
Asava - Arishta Kilo-ltrs
Others
7c) Particulars in Respect of Traded Goods
Class Of Goods Hair Oils
Unit Kilo-ltrs
Purchases Qty Value 2795.490 (3793.95) 7805.138 (7803.91) 1070.956 (1100.84) 2992.97 (4061.28) 8733.61 (5946.62) 1547.50 (1123.20) 6179.81 (5804.33) 19453.89 (16935.43)
Opening Stock Qty Value 150.34 (164.73) 288.68 (360.40) 30.89 (35.39) 163.18 (198.83) 256.98 (326.91) 62.29 (44.00) 544.01 (1017.21) 1026.46 (1586.95)
Closing Stock Qty Value 73.91 (150.34) 253.45 (288.68) 11.29 (30.89) 70.20 (163.18) 233.43 (256.98) 9.72 (62.29) 802.33 (544.01) 1115.69 (1026.46)
Sale Qty 2871.92 (3808.34) 7840.37 (7875.62) 1090.55 (1105.34) Value 4786.59 (7195.90) 14016.43 (13345.14) 2263.97 (2110.84) 8594.66 (9678.11) 29661.65 (32329.99)
Tooth Powder & Paste
Tonnes
Hajmola
Tonnes
Others
86
8. Deferred tax liability of merged entities namely, Balsara Home Products Limited and Besta Cosmetics Limited and Balsara Hygeine Ltd on date of merger (i.e. 1.04.2006) aggregating Rs.809.21, not being recognized earlier by transferor companies, has been charged against revenue reserve as per Para 5 of Accounting Standard Interpretation 11 of AS 22 issued by ICAI. 8 A) Expenditure in Foreign Currency: Professional & Consultation Fees Interest Others (Travellling , Conveyance & administration) 31-03-2007 100.45 0.00 68.29 168.74 734.43 34.51 144.35 913.29 6918.60 0.00 0.00 6918.60 31-03-2006 14.95 13.49 69.72 98.16 152.95 154.84 130.23 438.02 2631.85 26.36 0.00 2658.21
8 B) CIF Value of Imports: Raw Materials Stores & Spares (Including of packing material) Capital Goods 8 C) Earning in Foreign Exchange: Export sales at FOB Royalty/Technical Consultancy Dividend
8 D) Value of raw materials, stores and spares parts consumed:

Raw Material 31.03.2007 31.03.2006 Value % Value % 445.58 1.22 188.52 0.73 35940.16 98.78 25745.98 99.27 36385.74 100.00 25934.50 100.00 Packing Material, Stores & Spares 31.03.2007 31.03.2006 Value % Value % 0 0.00 31.56 0.21 24206.19 100.00 14917.41 99.79 24206.19 100.00 14948.97 100.00
Imported Indigenous Total
E) Net Dividend remitted in foreign currency: 2004-05 Final Dividend to 128 shareholders on 129000 shares 2005-06 Interim Dividend to 110 shareholders on 111000 shares 2005-06 Final Dividend to 102 shareholder on 204000 shares 2006-07 1st Interim Dividend to 95 shareholder on 191000 shares 2006-07 2nd Interim Dividend to 96 shareholder on 284500 shares
2006-07 2.04 1.91 2.13 6.08
2005-06 1.94 1.66 3.60
9. Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the year, to the Directors: 31.03.2007 Salary Commission (as computed below) Contribution to Providend Fund Residential Accommodation Medical & Leave Travel Benefit Contribution to Superannuation Fund Others (Including Rs.404.76; Previous year Rs.278.50 Under stock option Scheme) 186.88 90.00 22.43 112.13 4.62 37.00 435.97 889.03 31.03.2006 158.45 88.64 19.73 95.08 4.72 23.77 317.15 707.54
87
Computation of net profit in accordance with Section 198 and section 309 (5) of the Companies Act,1956 and calculation of Director's commission : 31.03.2007 Profit for the year before tax as per Profit & Loss Account Add: Provision for Diminution in Long term Investment Profit After the provision for diminution in long term inv. Add: Managerial remuneration Directors fees 10.50 Less: Capital Profit Adjusted net profit Commission payable: To one non whole-time Director 28422.30 0.00 28422.29 889.03 899.53 334.82 28987.01 90.00 31.03.2006 21435.53 26.99 21462.52 707.54 716.54 19.27 22159.49 88.64
9.00
10. Particulars of small-scale industries have been furnished to the extent such parties have been identified on the basis of information available with the Company. The name of small scale industries to whom the Company owes any sum which is outstanding as on 31st March 2007 for more than 30 days are :4R Health Care Products A N Products Abhimanyu Containers Abhinav Printing & Packagings Adchem Industr Agarwal Polysacks Ltd. AGI Glaspac Ajanta Packaging Ajay & Company Amita Polymers Pvt Ltd Anipra Chemicals Pvt Ltd Baya Traders Bharat Rubber Works Bhargava Poly Packs Burman Laboratories P Limited Care Marketing Co Pvt Ltd Classic Bottle Caps Pvt.ltd. Compack Enterprises India Pvt Ltd Continental Crowns And Closures Devendra Cottage Industries Dolsun Containers Pvt. Ltd. Domino Printech India Pvt Ltd Dynamic Sticker Industries Echel Engg. Components Elson Colour Containers Empire Multipack P Ltd Everest Containers Pvt.ltd Faridabad Plastics Firmenich Aromatics (India) G S Engineering Works Green Valley Products P Ltd H B D Packaging Pvt Ltd H S Enterprises Hi Tech Packers Interlabels Industries P Ltd Jainex India Jasmer Packers Pvt Ltd Jiwan Plasto Moulds Pvt Ltd Jyot Overseas Pvt. Ltd. Kamet Plastics Pvt Ltd Krishna Industries Krishna Printers Kush Prints Pvt. Ltd. Magadh Plas Pvt Ltd Magnesium Products Pvt Ltd Mahabir Industries Mandagini Agencies Maxcare Laboratories Limited Mc Packaging P Mega Packages Mega Packers Merlin Printer Morisha Enterp N.k. Gossain & Naturalle Health Products P Ltd Nav Bharat Enterprises New Gaurav Printers New Samudra Art Centres Nikita Plast (Unit III) Niranjan Containers P Ltd Northern Aromatics Ltd, Baddi Om Packaging Orgachemie Agencies P.M.C. Machines P. Ltd. Pacwel Plastics Private Limited Penguin Plasti Plastic Packaging Industries Prakash Printers & Stationers Precise Laboratories Pvt Ltd Prem Industries Print & Public Printex Centre Print-n-wrap Process Instrumentation and Control Protech Engg Industries Pvt PSN Chemicals Reliplast Pvt. Ltd. Responsive Industries Rsg Packagings Pvt. Ltd. S A Packaging Pvt Ltd Sai Packaging Co. Satish Enterprises Sea-shell Chemicals Pvt Ltd Sheel Packaging Pvt Ltd Shiva Trading Company Shivam Safety Industries Shree Nath Printers Special Air Gases Speciality Valves Sudha Rasayan Sunshine Polymers Pvt Ltd Svar Plastics Pvt Ltd Taurus Packaging Pvt.ltd V P Poly Udyog Varahi Plastics Pvt Ltd Vimoni (India) Pvt Ltd Vipul Plastics Walia Rubber Stamps Windsor Packaging Pvt Ltd
88
11. Particulars of Balances with Non-Scheduled Banks: Current year: In Current Account a) Barclays Bank, London b) In Postal Savings Bank Account Previous year: In Current Account a) Barclays Bank, London b) In Postal Savings Bank Account 61.32 0.95 141.67 0.95 NIL NIL Balance as on 31.03.2006 61.32 0.95 Maximum Balance during the year Balance as on 31.03.2007 Maximum Balance during the year
12. The company's freehold land situated at Sahibabad measuring about 7.58 acres was acquired by U.P. Government under Land Acquisition Act and the State Government had allotted and given possession of about 4.72 acres of land on lease to the Company in lieu of acquired land. The company has filed a claim for compensation of Rs.572.42 before the Office of Special Land Acquisition Officer, Ghaziabad against the land so acquired. However, keeping in view the generally accepted accounting practice, the same claim has not been considered in the books of accounts. 13A. Related party Disclosures Related party disclosures as required under AS 18 issued by the Institute of Chartered Accountants of India are given below: (a) Name of related party and nature of related party relationship where control exists: (i) Subsidiaries Dabur Foods Ltd. Asian Consumercare Pvt Ltd Dabur Nepal Pvt. Ltd. Dabur Egypt Ltd. Dabur (UK) Ltd Dabur International Ltd. WeikField International (UAE) African Consumercare Limited Asian Consumercare Pakistan Pvt. Ltd. Naturelle LLC (Domestic Subsidiary) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company)
(ii) Key management personnel (whole time directors) a) Pradip Burman b) P. D. Narang c) Sunil Duggal
Relatives of Key Management personnel R C Burman
89
(iii) Entities over which Key Management Personnel are able to exercise significant influence: 1. Welltime Housing and Finance Ltd
Related Party Transactions as on 31.03.2007

Liabilities Where key Management Personnel has significant influence Purchases of Goods Sale of Goods Sale of Assets Sale of Overseas Branch Sale of Investment Receiving of Services Loan Given Rent Paid Equity Contribution Repayment of Loans Given (Instl.Recd) 3,700.00 (1,025.00) Interest Recd On Loans Given 116.52 (8.75) (-) (-) (-) (-) 802.40 (3,365.00) 0.47 (0.43) (26.36) 0.50 (3.50) (-) (-) (-) (-) (-) (-) (-) 394.27 (340.71) (-) 404.76 (278.50) (-) (-) (-) 1.28 (125.98) (-) (-) (-) 3,700.50 (1,028.50) 116.52 (8.75) 813.70 (466.69) 7,102.40 (7,115.00) 420.29 (369.67) (26.36) (-) (-) (-) 7,102.40 (7,115.00) (-) (-) 57.28 (248.68) 1,041.85 (371.35) 28.23 163.75 (-) (2,185.37) (-) 1,700.00 (4,025.00) (-) (2,178.00) 6,564.21 (5,986.22) 1,325.40 (907.85) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (180.00) (-) 1.56 (6.00) (-) (-) (-) (6.47) (-) (-) (-) 39.12 (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) 6,621.49 (6,234.90) 2,367.25 (1,279.20) 28.23 163.75 (6.47) (2,185.37) (180.00) 1,700.00 (4,025.00) 40.68 (6.00) (2,178.00) 205.16 (506.24) 456.72 (298.30) (-) (-) (-) (-) 1,082.00 (3,082.50) (-) (-)
Transactions
Subsidiary
Fellow Subsidiary
Key Management Personnel
Relative of Key Management Personnel
Total
Outstanding As on 31.03.2007
Remuneration/Exg./Pension
Guarantees & collaterals given 6,300.00 (3,750.00) Employee Stock Option Scheme 15.06 Royalty Received (90.74) (-)
Figure in bracket are of previous year Provisions for doubtful debts due from related parties nil (previous year nil) Amounts written off or written back in the year in respect of debts due from or to related to parties nil (previous year nil).
14. Exchange gain works out to Rs 81.05 (Previous Year Nil) net of loss Rs. Nil (Previous year 80.43) which has been credited to Profit & Loss Account.
90
15. Information (to the extent applicable) pursuant to AS 19 issued by ICAI. The future minimum lease payment under non-cancelable operating lease :31/03/2007 (i) Not later than 1 year (ii) Later than 1 year not later than 5 year (iii) Later than 5 year 17. Earnings per Share has been computed as under: Profit after Tax Weighted average number of shares outstanding Basic Diluted Earning per Share (face value Re. 1 per share) Basic Diluted 18. Information pursuant to AS 24 on discontinued operations: Particulars 1 2 3 4 5 6 7 8 Discontinued since Segment the operation of the Unit relates to in financial statement Carrying amount of total assets Carrying amount of total liabilities Profit from ordinary activities Income Tax expenses Gain on disposal of assets Cash flow from discontinued operations: Operating activities Investing Activities Financial Activities Note : 1. Figures in brackets are for previous year. Hair Oil Baddi March, 04 FMCG 33 (33) 4 (4) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) MSY Unit Baddi Nov, 2000 FMCG 28 (28) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 2.93 2.90 2.20 2.19 860884512 869534762 859723793 866287499 2006-2007 25207.62 2005-2006 18908.37 16.80 8.10 Nil 31/03/2006 9.60 8.10 Nil
16. Sundry Creditors include Rs.387.88 (previous year 75.13) being dues to subsidiaries.
II. Part of fixed assets belonging to discontinued operations under reference have been used for new plants set up in relevant premises. Such assets have been left out of the purview of '3' above table. 91
19. Information pursuant to AS - 17 issued by ICAI

Consumer Care Business Consumer Health Business Current Year 157,123 157,123 40,129 40,129 40,129 40,129 31,600 3,947 3,792 122 104 31,600 3,947 3,792 122 104 443 3,214 (18,990) (18,990) 31,600 31,600 3,947 3,947 3,792 3,792 122 122 104 104 15,333 (15,333) 13,495 (13,495) 566 2,578 (16,639) 51 (16,588) 118,551 118,551 16,224 16,224 14,856 14,856 4,455 4,455 3,561 3,561 177,802 177,802 44,198 15,333 28,865 443 3,214 25,208 25,208 Previous Year Current Year Previous Year Current Year Previous Year Current Year Previous Year Current Year Others Unallocated Dabur India Ltd. Previous Year 136,968 136,968 35,496 13,495 22,001 566 2,578 18,857 51 18,908
92
As on 31/03/07 27,063 27,063 2,887 2,887 24,176 958 28,704 2,366 2,366 26,338 830 6,749 763 763 5,986 141 7,012 578 578 6,434 122 3,158 107 107 3,051 181 As on 31/03/06 28,704 As on 31/03/07 6,749 As on 31/03/06 7,012 As on 31/03/07 3,158 As on 31/03/06 3,999 3,999 331 331 3,668 157 As on 31/03/07 5,639 5,639 515 515 5,124 918 649 As on 31/03/06 5,514 5,514 454 454 5,060 796 426 As on As on 31/03/07 31/03/06 36,970 39,715 5,639 42,609 3,757 515 4,272 38,337 2,198 649 5,514 45,229 3,275 454 3,729 41,500 1,905 426
Revenue External Sales Inter-segment Sales Total Revenue
Result Segment Result Unallocated Corporate Expenses Operating Profit
Interest Expense (Net Of Interest Income) Income Tax (current + Deferred) Profit From Ordinary Activities
Exceptional Item (Profit/Loss on Long Term Trade Investment) Net Profit
Other Information
Segment Assets
Unallocated Corporate Assets
Total Assets Segment Liabilities Unallocated Corporate Liabilities Total Liabilities Capiltal Employed Depreciation Non-cash Expenses Other Than Depreciation
Secondary Segment
As the company also exports, the secondary segment for the company is based on the location of customers. Out of the total sales of Rs. 177802 (136968), the export sales is of Rs. 7253 (4514) and domestic sale is 170549 (132454)
20 a. Pension to relative of deceased director Rs.31.50 (previous year Rs.31.50) b. Pension of retired director Rs.58.74 (previous year Rs.68.24). 21 Figures for the previous year have been rearranged/regrouped as and where necessary in terms of current year's grouping.
Signatures to the Schedules "A" to "P" Annexed to and forming part of the Accounts.
93
22 Additional information as required under Part IV of Schedule VI of the Companies Act 1956: I. Registration Details Registration No Balance Sheet Date: 7908 31 Date State Code : 03 Month 55 2007 Year
II Capital raised during the year (Amount in Rs thousand) Public Issue Nil Bonus Issue 287045551 Right Issue Nil Private Placement 2535473
III Position of Mobilisation of Deployment of Funds (Amount in Rs. thousand) Total Liabilities 8019937 Sources of Funds Paid up capital 862884 Secured Loans 192771 Deferred Tax Liaiblity 226399 Application of Funds Net Fixed Assets 2390405 Net Current Assets 403275 Deferred Tax Assets 13710 IV Performance of Company (Amount in Rs. thousand) Turnover 17780243 Profit/(Loss) Before Tax 2842229 Earning per share in Rs. 2.93 Total Expenditure 15103130 Profit/(Loss) After Tax 2520763 Dividend Rate % 175% Investments 1453508 Misc Expenditure 198192 Reserve & Surplus 3169008 Unsecured Loans 8028 Total Assets 8019937
94
Generic names of three Principal Products/Services of company (as per monetary terms) Item Code No. (ITC Code) Product Description Item Code No.(ITC Code) Product Description Item Code No.(ITC Code) Product Description 30049001 Ayurvedic Medicines 33059001 Hair Oils 33061000 Dentifrices
Signatures to the Schedules A to P Annexed to and forming part of the Accounts.
95
Consolidated Financials
Dabur India Limited Consolidated Financials Annual Report 2006-07
The Board of Directors, Dabur India Limited,

We have audited the attached consolidated balance sheet of Dabur India Limited group, as at 31st March, 2007 and also the consolidated profit and loss account and the consolidated cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Dabur India Ltd.s management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all material aspects, in accordance with an identified financial reporting frame work and are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as, evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs. 11052.52 lacs as at 31st March, 2007, the total profit of Rs. 805.88 lacs and cash out flows (net) amounting to Rs. 20.53 lacs for the year ended 31st March, 2007. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors. We report that the consolidated financial statements have been prepared by the Dabur India Ltd.s management in accordance with the requirements of AS-21 on consolidated financial statement issued by the Institute of Chartered Accountants of India. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India. a) b) In the case of the consolidated balance sheet, of the state of affairs of Dabur India Ltd. group as at 31st March, 2007. In the case of the consolidated profit and loss account, of the profit of Dabur India Ltd. group for the year ended on that date; and In the case of the consolidated cash flow statement, of the cash flows of Dabur India Ltd. group for the year ended on that date.
c)
For G. BASU & CO. Chartered Accountants S. Lahiri Partner, Membership No 51517 New Delhi 8th May 2007
97
Balance Sheet as at 31st March 2007

(As at 31st March) (Rs. Lac) 2007 2006
Schedule Sources of Funds :

Shareholders Funds:
(A) Share Capital (B) Reserves and Surplus A B B2 C D EB
8,628.84 39,327.88 47,956.72 447.19 10,563.27 5,426.40 2,589.64 66,983.22
5,733.03 43,972.79 49,705.82 546.08 8,080.01 2,352.75 1,715.08 62,399.74
Minority Interest Loan Funds:

(A) Secured Loans (B) Unsecured Loans
Deferred Tax Liability

Total
Application of Funds :
Fixed Assets :
(A) Gross Block (B) Less : Depreciation (C) Net Block F 61,723.16 23,807.14 37,916.02 G EB H 25,710.84 14,197.09 6,066.81 18,071.75 64,046.49 Less: Current Liabilities and Provisions (A) Liabilities (B) Provisions EA 36,241.04 8,934.44 45,175.48 18,871.01 1,981.92 30,280.64 13,329.29 43,609.93 3,522.07 3,287.48 21,277.84 7,435.01 5,117.22 13,301.93 47,132.00 8,069.77 144.50 72,148.62 20,903.32 51,245.30 4,213.15 131.74
Investments Deferred Tax Assets Current Assets, Loans and Advances:

(A) (B) (C) (D) Inventories Sundry Debtors Cash & Bank Balances Loans & Advances
Net Current Assets

Miscellaneous Expenditure (To the extent not written off or adjusted) Notes To Accounts Total As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007 IA P
66,983.22 For Dabur India Ltd. V.C. Burman P.D. Narang Sunil Duggal A.K. Jain
62,399.74
Chairman Director Director GM (Finance) & Company Secretary
98
Profit and Loss Account

Income :
Sales Less Returns Other Income Total Income
for the year ended 31st March 2007 (Year ended 31st March) Schedule J 2007 223,371.78 2,591.23 225,963.01 K L M N O IB 97,108.28 3,711.03 7,425.54 16,666.83 63,486.20 1,537.50 649.36 3,429.05 194,013.79 31,949.22 3,494.04 -136.86 374.68 28,217.36 0.00 28,217.36 -87.10 28,304.46 21,586.11 0.00 0.00 0.00 22.82 -155.37 49,758.02 12,212.54 0.00 1,712.81 0.00 0.00 334.82 19.62 3,000.00 32,478.23 3.27 3.24 860,884,512 869,534,762 P For Dabur India Ltd. V.C. Burman P.D. Narang Sunil Duggal A.K. Jain Chairman Director Director GM (Finance) & Company Secretary (Rs. Lac) 2006 189,957.00 1,336.68 191,293.68 80,772.30 3,372.14 5,711.24 14,495.75 56,522.85 1,638.73 426.24 2,692.46 165,631.71 25,661.97 2,185.80 353.04 463.31 22,659.82 -1,274.05 21,385.77 -32.47 21,418.24 14,092.86 56.93 0.00 0.00 148.53 -51.83 35,664.73 4,303.03 5,733.03 602.98 804.06 0.00 19.27 5.31 2,610.94 21,586.11 2.50 2.48 859,723,793 866,287,499
Expenditure :
Cost Of Materials Excise Duty Manufacturing Expenses Payments to and Provisions for Employees Selling and Administrative Expenses Financial Expenses Miscellaneous Expenditure Written Off Depreciation Total Expenditure Balance Being Net Operating Profit Before Tax Provision For Taxation Current Provision For Taxation Deferred Provision For Taxation Fringe Benefit Net Profit after Taxation and before Extraordinary Add Extraordinary Item (Profit/(Loss) on Long Term Trade Investments Net Profit After Tax And Extraordinary Item Minority Interest Net Profit After Minority Interest Balance Brought Forward Transferred From Capital Redemption Reserve Transferred From Investment Allowance Reserve Transferred From Investment Deposit Reserve Provision For Taxation For Earlier Year Written Back Provision For Taxation For Earlier Year Profit Available For Appropriation
Item
Appropriation/Allocation
Interim Dividend Proposed Dividend - Final Corporate Tax on Interim Dividend Corporate Tax on Proposed Dividend Employees Sharing of Profit Transferred to Capital Reserve Transferred to Legal Reserve Transferred to General Reserve Balance Carried Over To Balance Sheet Earning Per Share ( In Rs.) Basic Diluted No of Shares Basic Diluted Notes To Accounts As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007
99

(Year ended 31st March) 2007 A. Cash Flow From Operating Activities Net Profit Before Tax And Extraordinary Items Add: Depreciation Loss On Sale Of Fixed Assets Fixed Assets Impairment Loss Miscellenous Exp. Written Off Miscellenous Exp. Written Off (Included in Director Remun.) Interest 31,949.22 3,429.05 0.47 10.30 649.36 404.76 1,537.50 6,031.46 37,980.68 Less: Dividend Received Interest Received Profit on Sale of Investment Profit on Sale of Assets Operating Profit Before Working Capital Changes Working Capital Changes Increase/(Decrease) in Inventories Increase/(Decrease) in Debtors Decrease/(Increase) in Trade Payables Increase/(Decrease) in Working Capital Cash Generated from Operating Activities Interest Paid Tax Paid Corporate Tax On Dividend Cash Used(-)/(+)Generated For Operating Activities (A) B. Cash Flow From Investing Activities Purchase of Fixed Assets Sale of Fixed Assets Purchases of Investment Sale of Investments Dividend Received Cash Used(-)/(+)Generated for Investing Activities (B) 0.30 40.62 533.89 400.67 975.48 37,005.20 4,433.00 6,492.87 (4,595.48) 6,330.39 30,674.81 1,546.99 4,092.02 2,516.87 8,155.87 22,518.94 (5,129.32) 580.78 (144,079.21) 140,756.48 0.30 (7,870.97) 1,604.87 2,649.11 1,205.54 5,459.52 21,868.97 (7,287.80) 1,171.02 (4,826.98) 6,067.63 0.48 (4,875.65) 964.92 (102.11) 2,728.49 3,591.29 27,328.49 0.48 10.28 96.39 211.91 319.06 30,919.78 2,692.46 65.85 0.00 426.24 777.16 1,615.15 5,576.87 31,238.84 (Rs. Lac) 2006 25,661.97
100

(Year ended 31st March) 2007 C. Cash Flow From Financing Activities Proceeds From Share Capital & Premium Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities Repayment(-)/Proceeds(+) From Short Term Loans Repayment (-)/Proceeds(+) From Deposits Repayment(-)/Proceeds(+) From Other Unsecured Loans Payment Of Other Advances Payment Of Dividend Cash Used(-)/+(Generated) In Financing Activities (C) Net Increase(+)/Decrease (-) In Cash And Cash Equivalents (A+B+C) Cash And Cash Equivalents Opening Balance Cash And Cash Equivalents Closing Balance 24.72 (2,303.37) 4,786.63 (8.15) 3,028.80 (1,542.72) (17,684.31) (13,698.38) 949.59 5,117.22 6,066.81 (Rs. Lac) 2006 2.31 672.46 (2,297.61) (1.76) (3,024.01) (88.24) (8,612.56) (13,349.39) 3,643.93 1,473.29 5,117.22
101

Schedule A - Share Capital
Authorised :
1250000000 Equity shares of Re. 1 each (Previous year 1250000000 equity shares of Re. 1 each)
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
12,500.00 12,500.00
12,500.00 12,500.00
Issued and subscribed:

862883808 Equity shares of Re. 1 each fully called up (Previous year-573302784equity shares of Re. 1 each fully called up) Total 8,628.84 8,628.84 5,733.06 5,733.06
Schedule B - Reserves and Surplus

Capital Reserve Share Premium Account Employees Housing Reserve Fund General Reserve Legal Reserve Profit and Loss Account Employee Stock Option Scheme Outstanding Total 2326.87 355.93 495.73 506.56 61.23 32,288.79 3,292.77 39,327.88 1,818.78 3,051.45 456.03 12,775.82 41.61 21,586.11 4,242.99 43,972.79
Schedule B 2- Minority Interest

Share Capital Share Premium Capital Reserve General Reserve Profit & Loss Total 161.79 9.38 126.91 11.44 137.67 447.19 178.54 9.38 126.91 15.15 216.10 546.08
102

Schedule C - Secured Loans
I. Term Loans :
GE Capital Services Deferred Payment Picup Under Trade Tax Loan Scheme
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
7.89 163.79 379.57 10,012.02 10,563.27
1,845.99 253.41 755.22 5,225.39 8,080.01
II. Short Term Loans - From Banks :

Total
Schedule D - Unsecured Loans

Deposits : Directors Companies Security Deposit From Dealers And Others Other Loans : Term Loan - From Banks Book Overdraft of Current Account With Banks Commercial Papers Packing Credit Loan External Commercial Borrowings -ABN Amro Bank NV Deferred Payment Credit Total 48.13 200.40 54.42 3,975.00 49.55 1,000.00 0.00 0.00 98.90 5,426.40 48.13 1,021.92 9.58 999.47 125.30 148.35 2,352.75
Notes: 1. Loans Include Amounts Due Within One Year Rs. 3,890.91 (Previous Year Rs. 50) 2. Maximum Amount of Commercial Papers Outstanding During The Year Rs. 2000 (Previous Year Rs. 11,500)
103

Schedule EA - Current Liabilities and Provisions
A. Current Liabilities :
Acceptance Amount Due To SSI Units ( Goods) Creditors For Goods Creditors For Expenses and Other Liabilities Advances From Customers Interest Accrued But Not Due On Loans Deposits - Others Investor Education And Protection Fund To Be Credited By : -Unpaid Dividend -Unpaid Matured Public Deposit -Interest Accured On Public Deposit
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
8,445.68 1,284.92 7,678.85 17,837.58 35,247.03 542.84 53.18 4.05
8,050.56 1,037.21 7,394.54 13,272.32 29,754.63 273.63 62.66 55.43
382.45 6.04 5.45 36,241.04
121.19 7.53 5.57 30,280.64 5,733.03 804.06 122.00 755.08 5,915.12 13,329.29 43,609.93
B. Provisions :
For Dividend (Proposed) - Final For Corporate Tax On Proposed Dividend- Final For Leave Salary For Housing, Bonus & Gratuity & Other Welfares For Taxation Total 0.00 87.44 216.00 8,631.00 8,934.44 45,175.48
Schedule EB - Deferred Tax Liaibility (Net)

Deferred Tax Liaibility :
Depreciation 2,589.64 1,715.08
Less: Deferred Tax Assets :

VRS Payment Other Disallowances Under Section 43b of Income Tax Act 1961 Total 60.38 84.12 144.50 2,445.14 74.55 57.19 131.74 1,583.34
104

st
March 2007
Schedule F - Fixed Assets

Gross Block Opening Balance 781.01 864.96 15,277.73 27,327.55 1,249.39 4,045.41 3,189.40 1,112.87 0.22 1,304.68 16,995.40 0.00 72,148.62 51,504.82 24,004.40 3,360.60 72,148.62 8,601.28 19,026.74 61,723.16 20,903.32 19,478.09 2,901.48 0.00 569.44 3,471.96 14,848.96 0.00 734.20 2,146.44 569.44 0.00 0.00 0.00 0.00 0.00 113.89 3,429.05 2,692.46 234.75 0.00 0.00 38.82 0.00 0.00 3,385.33 1,112.87 0.22 2,030.29 370.41 0.00 320.16 106.48 0.00 36.38 0.00 0.00 0.00 0.00 0.00 525.23 1,267.23 2,877.73 330.19 292.19 363.27 140.29 114.16 29,842.01 1,439.29 4,223.44 11,435.34 583.26 2,141.95 1,905.00 191.04 259.02 306.18 86.57 71.49 168.04 58.53 1,168.93 0.12 0.00 49.16 948.93 923.49 16,397.50 0.00 45.92 4,296.15 0.00 9.21 524.25 0.00 0.00 24.61 0.00 55.13 4,795.79 13,034.16 687.73 2,329.48 2,314.07 476.89 0.00 0.00 0.00 113.89 23,807.14 20,903.32 Adjustment Balance Balance Year Adjustment Balance Additions Transfer/ Closing Opening For the Transfer/ Closing Depreciation As on 31.03.2007 948.93 868.36 11,601.71 16,807.85 751.56 1,893.96 1,071.26 635.98 0.22 734.20 2,146.44 455.55 37,916.02 51,245.30 Net Block As On 31.03.2006 781.01 819.04 10,981.58 15,892.21 666.13 1,903.46 1,159.11 742.46 0.22 1,304.68 16,995.40 0.00 51,245.30
Name of Assets
Freehold Land Leasehold Land Building,Roads & Culvert
Plant & Machinery Vehicles Furniture & Off Equipment
Computers Patents Live Stock
Capital Work In Progress Goodwill Software
Total
Previous Year
105

Schedule G - Investments
A Current Investments Quoted-other than Trade 1 Fidelity Cash Fund (Purchased During the Year) Units 1000000 (Sold During the Year) Units 1000000 LIC Mutual Fund (Purchased During the Year) Units 271343945.219 (Sold During the Year) Units 250782042.366 Birla Mutual Fund (Purchased During the Year) Units 34127197.78 (Sold During the Year) Units 34127197.78 Chola Liquid Fund - Institutional Plus-growth (Purchased During the Year) Units 90110366.63 (Sold During the Year) Units 96232012.38 DSP Mutual Fund (Purchased During the Year) Units 1160898.88 (Sold During the Year) Units 1260898.88 Deutsche Bank Mutual Fund (Purchased During the Year) Units 63873772.2 (Sold During the Year) Units 63873772.2 Lotus Liquid Fund (Purchased During the Year) Units 11000000 (Sold During the Year) Units 1000000 JM Floter Fund- S T P Growth (Purchased During the Year) Units 22078914.479 (Sold During the Year) Units 22078914.479 Kotak Mahindra Mutual Fund (Purchased During The Year) Units 67720717.59 (Sold During The Year) Units 49881012.39
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March) Number
0.00
0.00
20,561,902.85
2,462.00
0.00
0.00
0.00
0.00
873.34
0.00
1,000.00
0.00
0.00
10,000,000.00
1,000.00
0.00
0.00
0.00
30,000,000.00
3,000.00
1,716.00
10 Principal Mutual Fund (Purchased During The Year) Units 202087898.72 (Sold During The Year) Units 202087898.72 11 Prudential Mutual Fund (Purchased During The Year) Units 82286044.72 (Sold During The Year) Units 86796522.56
0.00
0.00
0.00
500.00
106

Schedule G (Contd.)
12 Reliance Liquid Fund (Purchased During The Year) Units 21132951.12 (Sold During The Year) Units 21132951.12 13 Sahara Mutual Fund (Purchased During The Year) Units 19223.82 (Sold During The Year) Units 19223.82 14 SCB Mutual Fund (Purchased During The Year) Units 17798310.73 (Sold During The Year) Units 12798310.73 15 Sundram Mutual Fund (Purchased During The Year) Units 10000000 16 Tata Mutual Fund (Purchased During The Year) Units 44354161.93 (Sold During The Year) Units 44354161.93 17 UTI Mutual Fund (Purchased During The Year) Units 8306045.42 (Sold During The Year) Units 8306045.42 18 ING Mutual Fund (Purchased During The Year) Units 56601809.84 (Sold During The Year) Units 56601809.84 19 Templeton Mutual Fund (Purchased During The Year) Units 374438.53 (Sold During The Year) Units 374438.53 B. Long Term Investment I) 1 Quoted-equity Shares- Other Than Trade Dabur Pharma Ltd (Sold During The Year) Shares 364400 Unquoted -equity Shares - Trade Investments Sanat Products Ltd Dabon International Pvt Limited
st
March 2007 (Rs. Lac) 2007 2006
0.00
0.00
0.00
0.00
5,000,000.00
500.00
0.00
10,000,000.00 -
1,000.00 0.00
0.00 0.00
0.00
0.00
0.00
0.00
0.00
0.00
115,000.00
1.15
4.79
II) 1 2
50,000.00 270,000.00
105.00 27.00
105.00 27.00
107

Schedule G (Contd.)
III) Unquoted Equity Shares - Other Than Trade 1 Commerce Centre Cooperative Housing Society Limited 2 Capexil (Agencies) Limited 3 Dabur Employees Consumers Co-op Stores Limited 4 Dabur Employees Cooperative Credit Society Ltd 5 Co-operative Stores Limited, Super Bazar 6 National Saving Certificates 7 Kisan Vikas Patra 8 Saraswat Co-op Bank Ltd 9 5% Special Bond Total Less Provision For Diminution In Long Term Trade Investment Total
st
March 2007 (Rs. Lac) 2007 2006
15.00 3.00 250.00 650.00 500.00 1,000.00
0.02 0.01 0.03 0.07 0.05 1.27 0.07 0.10 0.00 8,096.76 26.99 8,069.77
0.02 0.01 0.03 0.07 0.05 1.26 0.07 0.01 12.49 4,240.13 26.99 4,213.14
108

Schedule H - Current Assets, Loans and Advances
A. Current Assets :
Inventories - Raw Materials - Packing Materials, Stores And Spares - Stock In Process - Finished Goods Sundry Debtors (Unsecured) : - Debts Outstanding for a Period Exceeding Six Months : Considered Good Considered Doubtful Less : Provision for Doubtful Debts - Other Debts (Considered Good) Cash and Bank Balances : - Cash in Hand - Remittance-in-transit & Cheques-in-hand - Balance With Scheduled Banks In Current Accounts In Fixed Deposit Accounts - Balance With Non Scheduled Banks In Current Accounts In Fixed Deposit Accounts - Postal Savings Bank Accounts (Deposited With Excise Authority) Total A
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
7,387.24 5,183.86 3,323.95 9,815.79 25,710.84
7,753.23 4,820.50 1,402.38 7,301.73 21,277.84
793.03 259.31 1,052.34 259.31 793.03 13,404.06 14,197.09 24.80 7.49 5,257.14 124.35 479.17 173.86 6,066.81 45,974.74
324.51 153.84 478.36 153.84 324.51 7,110.50 7,435.01 49.45 2.25 4,621.98 137.28 219.07 86.24 0.95 5,117.22 33,830.07
B. Loans and Advances (Unsecured, Considered Good)

Security Deposit with Various Authorities (including Deposit with Govt. Authorities Rs. 887.27; Previous Year Rs. 435.89) Advance Payment of Tax Advances to Suppliers Advances to Employees Balance with Excise Authorities Other Advances Recoverable in Cash or in Kind or for Value to be Received Total B Total (A+B) 1,511.41 8,817.97 2,407.28 434.78 1,124.37 3,775.94 18,071.75 64,046.49 1,660.41 5,914.13 2,084.01 324.48 434.84 2,884.06 13,301.93 47,132.00
109
st
March 2007 (Rs. Lac) 2007 2006
(As at 31st March)
Schedule IA - Miscellaneous Expenditure

(To the extent not written off or adjusted) Technical Knowhow Fees Paid Less: Amortised during the year Deferred Employee Compensation Under ESOP: Opening Balance Addition during the Year Less: Cancelled during the Year Less: Amortised related to subsidiary Less: Amortised during the year Total 46.87 18.75 3,240.61 862.00 915.77 3,186.84 197.67 1,035.37 65.62 18.75 515.42 3,503.78 1.43 4,017.77 91.17 685.99
28.12
46.87
1,953.80 1,981.92
3,240.61 3,287.48
Schedule IB - Miscellaneous Expenditure

Written Off
Technical Knowhow Fees Paid Deferred Employee Compensation Under ESOP Less: Transferred to Director Remuneration Total 18.75 1,035.37 404.76 630.61 649.36 685.99 278.50 18.75 407.49 426.24
Schedule J - Sales and Other Income

A. Sales :
Domestic Sales Less Returns Export Sales Total 196,537.05 26,834.73 223,371.78 203.94 15.64 423.56 0.30 972.60 291.91 241.99 400.67 40.62 2,591.23 171,140.50 18,816.50 189,957.00 172.37 17.30 278.78 0.48 18.54 530.63 96.39 211.91 10.28 1,336.68
B. Other Income :
Export Subsidy Rent Realised Sale of Scrap Dividend from Long Term Investment Other Than Trade Investment Royalty Miscellaneous Receipts Profit on Sale of Current Investments Profit on Sale of Long Term Investments Profit on Sale of Fixed Assets Interest Received Total
110
(Year Ended 31st March) 2007
st
Schedule K - Cost of Materials

Raw materials consumed : i) Opening Stock ii) Add : Stock Inherited from New Subsidiaries iii) Add : Purchases iv) Less : Closing Stock Packing Materials Consumed : i) Opening Stock ii) Add : Stock Inherited from New Subsidiaries iii) Add : Purchases iv) Less : Closing Stock Purchase of Finished Products Adjustment of Stocks In Process And Finished Goods Opening Stock : Stock in Process Finished Products Stock inherited from New Subsidiaries Closing Stock : Stock-in-process Finished Products Increase(-)/Decrease In Stock In Process And Finished Goods Total 7,227.27 47,728.31 54,955.58 7,242.46 4,254.78 34,037.11 38,291.89 4,853.77 33,438.12 18,938.65 47,713.12 7,154.31 138.26 38,693.11 45,985.68 7,227.27 3,009.44 305.85 26,831.23 30,146.52 4,254.78 25,891.74 15,385.77 38,758.41
1,506.17 7,190.02 8,696.19 3,323.95 8,353.85 11,677.80 (2,981.61) 97,108.28
813.84 7,784.26 834.47 9,432.57 1,506.17 7,190.02 8,696.19 736.38 80,772.30
Schedule L - Manufacturing and Operating Expenses

Power and Fuel Stores & Spares Consumed Repairs & Maintenance - Building - Plant & Machinery - Others Processing Charges Total 4,015.46 1,345.44 294.16 429.79 339.26 1,001.43 7,425.54 3,548.77 1,083.63 156.77 202.15 392.22 327.70 5,711.24
111
st
Schedule M - Payments to and Provisions for Employees

Salaries, Wages and Bonus Contribution To Provident and Other Funds Workmen And Staff Welfare (Net of Excess Provision Written Back Rs. 480.00; Previous Year Rs. Nil) Directors Remuneration Total 12,108.65 1,182.27 2,129.43 1,246.48 16,666.83 10,057.40 1,110.58 2,432.48 895.29 14,495.75
Schedule N - Selling and Administrative Expenses

Rent Rates and Taxes Insurance Sales Tax Freight and Forwarding Charges Cartage and Coolie Commission, Discount and Rebate Advertising and Publicity Travel & Conveyance Legal & Professional Telephone, Fax Expenses Security Expenses General Expenses Directors Fees Auditors Remuneration Donation Contribution for Scientific Research Expenses Provsion for Doubtful Debts Loss on Sale of Investments (Other Than Trade) Loss on Sale of Fixed Assets Provision for Diminution in the Market Value of Long Term Investment Total 1,101.58 212.59 378.81 15,530.14 7,136.67 32.94 1,827.55 25,585.81 2,388.87 1,149.66 491.07 252.91 5,795.29 10.50 80.33 430.30 775.00 304.43 1.28 0.47 63,486.20 1,031.21 117.81 341.84 14,306.39 6,405.88 35.18 1,383.09 22,168.21 2,098.76 928.14 407.62 186.55 5,731.71 9.00 71.55 331.37 720.00 145.82 9.88 65.85 26.99 56,522.85
Schedule O - Financial Expenses

Interest Paid on : Fixed Period Loan Others Bank Charges Total 501.83 608.18 427.49 1,537.50 389.33 735.70 513.70 1,638.73
112
Schedule P - Accounting Policies & Notes to Accounts

(All figures in Indian Rupees lacs except share capital) A. ACCOUNTING POLICIES Significant accounting policies are summarized below: 1. Principles of Consolidation: The Consolidated Financial Statement relates to Dabur India Limited (the parent company) and Dabur Foods Ltd. wholly owned subsidiary company incorporated in India. Dabur International Ltd., (wholly owned body corporate incorporated in Isle of MAN), Dabur (UK) Ltd. (a wholly owned subsidiary body corporate incorporated in British Virgin Island 100% stake wherein is held by Dabur International Ltd.), Dabur Nepal Pvt. Ltd. (a subsidiary body corporate incorporated in Nepal, 97.5% stake wherein is held by Dabur International Ltd.), Dabur Egypt Ltd. (a wholly owned subsidiary body corporate incorporated in Egypt, 76% & 24% of stake wherein are held by Dabur (U.K.) Ltd. and Dabur International Ltd. respectively), Asian Consumercare Pvt. Ltd. (a subsidiary body corporate incorporated in Bangladesh, 76% stake wherein is held by Dabur International Ltd.), Weikfield International (UAE) (a subsidiary body corporate incorporated in UAE, 38.41% stake wherein is held by Dabur International Ltd. which has control of composition of board of directors of the former being raison detre of subsidiary status) African Consumer Care Ltd ( a subsidiary body corporate incorporated in Nigeria, 90% stake wherein is held by Dabur International Ltd & 10% stake held by Dabur (UK) Ltd ,Asian Consumer Care Pakistan Ltd (a wholly owned subsidiary body corporate incorporated in Pakistan, 100% stake where in is held by Dabur International Ltd) and Naturelle LLC ( a subsidiary body corporate incorporated in Emirate of RAS AI Khaimah 100% stake wherein is held by Dabur International Ltd. The consolidated financial statements have been prepared on the basis of AS-21, issued by ICAI read with the following basic assumptions: I. The financial statements of the parent company and its subsidiary companies have been combined on a line-byline basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions and resulting in unrealized profits or losses. Investments of parent company in subsidiaries are eliminated against respective proportionate stake of parent company therein on the respective dates when such investments were made by way of debiting/crediting the difference of the two in goodwill/ capital reserve except for DNPL where the same is adjusted against share premium account. In respect of foreign subsidiaries, rise in the value of stake of parent company in terms of reporting currency upto the date of commercial production (i.e. the date, their assets were due for capitalization) on account of exchange fluctuation has been credited to capital reserve. Subsequent generation of reserve other than that of the nature of capital reserve including gain/ loss arising on account of translating the transactions of the year, year-end assets and liabilities of the foreign subsidiaries for the purpose of consolidating with parent companys assets at exchange rates ruling on year-end-date has been recognized as reserve specifically earmarked for the purpose. II The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the parent companys separate financial statements unless stated otherwise. Minority interest, where lying, in the net income of consolidated subsidiaries have been adjusted against the income of the group so as to arrive at net income attributable to the parent company. Minority interest consisting of equity attributable to them on the date such investments were made by the parent company and movement in their equity since the date of parent subsidiary relationship has been disclosed in the consolidated financial statement separately from liability and equity of shareholders of parent company. Current assets/liabilities and income/ expenses of overseas subsidiaries have been translated in reporting currency in terms of exchange rates prevailing on year-end date and average rate respectively on the basis of non-integral operation approach as per revised AS-11.
III.
IV
113
Fixed assets of the overseas subsidiaries have been accounted for in terms of the exchange rate prevailing at the point of commencement of production of relevant subsidiaries pertaining to assets appearing since that point of time and at purchase price (including cost of installation) for remaining fixed assets. 2. Accounting Convention: The accounts have been prepared in accordance with the historical cost convention. a Fixed Assets and Depreciation: Fixed assets are stated at carrying amount subject to deduction of accumulated depreciation. Cost includes inward freight, duties, and taxes and expenses incidental to acquisition and installation. Depreciation has been provided at rates provided in schedule XIV of Companies Act. In respect of the parent company, Dabur Foods Ltd & Asian Consumer Care Pvt. Ltd. depreciation on fixed assets has been provided on written down value method, except for Baddi, Katni, 5/1 Sahibabad, Jammu, Rudrapur unit, Pitampur,Silvasa, Kanpur and Corporate Office of parent company, Dabur Egypt Limited, Dabur International Limited, Dabur Nepal Pvt. Ltd, Weikfield Limited, and African Consumercare Ltd where the depreciation have been provided on straight line method. Patent and trade marks are amortized equally over a period of 10 years. Moulds are depreciated 100% in the year of addition. Software are being amortized over the period of five years on straight line basis. For Green field project direct expenses and overheads (except for those relating to employees deputed for implementation) are capitalized only.
b.
Impairable assets are identified at the year-end in term of para-5 to 13 of AS 28 issued by ICAI for the purpose of arriving at impairment loss thereon, if any, being the difference between the book value and recoverable value of relevant assets. Impairment loss, when crystallizes, is charged against revenue of the year. Investments: Long term investments are held at cost. Provision is made against diminution in carrying cost of investment, if any, of permanent nature as required under AS-13 issued by ICAI. Current investments are held at lower of cost and NAV/Market value.
c.
d.
Deferred Entitlement on LTC: In terms of the opinion of the Expert Advisory Committee of the ICAI, the parent company has provided liability accruing on account of deferred entitlement towards LTC in the year in which the employees concerned render their services.
e.
Inventories: Stocks are valued at lower of cost or net realizable value. Basis of determination of cost remain as follows: Raw materials, Packing materials, stores & Spares :On Weighted Average Basis Work-in-process :- At cost of input plus overhead upto the stage of completion. Finished goods:- At cost of input plus appropriate Overhead.
f.
Research and Development Expenses: Contributions towards scientific research expenses are charged to the Profit & Loss Account in the year in which the contribution is made.
g.
Retirement Benefits: Liabilities in respect of retirement benefits to employees are provided for as follows: Leave salary of employees of the company on the basis of actuarial valuation/management estimate/insurers advice
114
h.
Gratuity liability on the basis of actuarial valuation/management estimate/insurers advice. Liability for superannuation fund on the basis of insurers advice VRS, if paid, is charged to revenue on actual basis in the year of payment.
Recognition of Income and Expenses: Sales and purchases are accounted for on the basis of passing of title to the goods. Sales comprise of sale price of goods including excise duty and sales tax but exclude discount. All items of incomes and expenses have been accounted for on accrual basis value stated otherwise.
i.
Income Tax & Deferred Tax Income Tax is estimated considering the provisions of the Statute. Deferred tax is recognized for entities where the same is mandatorily applicable subject to the consideration of prudence, on time differences being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods. No deferred tax asset is recognized against un-absorbed depreciation and carry forward loss under fiscal act unless there is virtual certainity of future taxable profit to realize the asset, due to restriction imposed under para 17- AS-22 issued by ICAI.
j.
Contingent Liabilities: Disputed liabilities and claims including claims raised by fiscal authorities, pending in appeal/court, for which no reliable estimate can be made of the amount of obligation or which are remotely poised for crystallization are not provided in accounts but disclosed in notes on accounts. However, present obligation as a result of past event with possibility of outflow of resources, when reliably estimable, is recognized in accounts.
k.
Foreign Currency Translation: In respect of foreign branches/offices integral foreign operation approach has been adopted as per revised AS11 and accordingly revenue items have been converted at average of month end exchange rates during the year. Fixed assets have been converted at the rates prevailing on dates of purchase. Assets & Liabilities other than fixed assets are converted at the year-end exchange rate. Exchange gain or loss arising out of above is accounted for in Profit & Loss Account. Receivables/payables (excluding for fixed assets) in foreign currencies are translated at the exchange rate ruling at the year-end date and the resultant gain or loss is accounted for in the Profit & Loss Account. Increase / decrease in foreign currency loans on account of exchange fluctuation are debited/credited to profit and loss account. Overseas subsidiaries are incorporated on same basis as those of foreign branch and offices with the difference that the impact of exchange fluctuation are adjusted against general reserve.
L.
Employee Stock Option Purchase (ESOP): Aggregate of quantum of option granted under the scheme in monetary term net of consideration of issue to be paid in cash has been shown as Employees Stock Option Scheme outstanding in Reserve and Surplus head of the Balance Sheet by way of debiting deferred Employee Compensation under ESOP as per guideline to the effect issued by SEBI. With the exercise of option and consequent issue of equity share corresponding ESOP outstanding is transferred to share premium account.
m.
Miscellaneous Expenditure: Technical know-how fees paid to Technical Collaborators upto 31.03.2004 are being amortized equally over a period of six years. Subsequent such expenses are charged to revenue in the year of incurrence. Deferred Employees Compensation under ESOP is being amortized on straight-line basis over vesting period. Employee compensation in respect to option granted to subsidiary company employees is being reimbursed by subsidiary companies to holding company.
115
B.
NOTES TO ACCOUNTS 1. Building constructed on leasehold land included in the value of building shown in Fixed Assets Schedule: As at 31st March 2007 Cost/Revalued Written Down 2. 3. 8,493.29 6,143.57 As at 31st March 2006 6,757.63 4,781.37
None of the assets qualify for the impairment loss for the year (Previous year Rs. NIL) which was adjusted against the profit & loss account /opening reserve. a. Further to para A(2)(b) above, recoverable value of cash generating units (CGUs] have been assessed based on value-in-use method which for each CGUs worked out to much higher than corresponding book value of net assets thereby not warranting further exercise of arriving at their net-selling-price. This further confirms absence of exigency of making any provision against impairment loss. Beside those referred to in parent company financial statements, each plant of each subsidiary constitutes independent CGU. Annual discount rate considered for arriving at value-in-use of assets pertaining to each CGU are as per interest rate of external borrowing plus risk factor at a rate of two percent per annum.
b. c. 4.
Consequent upon change in valuation of inventories from FIFO to Weighted Average Method the value of closing inventories as on 31.03.07 has been reduced by Rs.53.83 with corresponding decline in the profit at the year by said amount. Contingent Liabilities: a) i) Claims not acknowledged as debts: a) In respect of civil suits filed against the company Rs 261.78 (Previous year 338.61) b) In respect of claims by employees Rs 0.50 (previous year 0.01) c) In respect of letters of credit Rs. 1962.60 (previous year 2119.04) In respect of Bank Guarantees executed Rs.2116.48 (previous year 2933.96) In respect of Sales Tax under appeal Rs.1077.40 (previous year 1291.95) In respect of excise duty disputes pending with various judicial authorities Rs.1766.58 (previous year Rs.2832.24) In respect of Corporate Guarantees given by the Company Rs.11519.92 (previous year Rs.7644.85) In respect of Income tax under appeal Rs .461.96 (previous year Rs.319.79) Estimated Amount of contract remaining to be executed on capital Account Rs.611.65, net of Advance (previous year Rs.450.89) In respect of Bill Discounting of Company Rs.Nil (Previous year Rs.277.54)
5.
ii. iii. iv. v. vi. vii. viii. b) i)
Information pursuant to AS 29 issued by ICAI: Existing provision relates to disputed liability of Rs. 62.64, Rs.26.15 and Rs.0.29 towards liabilities on account of VAT, Sales Tax and Entry Tax respectively carried forward from previous year in view of absence of any additional provision therefor during the year. Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCTs, if mature, are expected to be in succeeding financial year. Provisions are made herein for medium risk oriented issues as a measure of abundant precaution. Brief particulars of provision under AS 29: Nature of liabilities VAT Sales Tax Sales Tax Sales Tax Entry Tax Particular of dispute Short Payment of VAT Classification of Lal Dant Manjan Classification of Gulabari Exemption Forms from Dealers Entry Tax on Car Amount 62.64 24.32 0.74 1.08 0.29 Forum under the dispute is pending IInd appeal Filed Filed review application with High Court Appeal Filed before the D.C. Appeal IInd Appeal filed before D C Appeal Appeal pending before D.C.
ii) iii) iv)
116
v) 6. (a)
Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 5 (a) above. During the year Pasadensa Foods Limited erstwhile wholly owned subsidiary of Dabur Foods Ltd was merged with its former immediate holding company pursuant to order of Delhi High Court dated 26.12.2006 approving the scheme of merger effective retrospectively since 1.4.2006. Till preceding financial year, the accounts of both the entities were consolidated thereon herein as per their separate financial statements. This, however had no impact in CFS where incorporated with previous financial year. During the year Balsara Home Product Ltd and Besta Cosmetics Ltd two erstwhile wholly owned subsidiary of the parent company and Balsara Hygiene Product Ltd erstwhile subsidiary of parent company, were merged with their holding company pursuant to order of Hon,ble High Court Bombay dated 8-9-2006 and Honble High Court Delhi dated 12.9.2006 approving their scheme of merger effective retrospectively since 1.4.2006. Impact of merger of three, all engaged in FMCG business, in term of scheme sanctioned by Honble Court led to discharge of obligation towards minorities of Balsara Hygiene Product Ltd by way of issue of 63336 nos of equity share of parent company of Re.1/- each apart from adjustment of 16163.76 lacs (forming part of goodwill arisen on account of consolidation upto previous financial year) being the excess of value of parents investment over identified net fixed assets with the share premium amount (Rs.5835.36) and general reserve (Rs.10328.40) unlike previous practice. Consolidated herein a new wholly owned subsidiary with total net assets of Rs.29.58 (Fixed Assets Rs.17.68, Cash & Bank 64.67 & Current liabilities 56.56) and without any income or expenses during the year. To this effect figures of previous year are not comparable with those of current year. Other Notes to Accounts qualifying disclosure are disclosed in separate financial statement of different companies/ body corporate under consolidation except for qualitative particulars of foreign subsidiaries (other than Nepal ) disclosure of which are not mandatory under statute of countries of their incorporation.
(b)
(c)
(d)
7A. Related Party Disclosures Related party disclosures as required under AS 18 issued by the Institute of Chartered Accountants of India are given below: (a) Name of related party and nature of related party relationship where control exists: Nil (b) Name of the related party and nature of related party relationship other than those referred to in (a) above in transaction with the company. (i) Joint Ventures Mr Rukma Rana, joint venture partner in Dabur Nepal Pvt Ltd ACI Ltd. Bangladesh Weikfield Product Co. Pvt. Ltd Dabon International Pvt. Ltd RAK Investment Authority Key Management Personnel (Whole time directors) a) b) c) d) e) f) g) h) Pradip Burman Amit Burman Siddharth Burman P. D. Narang Sunil Duggal Mohit Burman Rukma Rana Chetan Burman Relatives of Key Management Personnel
(ii)
Asha Burman Saket Burman
(iii) Entities over which Key Management Personnel are able to exercise significant influence: 1. Welltime Housing and Finance .Ltd
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7b
Transactions with related parties (consolidated) for the period from 01.04.2006 to 31.03.2007: Joint Venture Key Management Personnel (-) (-) 48.13 (-) 3.85 (-) (-) (-) 39.12 (-) (-) (-) 844.98 (532.84) (-) 404.76 (278.50) (-) Relatives Of Key Management Personnel (-) (-) (-) (-) (-) (-) (-) (-) (-) 120.14 (125.98) (-) (-) (-) Total Outstanding As on 31.03.2007 (-) (-) 48.13 (-) (-) (-) 82.00 (-) (-) (-) (-) (-) (-) (-) (-) (-)
Purchases of Goods Sale of Goods Loan Received Interest paid on Loan Recd Sale of Investment Receiving of Services Loan Given Rent Paid Equity Contribution Repayment of Loans Given (Instl.Recd) Interest Recd on Loans Given Remuneration/Exg./Pension Guarantees & Collaterals given Employee Stock Option Scheme Royalty Received
(-) 1013.16 (1061.82) (-) (-) 145.45 (264.34) (-) 11.10 (19.49) (-) 0.50 (3.50) (-) (-) (-) (-) (-)
1013.16 (1016.82) 48.13 (-) 3.85 (-) 145.46 (264.34) (-) 50.22 (19.49) (-) 0.50 (3.50) (-) 965.12 (658.82) (-) 404.76 (278.50) (-)
Figures in brackets are of previous year Provisions for doubtful debts due from such parties at that date nil (previous year nil) Amounts written off or written back in the period in respect of debts due from or to related to parties nil (previous year nil). 7c Earnings per share has been computed as under: 2006-07 Profit after Tax and after Minority Interest Weighted average number of shares outstanding Basic Diluted Earnings per share (face value Re.1 per share) Basic Diluted 3.27 3.24 2.50 2.48 28304.46 860884512 869534762 2005-06 21418.24 859723793 866287499
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8.
Information pursuant to AS 24 on discontinued operations (pertaining to parent company only) Particulars 1 2 3 4 5 6 7 8 Discontinued since Segment the operation of the unit relates to in financial statement Carrying amount of total assets Carrying amount of total liabilities Profit from ordinary activities Income Tax expenses Gain on disposal of assets Cash flow from discontinued operations: Operating activities Investing Activities Financial Activities Hair Oil Baddi March, 04 FMCG 33 (33) 4 (4) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) MSY Unit Baddi Nov, 2000 FMCG 28 (28) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0)
Note:
I. Figures in brackets are for previous year. II. Parts of fixed assets belonging to discontinued operations under reference have been used for new plants setup in relevant premises. Such assets have been left out of the purview of 3 above.
119
120
Consumer Care Business Current Previous Current Year 26000 26000 2302 2302 2302 2302 2129 2129 123 123 104 104 2129 123 104 2129 123 104 15868 (15868) 1538 3732 (21138) 87 (21051) 20121 4455 3561 14277 (14277) 1639 3002 (18918) (1274) 32 (20160) 20121 4455 3561 Year Year Year Year Year Previous Current Previous Current Previous Current Year 223372 223372 49355 15868 33487 1538 3732 28217 87 28304 Year 176693 176693 42983 42983 42983 42983 35553 3947 3792 35553 3947 3792 35553 3947 3792 35553 3947 3792 151419 16224 14856 151419 16224 14856 Year Year Year Consumer Health Business Current Previous Foods Others Unallocated Total Consolidated Previous Year 189957 189957 41578 14277 27301 1639 3002 22660 (1274) 32 21418 As on 31/03/07 37278.00 37278.00 9172.00 9172.00 28106.00 1,456.00 1,069.00 141.00 28861 5986 8751 763 321 6196 122.00 37612 8751 6749 763 6517 321 11405 6099 6099 5306 703.00 As on 31/03/06 37612 As on 31/03/07 6749 As on 31/03/06 6517 As on 31/03/07 11405 As on 31/03/06 12190 12190 7841 7841 4349 529.00 As on 31/03/07 2910 2910 157 157 2753 212.00 As on 31/03/06 3345 3345 (416) -416 3761 176.00 As on 31/03/07 6660 6660 2836 2836 3824 918.00 649 As on 31/03/06 (552) -552 (3804) -3804 3252 796.00 426 As on As on 31/03/07 31/03/06 58342 59664 6660 65002 16191 2836 19028 45974 3430 649 (552) 59112 16497 (3804) 12693 46419 2692 426
9.
Information pursuant to AS - 17 issued by ICAI
REVENUE External Sales
Inter-segment sales
Total Revenue RESULT
Segment result Unallocated corporate expenses
Operating profit
Interest expense (Net of Interest Income) Interest Income
Income Tax(Current + Deferred)
Profit from ordinary activities Exceptional item (Profit/loss
on long term investment) Minority Interest
Net profit
OTHER INFORMATION
Segment assets
Unallocated corporate assets
Total assets Segment liabilities
Unallocated corporate liabilities
Total liabilities
Capiltal Employed
Depreciation Non-cash expenses other than depreciation
Secondary Segment As the company also exports, the secondary segment for the company is based on the location of customerss . Out of the total sales of Rs. 223372 (189957), the export sales is of Rs.
26835 ( 18816) and domestic sale is 196537 (171141).
10. (a) (b) 11.
Exchange loss Rs.100.14 (Previous Year Rs. 57.34) net of gain Rs.11.73 (previous year Rs. 43.46) has been charged to Profit & Loss Account. Exchange Loss Rs. 21.12 ( Previous year Rs.70.01) net of gain Rs. 4.71 (previous year Rs.1.33) has been charged to general reserve.
Deferred payment credit Rs. 98.90 (previous year Rs.148.35) forming part of unsecured loan is covered by letter of credit issued by HSBC on behalf of a group company to a supplier of machinery.
12. Grouping and heads of accounts of the subsidiaries have been rearranged in terms of presentation of those of parent company as and when necessary. Besides, figures for previous year have been rearranged/ regrouped as and when necessary in terms of current years grouping. Signatures to the Schedules A to P Annexed to and forming part of the Accounts.
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Dabur India Limited Financials as per US GAAP Annual Report 2006-07
The Board of Directors, Dabur India Limited,

We have audited the accompanying consolidated Balance sheet of Dabur India Limited, New Delhi and subsidiaries as of March 31st, 2007 and related consolidated statement of income, stockholders equity and comprehensive income and consolidated cash flow for the year then ended as prepared by Management under US GAAP. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standard generally accepted in United States of America. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examination on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principle used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that audit provides a reasonable basis for our opinion. Incorporated herein are the accounts of certain subsidiaries whose accounts audited by other auditors as per law of the country of incorporation of respective entities. We have relied on these accounts for subsequent translation of them as per requirement of US GAAP. In our opinion, the consolidated financial statements referred to above read with notes thereon present fairly, the financial position of Dabur India Limited and subsidiaries as of March 31, 2007, and the result of their operations, comprehensive income and cash flows for the year then ended in conformity with accounting principle generally accepted in the United States of America.
For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007
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Consolidated Balance Sheet

ASSETS Current Assets
Cash and Cash equivalents Marketable securities Accounts Receivable, net of allowances Inventories Other current assets
as at 31st March 2007 (As at 31st March) 2007 (INR Lac) 2006
5,768.60 8,001.87 14,197.09 25,764.68 16,528.33 70,260.56 35,183.31 1,821.87 851.77 186.48 1,841.61 110,145.61
4,892.75 4,096.15 7,435.01 21,617.30 11,609.50 49,650.71 33,911.52 17,566.51 632.02 364.31 1,916.88 104,041.95
Total current assets

Property, plant and equipment, net Goodwill Intangibles Investments Other non-current assets
Total assets LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities

Short term debt and current portion of long term debt Trade accounts payable Accrued expenses and other current liabilities
15,285.09 17,409.44 18,607.93 51,302.46 999.61 8,863.05 9,862.66 1,387.57 62,552.69 478.67
7,420.77 16,482.32 20,300.90 44,203.99 3,002.08 6,837.21 9,839.29 1,171.45 55,214.73 565.76
Total current liabilities

Long term debt, excluding current portion Other non-current liabilities
Total non-current liability

Deffered Tax liabilities (net)
Total liabilities
Minority interest Stockholders equity Common stock, Re. 1/ Pre value. 1250000000 equity share authorised 862883808 issued and outstanding Additional paid in capital Retained earning Accumulated & other comprehensive income
8,628.84 2,431.56 35,586.82 467.03 110,145.61
5,733.03 4,068.97 38,438.93 20.53 104,041.95
Total liabilities and stock holders equity
The accompaying notes are an integral part of these Consolidated Financial Statements As Per Our Report Of Even Date Attached For G.Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007 For Dabur India Ltd. V.C. Burman P.D. Narang Sunil Duggal A.K. Jain Chairman Director Director GM (Finance) & Company Secretary
123
Consolidated Statement of Income
for the year ended 31st March 2007 (INR Lac) 2007 2006 171,996.64 94,475.19 77,521.45 41,290.52 6,930.40 3,417.85 1,638.70 53,277.46 24,243.98 875.10 25,119.08 2,185.80 598.48 463.31 (32.51) 21,904.00 2.55 2.53 859,723,793 866,287,499
(Year ended 31st March)
Revenue Cost of revenues Gross profit Operating expenses Selling, general and administrative expenses Personnel expenses Depreciation and amortisation Financial expenses Total operating expenses Operating Income Other income, net Income before provision for taxes Provision for taxes Current tax expenses Defered tax benefit Prior year tax adjustment: Fringe benefit tax Minority interest Net income Earning per common share: Basic Diluted Weighted Average common shares outstanding Basic Diluted
203,485.64 113,665.48 89,820.16 46,683.07 8,130.68 4,352.86 1,537.51 60,704.12 29,116.04 1,963.23 31,079.27 3,494.04 216.12 374.68 (87.10) 27,081.53 3.15 3.11 860,884,512 869,534,762
The accompaying notes are an integral part of these Consolidated Financial Statements
As Per Our Report Of Even Date Attached For G.Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 8th May 2007
For Dabur India Ltd. V.C. Burman P.D. Narang Sunil Duggal Chairman Director Director
A.K. Jain
124
Consolidated Statement of Stockholders Equity and Comprehensive Income

INR Lac Common Stock No. of Shares Amount Additional paid in capital 6,158.32 112.77 112.77 Comprehensive Income Accumlated Retained earnings other (Accumulated comprehensive earnings) income (loss) 27,793.90 96.70 Total stockholders equity
for the year ended March 31, 2007
Particulars
286419713 231679 286651392 (2,866.51) 777.16 2.32 2,866.51
2,864.20
21,904.00 (100.10) 3.79 4.06 573302784 2472137 24.72 5,733.03 4,068.97 3.79 4.06 21,924.53
(4,303.03) (5,733.03) (602.98) (716.63) 21,904.00 (100.10) 3.79 4.06 20.53 38,438.93
Balance as of March 31, 2005 Adjustment for prior period items Issue of share against exercise stock option Bonus Shares Amortization of employees stock option Interim Dividend Proposed Dividend Tax on Interim Dividend Tax on Proposed Dividend Net Income Translation adjustment Unrealised gain on short term investment (net of deffered Tax 1.27) Unrealised gain on long term investment (net of deffered tax)
36,929.19 96.70 2.32 777.16 (4,303.03) (5,733.03) (602.98) (716.63) 21,904.00 (100.10)
Balance as of March 31, 2006
48,261.46 24.72 (132.55)
287045551 63336
2,870.46 0.63
(2,870.45) 1,233.04 (12,212.54) (1,712.81) (15,875.75) 27,081.53 27,081.53 386.67 11.56 48.28 11.56 48.28 386.67 23.11 96.55
Issue of share against exercise stock option Adjustment for prior period items (Refer note No. 37 ) Bonus Shares Issue of share against schemes of merger Amortization of employees stock option Interim Dividend Tax on Interim Dividend Utilized for Merger Net Income Translation adjustment Unrealised gain on short term investment (net of deffered Tax 5.86) Unrealised gain on long term investment (net of deffered tax 24.49) 862883808 8,628.84
(132.55) 0.63 1,233.04 (12,212.54) (1,712.81) (15,875.75) 27,081.53 386.67
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Balance as of March 31, 2007
2,431.56
49,452.56
467.03
35,586.82
47,174.07
Consolidated Statement of Cash Flow for the year ended 31st March 2007
(Year ended 31st March) 2007 2006 21904.00 (INR Lac) 2005 16119.89
Cash Flows from Operating Activities

Net Income Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities Depreciation and amortization Provision for Taxation Deferred tax benefits Allowance for doubtful accounts Loss / (gain) on disposal of property, plant and equipment Loss / (gain) on disposal of investment Amortization of employees stock option plan expenses Minority interest Prior period adjustment Dividend Income Interest expenses Changes in operating assets and liabilities (Increase) / decrease in accounts Receivable (Increase) / decrease in Inventories Decrease / (increase) in other non current assets Decrease / (increase) in other current assets Increase / (decrease) in account payable Increase / (decrease) in other Current Liabilities Increase / ( decrease) in other non current liabilities Income tax paid Interest paid Net cash provided by operating activities Cash flow from Investing activities Expenditure on property, plant and equipment Proceeds from sale of property, land and equipment Purchase of intangibles Purchase of Securities Purchase of Marketable securities Sale of marketable securities Sale proceed of Dabon / Green Valley Sale of other securities Dividend received Net cash issued in investing activities Cash flows from financing activities Proceeds from exercise of stock option Increase of short term debts (net) Repayment of long term debts (net) Dividend Tax Payment of dividend 27081.53
4371.81 3494.04 216.12 0.00 (400.19) (533.89) 1233.04 (87.10) 0.00 (0.30) 1537.51 (6742.08) (4147.38) 75.27 (4918.83) 927.12 (1692.97) 2025.84 (3681.20) (1537.51) 17220.83 (5274.96) 509.99 (569.44) 0.00 (7962.00) 0.00 0.00 4623.23 0.30 (8672.88) 24.72 7864.32 (2002.47) (1712.81) (12212.54)
3436.80 2185.80 598.48 0.00 (146.00) (55.00) 777.16 (32.51) 96.70 0.00 1638.70 174.27 (1304.38) 912.93 (2439.45) (819.59) 2341.24 2242.15 (2240.41) (1638.70) 27632.19 (7841.71) 0.00 (11.55) (364.80) (4089.34) 0.00 55.00 4377.00 0.00 (7875.40) 2.32 (5469.40) 690.87 (1319.61) (10036.06)
2830.95 1509.88 (198.54) 14.00 202.63 (407.38) 338.94 138.01 (26.60) (0.50) 1243.59 (468.89) (5028.47) 870.16 0.00 6476.76 2613.41 1069.72 (1668.57) (1222.18) 39413.82 (7134.77) 500.02 (717.99) 0.00 0.00 143,259.86 0.00 0.00 0.50 (34772.73) 1.71 3177.40 (528.57) 0.00 (7761.23)
126
Consolidated Statement of Cash Flow for the year ended 31st March 2007
(Year ended 31st March) 2007 Net cash provided by financing activities Effect of exchange rate changes on cash Net increase in cash and cash equivalent during the year Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year (8038.77) 366.67 875.85 4892.75 5768.60 2006 (16131.88) (120.10) 3504.81 1387.94 4892.75 (INR Lac) 2005 (5,110.69) -19.02 (488.62) 1876.56 1387.94
A.K. Jain
127
Notes to Consolidated Financial Statement for the year ended 31.03.2007

(all amounts in Indian currency in Lac unless specified otherwise) 1) Business: - Dabur India Ltd. (DIL) along with its subsidiaries ( collectively known as group companies) is a FMCG Company with its business interest spread across the Globe. The company was incorporated on 16th September 1975 with the object of manufacturing and marketing FMCG, Ayurvedic & Pharmaceutical products. The pharmaceutical division of the company was demerged from the existing entity on 1.4.2003. DIL has manufacturing facilities in six States of India. The group companies presently have manufacturing facilities in seven countries, namely India, Bangladesh, Nepal, Dubai, Sarjah, Egypt & Nigeria. Major markets of the group include India, Middle East, Nepal, Bangladesh, USA, and UK. The growth of the company has been phenomenal since early ninety rarely shared by any other FMCG company in this subcontinent. 2) Significant Accounting Policies : Significant Policy for preparation of accompanying Consolidated Financial Statement (CFS) is summarized below: a) Basis of presentation and use of estimates: The accompanying CFS include Dabur India Limited and its subsidiaries and are prepared in accordance with accounting principles generally accepted in United States of America (US GAAP). The preparation of consolidated financial statement in conformity with US GAAP requires management to make estimates and assumption. These estimates and assumptions affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual result could differ from these estimates. The managements estimates for charge back, rebates, discount, returns, and the useful life of tangible and intangible assets and realization of deferred assets present sensitive estimate in particular. b) Foreign currency translation : Functional currency of Dabur India Limited is Indian Rupee (INR) and the accompanying financial statements are reported in INR accounted for under remeasurement method. Monetary assets and liabilities of overseas Group Companies are translated into INR at the appropriate year-end exchange rates. Income and expenses are translated using the monthly average exchange rates in effect during the year being reported. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income. Non-monetary assets are accounted for in terms of exchange rate ruling on the date of transaction. c) Principles of consolidation: The consolidated financial statements include the financial statements of DIL and its subsidiaries. An entity in which DIL has directly or indirectly, through other subsidiary undertakings, has taken a controlling interest or is in a position to control composition of directors is classified as a subsidiary. All material inter-company accounts and transactions have been eliminated on consolidation. The Group Companies, which are consolidated under DIL, presently comprise of entities with the following details:Name of Subsidiary: Dabur Nepal Pvt Ltd Dabur U.K. Ltd Dabur International Ltd Weikfield International (UAE) Ltd Dabur Foods Ltd. Dabur Egypt Ltd. African Consumer Care Ltd Asian Consumer Care Pvt. Ltd Asian Consumer Care Pakistan Ltd Naturelle LLC Country of incorporation Nepal British Virgin Island Isle of MAN United Arab Emirate India Egypt Nigeria Bangladesh Pakistan Emirate of Ras Ai Khaimah Shareholding 97.5% by Dabur International Ltd 100% by Dabur International Ltd 100% 38.41% by Dabur international Ltd. 100% 76% by Dabur U.K. Ltd & 24% by Dabur International Ltd 90% by Dabur International Ltd & 10% by Dabur U.K. Ltd 76% by Dabur International Ltd 100% by Dabur International Ltd 100% by Dabur International Ltd
128
d) e) f)
Cash and Cash equivalents : Cash equivalents include all highly liquid investments purchased with an original maturity of three months or less. Accounts Receivable Allowances for doubtful account based on direct analysis of receivable against uncollected dues are provided in account. Inventories : Finished goods are stated at the lower of cost and net realizable value. Cost is determined using first-in-first out / weighted average methods for raw materials, packaging materials and stores and spares. Cost includes the purchase price and attributable costs. Cost in the case of work-in-process and finished goods comprise direct labour, material costs and production overheads. Allowance for potentially obsolete or slow moving inventory is made on the basis of the managements analysis of inventory levels. Inventories worth INR 25764.68 lacs has been encumbered with banks towards security against short-term borrowing.
g)
Investment Securities : The Group Companies follow investment policies, which are consistent with the provisions of Statements of Financial Accounting Standard (SFAS) No. 115, Accounting for certain Investments in Debt and Equity Securities. Short-term readily marketable securities are held at market price at period end. Investment held for long term in securities where significant influence exists within the meaning of APB- 18, are valued at current market price and in its absence for unlisted securities at fair value. Investment held for long term not exceeding 20% of common stock of investee are classified as available for sale securities under non-current assets which are carried at historical cost less diminution therein, if deemed of permanent nature. Unrealized gain and losses , net of related tax effect are reported as a separate component of stock holders equity until realized. Realized gain or losses on sale of securities are computed with reference to their weighted average cost. Realized gains, losses and decline in value on non-readily marketable available-for-sale securities that are judged to be other than temporary, are included in the statement of income. Interest and dividend income is recognized when earned.
h)
Property, Plant and Equipment: Property, plant and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful life of the respective assets. Assets under capital leases and leasehold improvements are amortized over the lower of their estimated useful lives or the term of the lease. Expenditure for additions and improvements are capitalized, while costs for repairs and maintenance are charged to operations as incurred. Advances paid for the acquisition of property, plant and equipment outstanding at the balance sheet date and the cost of property, plant and equipment not put to use before such date are disclosed as capital work-in-progress. The cost and the accumulated depreciation for assets sold, retired or otherwise disposed of are removed from the amounts disclosed in the balance sheet and the resulting gain or loss is included in the Consolidated Statement of Income. Estimated cost of sale is reduced from carrying amounts of assets when the same is held for disposal. No further depreciation is provided after the asset become idle whether on the ground of temporary suspension of use or poised for sale. The Group Companies have determined the estimated useful lives of assets for depreciation purposes. A. Assets held & used 31.3.07 Type of assets Leasehold Land Buildings Plant and Machinery Furniture and Fixtures Office Equipment Vehicles Estimated useful life for charging depreciation 20 Years 10-15 Years 6-15 Years 10-15 Years 15 Years 5 Years
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Property, plant & equipment aggregating INR 29842.01 lac are mortgaged / hypothecated to bank & financial institutions towards security on loan. i) j) Intangible ( Patent & Trade mark and Software) Amortized over the useful lifetime of the asset on straight-line method subject to periodic review of utility. Goodwill : Goodwill arises out of consolidation of subsidiaries or merger of body corporate with group companies being the excess of value of investment over proportionate stake in net assets of subsidiaries / merged entities in terms of book values which are indicated in the consolidated balance sheet. Goodwill is not amortized but subjected to periodic impairment testing where applicable. Goodwill of business combination working out to negative, is deducted proportionately from the fixed assets of acquired entity. k) Impairment of long lived assets : The carrying value of long-lived assets, including intangible assets and property and equipment, are reviewed for impairment if an indication of impairment exists. Adjustments are recorded if the estimated undiscounted net cash flows are less than the carrying value. In addition, the subsequent amortization period for the remaining carrying value of the impaired asset is revised, if necessary. l) Employees Stock Option Scheme Compensation expenses for stock options granted to a section of management employees are measured by using the intrinsic value based method of accounting under the US GAAP, as permitted by SFAS No. 123. Under the method compensation expenses is recognized over vesting period based on difference, if any, between the market value of stock of parent company on the date of grant of the stock option and the amount to be paid by the employees for exercising the option. m) Research and Development Expenses Contributions towards scientific research expenses are charged to the statement of income year in which the contribution is made. n) o) p) Dividends Dividends on common stock are recorded as a liability when recommended by the Board. Advertising cost Expenditure on advertising is expensed when incurred. Earnings per share In accordance with SFAS No. 128, Earning per Share, basic earning per share is computed using the weighted average number of common shares outstanding during the period. Diluted earning per share is computed using the weighted average number of common and diluted common equivalent shares outstanding during the period. q) Revenue recognition : Customers of the Group Companies consist primarily of large wholesalers and dealers network who sell directly into the retail channel. Revenue from product sales is recognized when the merchandise is sold or shipped to customers and all four of the following criteria are met: (i) persuasive evidence that an arrangement exists (ii) delivery of the products has occurred; (iii) the selling price is both fixed and determinable and (iv) collectibility is reasonably assured. Provisions for sales discounts, damaged product returns, exchange for expired product are established as a reduction of product sales revenues at the time such revenues are recognized. Certain charge backs and rebate programmes extended to customers pursuant to industry standards are recognized as a reduction from product sales revenues. Besides taxes/duties incidental to sale are recognized as a reduction from product sale revenue. r) Income Taxes : The Group Companies account for deferred taxes under the full liability method, in accordance with the provisions of SFAS No. 109 Accounting for Income Taxes. Deferred Tax assets and liabilities are recognized for the future tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates as on the date of the financial statements. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
130
in the statement of income in the period of change. Based on managements judgment, the measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which it is more likely than not that some portion of all of such benefits will not be realized. Income Tax for current period is estimated and provided as per rule of country of incorporation of respective entities under consolidation. s) Employees benefit : Eligible employees of group companies are entitled to gratuity, superannuation and leave salary for which liabilities are accrued or payment made to appropriate agencies entrusted to provide relevant benefits on behalf of group companies. Accrued liabilities are ascertained on the basis on actuarial advice / management estimate and when payment is made to the agencies entrusted for the purpose, the same is accounted for as per payments made to these agencies in terms of their advice. 3) 4) Advertising and Publicity costs during the period amounted to INR 25586 lac. Changes in Accounting Procedures: Accounting treatments remain in terms of latest pronouncement of appropriate bodies and no change in accounting procedures during the year.. 5) Business Combination : a) During the year, Dabur International Ltd acquired two overseas wholly owned subsidiaries by way of investing for Stakeholders equity 100% of Asian Consumer Care Pakistan Ltd and Naturelle LLC UAE amounting to Rs. 68.72 and Rs. 29.58. In addition to above note, the group stake in African Consumer Care Ltd has been enhanced during the year by way of enhancing the same to 100% from 90% formerly held therein by way of acquiring additional 4405000 number of shares of Naira 1 each at total sum consideration of INR 19.32 Lac. Pursuant to above minority interest in liability side of balance sheet has been reduced by INR 13.59 lac. 6) Cash & Cash Equivalent : Cash & cash equivalent comprises following: INR Lac 2006 49.45 2.25 4621.98 219.07 0.00 0.00 0.00 4892.75
b)
2007 Cash in hand Remittance in transit Balance with schedule Bank Balance with non-schedule Bank Fixed deposit with Non-schedule Bank Fixed deposit account Postal savings Bank Total 24.80 7.49 5257.14 479.17 0.00 0.00 0.00 5768.60
Cash equivalent represent deposits placed with Banks in the normal course of business operation. 7) Accounts Receivable : The Accounts receivable is stated net of allowance for doubtful debts. The group companies maintain an allowance for doubtful debts on accounts receivable, based on present and prospective financial condition of the customer receivable after considering historical experience and the current economic environment on case-to-case basis. Trade account receivable as at March 31,2007, net of allowance for doubtful account of INR 259.31 lac ( 154.97 lac previous year) amounts to INR 14197.09 lac ( 7435 lac previous year) INR Lac Allowance at the beginning of the year Allowance for Doubtful debts for the year Account receivable write off during the year Balance for allowance for doubtful debts 2007 153.84 409.90 304.43 259.31 2006 25.98 273.68 145.82 153.84
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8)
Inventories : Inventories comprises of the following :2007 7441.07 5183.86 3323.95 9815.79 25764.68 INR Lac 2006 8092.69 4820.50 1402.38 7301.73 21617.30
Raw Materials Packing materials, stores & spare Stock in process Finished goods Total 9) Other Current assets : Other current assets comprise of the following :
Advance payment of Tax Advances to suppliers Advance to employees Balances with excise authority Other advances recoverble in cash or in kind or value to be received Total 10) Property, Plant & Equipment: Property, Plant & Equipment Comprise of the following :
2007 8817.97 2407.28 402.78 1124.37 3775.94 16528.33
INR Lac 2006 5914.13 2084.01 292.48 434.84 2884.04 11609.50
Freehold Land Leasehold Land Building, Roads & Culvert Plant & Machinery Vehicles Furniture & Off Equipment Computers Capital Work in Progress Total Gross Block Less: Accumulated Depreciation Negative Goodwill Net Block
2007 948.93 923.50 16397.50 29842.01 1439.29 4223.44 3385.33 734.20 57894.19 -22710.88 35183.31
INR Lac 2006 781.01 864.94 15271.82 27132.00 1249.40 4563.55 2872.73 1304.70 54040.14 -19232.95 -895.70 33911.50
The depreciation expenses relating to Property, Plant and Equipment for the year is 4003.17 ( 3634.48 previous year). 11) Investment: a) Current Investment: INR Lac Cost of the investment Gross unrealized holding gain in accumulated other comprehensive income Carrying Value b) (I) Investment readily available for sale Readily marketable equity securities: 7962.00 39.87 8001.87
132
INR Lac Cost of the investment Gross unrealized holding gain in accumulated other comprehensive income Carrying Value (II) Readily marketable debt securities (III) Not readily marketable equity securities: INR Lac Cost of the investment Gross unrealized holding gain in accumulated other comprehensive income Carrying value 12) Goodwill and intangibles : I) Component of goodwill (valued as per 2j) a) On September 14, 2003, the parent company acquired 100% stake in Dabur International Limited by way of acquiring 100000 numbers of shares therein at a consideration of INR 2287.50 lac. Excess of consideration money over the net asset value of the investee entity amounting to INR 1178.57 lac has been accounted for as Goodwill. On September 14, 2003, the parent company acquired 38.41% stake in Weikfied international Limited by way of acquiring 615 number of shares amounting to INR 356.89 lac. Excess of consideration money over the net asset value of the investee entity amounting to INR 224.03 lac has been accounted for as Goodwill. Group stake in Dabur Nepal Private Limited has been enhanced during the year as reported in business combination in para 5 above for this 140000 number of shares has been acquired at a consideration of INR 364.80 lac. Consideration money falling short of proportionate worth of net Assets by INR 896 lac gave rise to negative goodwill of said amount, which has been used, in reducing proportionately carrying amount of fixed assets. As on April 01, 2006, three entities, Balsara Hygeine Products Ltd, Balsara Home Products Ltd and Besta Cosmetics Ltd were merged with DIL. These companies accounts were consolidated here in upto previous financial year on the basis of three separate financial statements as subsidiaries of DIL, which contributed to consolidation goodwill of INR 15875.75. Considering Honorable high court affirming the merger plan laying adjustment of Goodwill, being the excess of value of parent companys investment in subsidiaries over latters proportionate net assets against part of retained earning ( general reserve in Indian context) the entire goodwill of INR 15875.75 arising in such merger has been adjusted against accumulated retained earning as on 01.04.06 as a measure of prudence. 106.44 Nil 106.44 1.15 78.89 80.04 NIL
b)
c)
d)
II)
Details of other intangible assets (Patent & Trademark & Software) : 2007 1682.31 830.54 851.77 349.68 INR Lac 2006 1112.87 480.85 632.02 235.79
Gross Carrying Amount Accumulated amortisation Net Carrying amount Amortisation in succeeding five years 13) Other non-current assets:
Other non-current assets include security deposits & those segment of current assets, which are not due for realization within a period of one year. 2007 Fixed deposit Post office savings bank for excise regis. Securty deposits with various authorities Advance to employees Total 298.20 0.00 1511.41 32.00 1841.61 INR Lac 2006 223.52 0.95 1660.41 32.00 1916.88
133
14) Borrowing : a) Short Term Debt (including current portion of long term debt) Working capital and short term loan from banks comprises following:
Name of Bank Amount in INR Lac Rate of Nature of security interest per anum 11.00% 11.00% 11.00% 9.00% 12.50% 10.50% 11.00% 12.00% Stocks, movable properties & guarantee by Dabur India Ltd. Do Do stocks, movable properties & guarantee by Dabur India ltd. Guarantee by Dabur India Ltd. Guarantee by Dabur India Ltd. Stocks, book debts, lease hold property, movable property, plant, equipment & personal guarantee of one of the director. Stock, book Debts, Lease hold property, Personal guarantee of one director. Stock, book Debts, Lease hold property, Personal guarantee of one director. Encumbrance on inventory
Name of entity
Dabur Nepal Pvt. Ltd - Do Dabur Foods Ltd. Dabur Foods Ltd Dabur Foods Ltd Dabur Foods Ltd Asian consumer care
Nabil Bank Ltd Standard Chartered Bank Nepal Ltd Nepal SBI Bank Ltd Hongkong Sanghai Banking Corporation & ICICI Bank Ltd GE Capital service EXIM Bank Canara Bank Standard Chartered Bank & ABN Amro Bank (Standard Chartered Bank & ABN Amro Bank ) Bank Overdraft (Standard Chartered Bank & ABN Amro Bank ) Bank Overdraft Banque Du Cairo Barklays Central Bank of India
2458.42 3095.77 475.85 856.82 1475 1500 1000 427.68
Weikfield Dabur International Limited Dabur Egypt Ltd Dabur Foods Ltd Short term loan Dabur India Ltd
758.78 413.87 0.28 1000.00
5% 5% 14.50% 10.05%
Dabur International Limited
Consortium of IDBI Bank, SBC, SBI, ABN Amro, UBI, UTI Bank, HDFC & Standard Chartered Deposits of Directors / Companies
1574.09
8.00%
Stock & book debts
248.53
8.50%
15
Trade accounts payable Trade accounts payable of INR 17409.44 lac (PY 16482.32) comprise trade creditors for goods & services which include notes payable of INR 8445.68 lac (PY INR 8050.56 lac).
16. Accrued expenses & other current liabilities Accrued expenses & other current liabilities comprise the following: INR Lac 2007 Proposed dividend Corporate tax on proposed dividend Bonus Creditor for expenses Deferred payment credit against machine Advance from customers Interest accrued but not due on loan Total 0.00 0.00 75.43 17837.58 98.90 542.84 53.18 18607.93 2006 5733.03 804.06 55.05 13224.12 148.35 273.63 62.66 20300.90
134
17.
Long term debt, excluding current portion

Name of entity Asian Consumer Care DNPL DIL DIL DIL Bank / Inst. Standard Chartered Bank Standard Chartered Bank Deffered payment Credit Investor Protection Fund Security Deposits from Dealers Total Amount in INR Lac 7.89 163.79 379.57 393.94 54.42 999.61 Rate of interest 12.00% 11% Int. free Int. free Int. free Nature of security Plant & Machinery Movable & immovable assets Fixed assets of 5/1 Shahibabad Nil Nil Repayment Terms Quarterly Quarterly Yearly
18
Other non-current Liabilities : 2007 87.44 140.56 8631.00 0.00 4.05 8863.05 INR Lac 2006 122.00 700.00 5959.78 0.00 55.43 6837.21
Leave salary Housing gratuity & other welfare Taxation Dividend payable Deposits others Total 19. Stockholders Equity a) Common Stock
DIL has only one class of common stock i.e. Equity Share of INR 1/ each Shareholders enjoy voting power in accordance to the number of Equity Shares held by it. Common stock has been enhanced during the year by INR 2895.81, respective contribution being in respect of INR 0.63 towards consideration for minority stakeholders of companies discussed in para 12(d), INR 24.72 towards exercise of stock option by minority and INR 2870.46 towards transfer from additional paid in capital on account of bonus issue. b) Employees stock exchange option Non-cancelled component of additional paid in share net-off quantum remaining unamortized shown separately under retain additional paid-in capital. c) Dividend During the year Interim dividend INR 12212.54 lac @ 175% has been distributed. 20. Employees stock option The parent Company has an Employees Stock Option Scheme (ESOP), which provides for grant of stock options in DIL to eligible management employees of group companies. The ESOP is administered by the Management Committee of the Board (the Committee). The criteria for granting options are essentially on the basis of the management grade of the employee. Exercise price of option is the nominal value of shares. Stock option activity during the year was as follows: Outstanding, beginning of the year Granted Excercised Cancelled Outstanding, at the end of the year 6691484 645381 948764 263493 6124608
135
21.
Other Income : Other income comprises rent realization, dividend earning, miscellaneous receipts and capital profit.
22. Related party transaction a. b. Sale of Goods of Rs. 1013.16 to ACI Ltd Bangladesh, a joint venture partner. Rent paid INR 2 lac to two Associates entities namely Miracle Commercial Enterprises Private Limited and Wakarusa Laboratories Pvt Limited associateship arising due to exercise of significant influence therein by key management personnel. And INR 9.10 Lac to ACI Ltd Bangladesh, a joint venture partner. Remuneration to key management personnel INR 844.98 lac. Post retirement benefits to relative of key management personnel INR 120.14 lac. Repayment of Loan INR 0.50 lac received from Welltime housing & Finance Ltd. and associates in which a key management personnel exercises significant influence. Services received amounting to Rs. 145.46 Lacs from ACI Ltd Bangladesh, a joint venture partner. Loan taken from director amounting to Rs. 48.13. Lacs. Interest paid on loan taken from director amounting to Rs. 3.85 Lacs. Key management personnel include Mr. Pradeep Burman, Mr. Amit Burman, Mr. Mohit Burman, Mr. Chetan Burman, Mr. P. D Narang, Mr. Sunil Duggal, Mr. Siddharth Burman, Mr. Saket Burman and Mr. R.S. Rana all whole time directors of group companies. Relatives of key management personnel include Mr. R. C Burman, Mr. V. C. Burman and Ms Asha Burman.
c. d. e. f. g. h. I)
Note:
II)
23. Income Taxes Provision for Income Taxes includes foreign income tax provision of INR 145.96 lac for Dabur Nepal Pvt. Ltd and Rs. 76.94 for Asian Consumer Care Pakistan Ltd. The break-up of deferred tax liability / benefit : 2007 A Deffered tax liability (Non-Current) Depreciation of Plant & equipment Long term investment Total Deffered Tax liability (NonCurrent) B Deffered Tax assets (NonCurrent) VRS Payment Long term investment Technical know how fees Total Deffered Tax assets (NonCurrent) C Deffered Tax liability (A - B) Deffered tax liability (current) Current investment Total Deffered tax liability (current) Deffered Tax assets (Current) VRS Payment Disallowance U/S 43B of Income Tax Act, 1961 Total deffered tax Assets (Current) 1361.57 78.71 1440.28 0.00 0.00 8.46 8.46 1431.82 39.87 39.87 0.00 84.12 44.25 1387.57 INR Lac 2006 1228.53 88.28 1316.81 0.00 0.00 15.56 15.56 1301.25 1.93 1.93 0.00 131.73 129.80 1171.45
G Total deffered tax liability (C -F)
136
24. Fair value of financial instruments The Company uses the following methods and assumptions to estimate fair value of each class of financial instruments for which it is practicable to estimate fair value: Cash, cash equivalents and restricted cash The carrying amount approximates fair value because of the short-term maturity (up to months) of such instruments. Accounts receivable The carrying amount approximates fair value due to their short term nature and historical collectability. Investments The fair value of some investments are estimated based on their quoted market prices. For other investments, for which there are no quoted market prices, a reasonable estimate of fair value could not be made without incurring significant costs. Accounts payable The carrying value of accounts payable approximates fair value due to the short-term nature of obligations. Long term debt The fair value of debt of the Company is estimated based on quoted market prices or current rates offered to the Company for same or similar debt. The carrying value of material long-term debt approximates its fair value. Estimated fair values of the Companys financial instruments are as follows : 2007 5768.60 14197.09 8083.35 105.00 17409.44 999.61 INR Lac 2006 4892.75 7435.01 4355.46 105.00 16482.32 3002.08
Cash & cash equivalent Accounts receivable Investments for which: Practicable to estimate fair value Non-practicable to estimate fair value Accounts payable Long term debt 25. Other contingency & capital commitment a)
The group Company is involved in certain claims, fiscal assessments and litigation arising in the ordinary course of business. Management believes that these claims taken individually, or together, will not have a material effect on the financial statement of the Company. List of contingencies are as follows: 2007 262.28 12436.40 1200.00 1962.6 3305.94 611.65 INR Lac 2006 338.62 9378.86 1200.00 2396.58 4443.98 450.89
Claims not acknowledged as debts In respect of Guarantees furnished: Current Non Current Bills purchased / discounted under letters of credit Demand for taxes pending disposal of appeal(s) In respect of Capital Commitment for un-executed contract b)
Non Current guarantee relates to guarantee furnished by Parent company for INR 1200.00 lac to GE Capital Services India Limited on behalf of Dabur Foods Limited against term loan facility obtained by latter from the former.
137
c)
Breakup of current guarantees furnished along with other particulars INR Lac Guaranteed party Name of party on whose behalf guarantee issued Dabur Nepal Private Ltd. Dabur Nepal Private Ltd. J P Sharma Naseem Ahmed R S Saini Dabur Egypt Limited Dabur Egypt Limited Dabur Foods Limited Dabur Foods Limited Dabur Foods Limited Dabur Foods Limited Dabur Oncology Plc Dabur Oncology Plc Dabur India Ltd Dabur India Ltd Dabur India Ltd Dabur Nepal Private Ltd. Dabur Foods Limited Dabur Foods Limited Carrying Amount as on 31/03/07 187.50 125.00 7.50 4.50 8.75 284.00 206.00 1200.00 2550.00 400.00 950.00 2138.00 2259.00 140.00 37.00 10.60 1719.70 41.85 167.00 12436.40 Fair Value as on 31/03/07 187.50 125.00 7.50 4.50 8.75 284.00 206.00 1200.00 2550.00 400.00 950.00 2138.00 2259.00 140.00 37.00 10.60 1719.70 41.85 167.00 12436.40
Nepal Arab Bank Ltd. Nepal Arab Bank Ltd. HDFC Limited HDFC Limited HDFC Limited HSBC, New Delhi HSBC Ltd. Canara Bank HSBC Ltd. ICICI Bank Limited GE Capital Services India ABN Amro Bank ABN Amro Bank Hongkong Bank Punjab National Bank Standard Chartered Bank Nepal Arab Bank Ltd. HSBC Ltd. ICICI Bank Limited Total
None of the parties favouring whom guarantee have been furnished is related party. ii) Non current Loans and Advances includes INR 48.64 lac paid by the Company to Excise authorities on behalf of Sharda Boiron Laboratories Limited, now known as SBL Limited, in respect of excise duty demand of INR 68.13 Lac raised by the District Excise Officer, Ghaziabad, against the Company and Sharda Boiron Laboratories Limited. The Honble Supreme Court of India had concurred with the order of the District Excise Officer, Ghaziabad. The Company had filed the review petition before Division Branch of the Honble Supreme Court of India, which was also decided against the Company. Pursuant to the indemnity bond executed by M/s. Sharda Boiron Laboratories Limited in favour of the Company and as per the terms and conditions of the contract executed with them, the recovery proceedings have been initiated by the Company against Sharda Boiron Laboratories Limited for INR 48.64 lac by invoking the arbitration clause. The matter is pending before Honble High Court of Delhi for the appointment of an arbitrator. The balance amount of INR 24.46 lac along with interest demanded by the Excise Authorities has been paid directly by Sharda Boiron Laboratories Limited to Excise Authorities. During the year 1991-92 the company has received a refund of INR 5.95 lac, pursuant to the decision of Honble Supreme Court in this regard. Necessary adjustments in respect of recovery / refund will be made as per the arbitration proceedings. 26. Concentration of customer The products of the groups meant for indigenous usage predominantly find outlet through dealers networks widely spread across the length and breadth of the country, none of the dealers controlling noteworthy percentage of total indigenous sale. Exports are predominantly destined to West Asia, South Asia and South East Asian countries. Products constituting lions share of the total revenue include Chywanprash, Hajmola, Hair oil, Fruit juices, Honey, Shampoo, Toothpaste and other Cosmetics etc.
138
27.
Revenue 2007 176023.40 26834.73 203.94 423.56 203485.64 INR Lac 2006 152729.01 18816.48 172.37 278.78 171996.64
Domestic sales less returns Export sales Subsidy Sale of scrap Total 28. Cost of revenues
Raw Material consumed Packing Materials consumed Purchase of Finished goods Increase(-) / Decrease in stock in process & finished goods Mfg. Expenses Misc exp / receipt Workmen & staff welfare Total 29. Selling, general and administrative expenses
2007 47659.30 33438.11 18938.65 -2981.63 7425.54 18.75 9166.76 113665.48
INR Lac 2006 38758.41 25891.75 15385.77 736.39 5711.25 18.95 7972.67 94475.19 INR Lac 2006 1031.21 117.81 341.84 6441.06 650.09 22168.21 2098.76 407.62 928.14 186.55 5631.61 9.00 71.55 331.37 720.00 145.82 0.00 9.88 41290.52
Rent Rates & Taxes Insurance Freight & forwarding charges Commission , Discount Advertisement & Publicity Travel & Conveyance Telephone Legal & Professional Telephone, fax expenses Security expenses General expenses Directors fees Auditors remuneration Donation Contribution to scientific research expenses Bad debts Provision for contingent liability Loss on sale of fixed assets Total 30. Personnel expenses
2007 1101.58 212.59 378.81 6569.60 555.06 25585.81 2388.87 491.07 1149.66 252.91 6395.29 10.50 80.33 430.30 775.00 304.43 0.00 1.28 46683.07
Directors remuneration Salaries & benefits ESOP Employees Total
2007 1246.48 6253.60 630.61 8130.68
INR Lac 2006 895.29 5537.11 498.00 6930.40
139
31.
Financial expenses 2007 Interest Paid on : Fixed period loan Others Bank charges Total 501.83 608.18 427.50 1537.51 INR Lac 2006 389.30 735.70 513.70 1638.70
32. Other income 2007 15.64 0.30 1013.21 533.89 0.00 400.19 1963.23 INR Lac 2006 17.30 0.48 540.88 151.84 18.54 146.06 875.10
Rent Realised Dividend Misc Receipt Profit on sale of investment Royalty Profit / loss on sale of fixed assets Total
140
33. Segment data
Since Dabur India Limited is not listed in US Stock exchange, it is not regarded as public listed enterprises. However for the purpose of providing additional information to the users, management has provided information close to the requirement of SAF 131 for current year.
Segment reporting and related information; Consumer Care Business Current Year 160962 0 160962 39346 0 39346 0 0 39346 0 39346 0 39346 63167 0 63167 30152 0 30152 33015 1848 28133 1357 38067 2508 8928 179 38067 0 2508 0 66200 11436 11470 1396 0 1396 10074 155 66200 0 11436 0 11470 0 33706 3613 3595 2107 19326 0 19326 20050 0 20050 (724) 892 0 0 0 0 33706 3613 3595 2107 0 0 0 0 0 2018 0 2018 21455 0 21455 34108 0 34108 (12653) 672 33706 3613 3595 2107 2018 0 0 0 0 0 0 0 0 0 0 33706 3613 3595 2107 2018 113 0 0 113 0 113 0 113 4931 0 4931 516 0 516 4415 269 33706 0 3613 0 3595 0 2107 0 2018 0 113 0 99 0 99 0 0 99 0 99 0 99 5887 0 5887 (1810) 0 (1810) 7697 223 137102 14780 13451 23685 18219 4085 3224 137102 0 14780 0 13451 0 23685 0 18219 0 4058 0 3224 0 0 0 0 0 (14525) (14525) 1538 4085 (20148) 1963 (18184) (87) (18097) 0 11285 11285 0 9327 9327 1958 1165 Previous Year Current Year Previous Year Current Year Previous Year Current Year Previous Year Current Year Previous Year 0 0 0 0 (13535) (13535) 1639 3248 (18422) 875 (17546) (33) (17514) 0 (935) (935) 0 (16547) (16547) 15612 1011 Consumer Health Business Foods Others Unallocated Total Consolidated Current Year 203486 0 203486 45179 (14525) 30654 1538 4085 25031 1963 26994 (87) 27082 98860 11285 110146 53226 9327 62553 47592 4353 Previous Year 171997 0 171997 39418 (13535) 25883 1639 3248 20996 875 21871 (33) 21904 105014 (935) 104078 71762 (16547) 55215 48863 3418
REVENUE
External Sales Inter-segment sales
Total Revenue
RESULT Segment result Unallocated corporate expenses
Operating profit
Interest expense (Net) Income Tax(Current + Deferred)
Profit from ordinary activities
Other Income
Net profit
Minority Interest
Net profit
OTHER INFORMATION Segment assets Unallocated corporate assets
Total assets
Segment liabilities Unallocated corporate liabilities
Total liabilities
CAPITAL EMPLOYED Depreciation
141
34. Employees post retirement benefit : a) Gratuity : (i) Dabur India Ltd. and Dabur Foods Ltd. These companies have taken comprehensive insurance coverage for payment of gratuity liability to eligible employees from Life Insurance Corporation of India (LIC) for which annual contribution is paid. Under this scheme settlement obligation remains with respective company although LIC administers the fund and determines annual contribution to be paid. Annual contribution made by DIL, Dabur Foods Ltd, LIC in this connection amount to INR 330.12 lac. ( 277.53 previous year). (ii) Dabur International Ltd. and Weikfield International (UAE) Ltd, Asian Consumer Care Ltd, African Consumer Care Ltd, Asian Consumer Care Pakistan Ltd, Dabur Egypt Ltd, Dabur Nepal Pvt Ltd. Gratuity liability has been provided based on management estimate on the assumption of all employees retiring at the period end. The said liability has not been funded. Provision made towards gratuity by Dabur International Ltd. and Weikfield International (UAE) Ltd amount to INR 26.94 lac and INR 9.95 lac respectively (14.75 lac and 3.11 lac respectively previous year). b) Leave Salary : i) Dabur India Ltd. and Dabur Food Limited Respective companies provided benefit of leave encashment to employees through annual contribution to a fund managed by LIC. Under this scheme the settlement obligation remains with the respective companies although LIC administers the fund and determines the annual contribution to be paid. Total payment made during the year on account of annual contribution to LIC in respect of Leave Salary amounts to INR 112.25, INR 8.34 lac by DIL , Dabur Food Limited respectively (20.53 lac & 3.65 lac previous year) ii) Dabur International Ltd. and Weikfield International (UAE) Ltd, Asian Consumer Care Ltd, African Consumer Care Ltd, Asian Consumer Care Pakistan Ltd, Dabur Egypt Ltd, Dabur Nepal Pvt Ltd. These companies estimate their liabilities towards leave salary on the assumption of all employees retiring at the period end. The liabilities so created are not funded. Liability on account of leave salary provided during the year include : Dabur International Limited Weikfield International Limited INR 55.81 lac INR 21.83 lac previous year INR 9.06 lac INR 11.97 lac previous year c) Benefit of superannuation DIL provides benefit of superannuation towards employees for which it has obtained comprehensive coverage from LIC. Under this scheme the settlement obligation lies with the company although LIC administers the fund and determines the annual contribution to be paid. Payment made for the period to LIC in this connection amounts to INR 204.03 lac ( 215.75 previous year). The company is in the process of implementing FASM pronouncement in respect of employee related liability. The detailed statement of reconciliation will be provided only after the implementation of the same. 35. Reconciliation between India GAAP & US GAAP. There are considerable differences between two, the noteworthy of them being enunciated below: a. b. Valuation of investment under US GAAP at market price as against lower of costs under market value under Indian GAAP leading to comprehensive total income. Depreciation on properties based on assessment of actual life span of the assets under US GAAP as against charging depreciation as per statutory rate under Indian GAAP.
142
c. d.
The Company has valued its inventories at weighted average method in Indian GAAP, whereas same is valued at FIFO in US GAAP . Above resulted in difference of profit of DIL Group between Indian GAAP and US GAAP by INR 1223.01 lac, the former being higher.
36. Comprehensive income has been accounted for in respect of income / loss on earned or sustained subsequent to 1st April 2005. Prior period income / loss predominantly arising out of translation adjustments forms part of retained earning. 37. Prior period adjustment: An income of INR 132.55 lac ( 96.70 previous year) relating to past years tax provision has been charged.
38. Changes in accounting practice pursuant to recent FASM pronouncements a) SFAS No 154 Accounting changes and error corrections is a replacement of APB No 20, lying down retrospectively application of voluntary changes affected in accounting treatment including method of depreciating (amortising nonfinancial assets) and correction of error in financial statement and correction of error in financial statement of earlier periods as far as practicable , has no effect in this financial statement due to absence of any such features in the account. SFAS No 123 R on Share based payment in revision of SFAS 123, calling for recognization of compensation expense in income statement for the grant date far value of stock options issued to employees over the vesting period has hardly any effect in the financial statement in view of revised statement being already in practice in the company since inception.
b)
39. Difference between Indian GAAP vis a vis US GAAP, if not material, for any head of accounts, has been ignored.
A.K. Jain
143

Final Annul A 2007

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Final Annul A 2007

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Dabur India Limited Annual Report 2006-07

Ten Year Highlights

Dabur India Limited Annual Report 2006-07

GM (Finance) & Company Secretary

Dabur India Limited Annual Report 2006-07

PAT after minority interests increased by 32 per cent to Rs.283 crore.

V.C. Burman Chairman

Dabur India Limited Annual Report 2006-07

Based on Consolidated financials of Dabur India Limited

Management Discussion and Analysis

Management Discussion and Analysis

Dabur India Limited Annual Report 2006-07

Management Discussion and Analysis

Dabur India Limited Annual Report 2006-07

Consumer Care Division (CCD)

Management Discussion and Analysis

Dabur India Limited Annual Report 2006-07

Skin and Baby Care

Management Discussion and Analysis

Dabur India Limited Annual Report 2006-07

Consumer Health Division (CHD)

Management Discussion and Analysis

Dabur India Limited Annual Report 2006-07

International Business Division

Management Discussion and Analysis

Dabur India Limited Annual Report 2006-07

Management Discussion and Analysis

Dabur India Limited Annual Report 2006-07

Internal Controls and their Adequacy

Report on Corporate Governance

Report on Corporate Governance

Companys philosophy on Corporate Governance

Table 1: Composition of the Board of Directors of Dabur India Limited

Dabur India Limited Annual Report 2006-07

Report on Corporate Governance

Essential 2-3 years experience as a CEO, preferably of an MNC in India

Desirable FMCG experience

Dabur India Limited Annual Report 2006-07

Salary and Perquisites 0 8560511 0 0 13220279 14843061 0 0 0 0 0 36623851

Superannuation Fund 0 705001 0 0 1120357 977876 0 0 0 0 0 2803234

Stock Option 0 0 0 0 20603081 19872592 0 0 0 0 0 40475673

Commission 9000000 0 0 0 0 0 0 0 0 0 0 9000000

Report on Corporate Governance

Dabur India Limited Annual Report 2006-07

New Delhi May 8th, 2007

Report on Corporate Governance

*Appointed as a member w.e.f. 31/10/2006. ** Ceased as a member w.e.f . 31/10/2006

Dabur India Limited Annual Report 2006-07

Mr V C Burman (PD / NED) Member Mr P D Narang (ED) Member

Report on Corporate Governance

Sd/P N Vijay Chairman, Shareholders/ InvestorGrievance and Share Transfer Committee

Dabur India Limited Annual Report 2006-07

Report on Corporate Governance

Dabur India Limited Annual Report 2006-07

Time 9.30 AM 2.00 PM 11.00 AM 11.00 AM 9.30 AM 11.00 AM

*AGM - Annual General Meeting, EGM - Extraordinary General Meeting

Report on Corporate Governance

97.54% 2.45% 0.01% 100.00%

99.9885% 0.0004% 0.00111% 100.00%

Dabur India Limited Annual Report 2006-07

End April 2008: Fourth Quarter and Annual

Additional Shareholder Information