DABUR INDIA LIMITED

ANNUAL REPOR T
w w w. d a b u r. c o m
Report on Corporate Governance Directors Report 06 Auditors Report 13 Financial Statements 17 Consolidated Financial Statements 18 Statements as per US GAAP 25 31

CHAIRMANS MESSAGE
Dear Shareholders,

BOARD OF DIRECTORS
Mr V C Burman Dr Anand Burman Mr Pradip Burman Mr Amit Burman Mr P D Narang Mr Sunil Duggal HH Maharaja Gaj Singh Mr R C Bhargava Mr P N Vijay Mr Stuart Edward Purdy Dr S Narayan Chairman Vice Chairman Director Director Director Director Director Director Director Director Director

oday India is at the forefront of global economic activity and investments on account of its strong economic growth and stellar corporate performance. The GDP in India has grown at 8.5 per cent, 7.2 per cent and 8.1 per cent in the last three years. The consensus among analysts is that India has gone beyond the point of inflexion and is poised for a period of sustained high growth. However, the FMCG industry had not kept pace with this overall economic growth. The period 20002004 saw low rates of growth in demand for FMCG products leading to intense competition between companies and severe pricing pressures. It has often been postulated that a few consecutive years of sustained high growth is necessary for overall economic prosperity to translate into benefits for the FMCG sector. In 2005-06, on the back of 3 consecutive years of strong economic growth, the fortunes of the FMCG industry as a whole have started to look much better. The FMCG sector will continue to gain from the fact that domestic consumption is growing both on the urban as well as the rural front. Successful businesses of the future will have to reach out to the vast semi-urban and rural markets in India. The low levels of FMCG market penetration in rural and semi-urban India coupled with improved economic conditions provide considerable scope of growth in these areas. Your company with its product mix and sales and distribution network is well positioned to leverage its strengths and consistently deliver high quality products at affordable prices in these markets. In addition the consumer spends in urban areas are increasing with rising affluence, changing lifestyles and a seeming up-gradation to premium / higher end products. Your company has a good portfolio of brands and products catering to this market as well. In 2005-06, your Company has successfully leveraged the revival in the FMCG sector and combined it with laudable improvements in costs, productivity, efficiency and supply chain management to deliver superior growth in revenues and even more so in profits.

Some key achievements areConsolidated net sales from operations increased by 23.6 per cent from Rs.1,537 crore in 2004-05 to Rs.1,900 crore in 2005-06. I Consolidated profits after tax (PAT) after accounting for minority interests and exceptional items grew by 37.5 per cent from Rs.155.8 crore to Rs.214.2 crore. I Return on capital employed (ROCE) increased from 31.5 per cent to 39 per cent. I Return on net worth (RONW) increased from 43.5 per cent to 46.1 per cent. I Fully diluted earnings per share (EPS-diluted) rose from Rs.2.71 to Rs.3.71.
I

I would like to touch upon some of the key developments that occurred during the year 2005-06. As you know, we had acquired the Balsara business in the current year. Integration is the key to any successful acquisition. I am delighted to inform you that due to the focussed efforts of your Company and the Balsara team, the integration was successfully completed within the first six months of acquisition. Balsara's home care and oral care products have been well positioned in the overall Dabur portfolio and have demonstrated good potential for growth. Also we have turned a loss making business into a profit making one. Operational integration completed, the process of merging the three Balsara entities with Dabur is underway and will further contribute to shareholders' value. Dabur's Consumer Care Division, which comprises of the core FMCG business has performed well during the year, driven by new product launches, innovation and marketing initiatives. During the year your company forayed into the soap category by launching a herbal soap under the Vatika brand. While Dabur Chyawanprash further consolidated its market share and continued to be the market leader, its variant Chyawanshakti was also launched during the year. Toothpastes emerged as major drivers in the oral care segment. Focus on South India market added momentum to CCD growth.

Dabur's traditional ayurvedic business is undertaken by the Consumer Healthcare Division. This business consistently recorded high growths throughout the year. With sales of Rs.148.6 crore, it has registered 38.7 per cent growth. This growth has been led by a number of initiatives like reaching out to the consumers directly through Dabur Ayurvedic centers, organising health camps, vaid meets, collaborating with the academicia, etc. We identify our healthcare business as one of the growth drivers in future. Increasing preference for natural remedies is likely to ensure a sustained demand for our ayurvedic products. The group's foods business under Dabur Foods Limited, a wholly owned subsidiary of your Company grew by over 46 per cent to reach sales of Rs.190 crore. Today, many of its products, especially its juices under the brands Real, Real Activ and Coolers are found in every household and account for almost 57 per cent of India's juice market. During the year, the business more than doubled its profit due to scale and operational excellence and has become a significant driver of growth of your Company. Changing lifestyles and modern retail formats are expected to benefit the foods business in future. I would also like to share with you your Company's overseas business performance. Overseas business grew at 19% with markets such as GCC growing at 27% and Egypt at 49%.There is a lot of potential for Dabur products in the international market. During the year, your company has reorganised its international business around the focus, potential and opportunistic markets to be able to tap its potential to the fullest. A subsidiary has been established for Pakistan market to leverage on Dabur's equity there. On the operational front, the company's manufacturing unit at Uttaranchal crossed Rs 500 crore production in a span of just 18 months. Your company is the first company in Uttaranchal to achieve this milestone. It has become the largest employer in the region and has added to the region's economic prosperity. Going ahead further capacity expansion has been planned for this unit. Also, the Silvassa unit that came with the acquisition of Balsara is being upgraded/transformed into an EOU to cater to the export requirements. During the year, the company spent its time and resources to migrate to an improved ERP platform- SAP to ensure best business practices. The target of going live on 1st April 2006 on SAP was successfully met. The Institute of Companies Secretaries of India conferred upon Dabur the 'National Award for Excellence in Corporate Governance' for the year2005. The company's CFO was recognised as one among the best three CFOs of the country for the year 2005 by Business India. Your company has always made concerted efforts to ensure highest levels of disclosures, transparency and corporate governance. Such recognition further motivates the Company towards continuing its efforts in this direction. A major survey conducted by two reputed HR consulting firms and published in the Business World listed your Company as one of the top ten 'Great Places To Work'. This is a creditable achievement for your company and recognizes its efforts to empower its employees and keep them fully motivated and aligned with the Company's goals. During the year your Company made a bonus issue of one share for every share held thereby rewarding the shareholders for its outstanding growth in the past few years. The Company also declared a dividend of 350% on pre-bonus capital, the highest till date. I would like to take this opportunity to thank all the employees, vendors and distributors for their commitment and hard work leading to the Company's success. Also I would like to thank the shareholders for their continuing faith and support. Your company has performed well in the past and I can assure you that it will continue to aim for higher achievements in future too. Yours sincerely, V.C. Burman Chairman

PERFORMANCE HIGHLIGHTS
FMCG+Pharma Pharma FMCG

183.8

1600 1200 800 400 0

200
189.08 1369.7 1268.72

50
38.7

160
148.02

40 30 20 10 0
14.5 27.2 34.9

1163.2

1148.0

1048.5

120 80 40
64.44

13.1

2001 02- 03 04 05-02 03 -04 -05 2006

72

101.2

2001 02- 03 04 05-02 03 -04 -05 2006

2001 02- 03 04 05-02 03 -04 -05 2006

SALES
(Rs crore)

PROFIT AFTER TAX (Rs crore)

RETURN ON CAPITAL EMPLOYED (%)

MANAGEMENT DISCUSSION & ANALYSIS

our years ago, Dabur India Limited (Dabur, DIL or the company) had laid down its long-term plan of transforming to focused and transformed FMCG player. The blueprint involved developing and implementing marketing initiatives based on a clear strategic plan with a restructured brand architecture, continuously introducing a stream of new products and creating a niche for the company in the FMCG segment based on the herbal and natural products platform. In 200506, Dabur has surpassed all the key milestones set out in this plan. Today, these drivers are firmly entrenched in Dabur and continue to foster development of its business strategies and operations, as is evident in its stand-alone and consolidated results for 2005-06.

Revenue from operations increased by 8 per cent from Rs.1,269 crore in 2004-05 to Rs.1,370 crore in 2005-06 Operating profit (EBIDTA) increased by 29.5 per cent from Rs.188 crore in 2004-05 to Rs.243 crore in 2005-06 Profit after tax (PAT) increased by 27.7 per cent from Rs.148 crore in 2004-05 to Rs.189 crore in 2005-06 Return on capital

Stand-alone performance of DIL

The highlights of Dabur India Limiteds (DILs) stand-alone results for 2005-06 are:

05-06

43.1

20

MANAGEMENT DISCUSSION & ANALYSIS

Dabur India Limited Annual Report 2005-06

PERFORMANCE HIGHLIGHTS
FMCG+Pharma Pharma FMCG FMCG-post bonus issue

employed (ROCE) increased from 38.7 per cent in 2004-05 to 43.1 per cent in 2005-06 Return on net worth (RONW) increased from 44.5 per cent in 2004-05 to 45.5 per cent in 2005-06

care. With the Balsara acquisition, products under the home care segment have been added to this SBU. Chart B gives the relative contribution of each category to CCDs sales.

Chart B: Category contributions to CCD (%)

Home care Health supplements

Consolidated performance of Dabur

Dabur caters to the domestic personal care and health care markets through its parent company, DIL. The foods business operates through its wholly owned subsidiary, Dabur Foods Limited (DFL). The international operations have been streamlined under another subsidiary called Dabur International Limited (DIntL), which, in turn, has its subsidiaries in focus markets. While the three Balsara companies are being merged into DIL with effect from 1 April 2006, during 2005-06 they functioned as DILs subsidiaries. Consequently, the full picture of Daburs overall performance can be best seen when viewed as a consolidated entity. The salient features of Daburs consolidated performance in 2005-06 are: Consolidated net sales from operations increased by 23.6 per cent from Rs.1,537 crore in 2004-05 to Rs.1,900 crore in 2005-06 Consolidated profits after tax (PAT) after accounting for minority interests and exeptional items grew by 37.5 per cent from Rs.156 crore in 2004-05 to Rs.214 crore in 2005-06 Return on capital employed (ROCE) increased from 31.5 per cent in 2004-05 to 39 per cent in 2005-06 Return on net worth (RONW) increased from 43.5 per cent in 2004-05 to 46.1 per cent in 2005-06. This year Dabur has undertaken a new initiative to prepare and present results as per US GAAP. The key points thereof are stated in the Financial section. In the beginning of 2005-06, Dabur had made its first major acquisition the Balsara business. This consisted of three entities: Balsara Home Products Limited, Balsara Hygiene Products Limited and Besta Cosmetics Limited. Balsaras oral care products complemented Daburs oral care range and its homecare products added a new segment to Daburs FMCG portfolio. During the year, while the company consolidated and broad based the core FMCG business with this acquisition, it also strengthened its other growth drivers the consumer healthcare business and the foods business. A key initiative undertaken during the year was renewed management focus and a fresh approach to developing the consumer healthcare business. This business segment, with an 8 per cent share in Daburs overall revenues, is an important part of the companys portfolio, as it is the foundation of its Ayurvedic and herbal positioning and offers multiple growth avenues for Daburs healthcare franchise. The reformulated strategy stressed on refurbishing product profiles, strengthening the sales and distribution channels, re-organising the workforce and developing the Ayurveda space in a scientific manner. The aim was to generate a quantum jump in growth and in 2005-06 the revenue from this business increased by 38.7 per cent. The foods business, under the wholly owned subsidiary Dabur Foods Limited (DFL), had witnessed impressive growth in the last two years. However, this was largely driven by the top-line; profitability had been lower than optimal. During 2005-06, with special focus on operations including investments in backward integration, the business has recorded a profit growth in excess of 100 per cent. Consequently, DFL has almost entirely wiped out its carried forward accumulated losses. With changes happening in consumption habits and the expected growth momentum in organised retail trade across the country, the foods business is expected to emerge as a potentially strong portfolio in Daburs business. After a few dull years, the FMCG sector in India has started to look up and a demand pick up is evident across most segments of this sector (see chart A). This augurs well for Dabur, which is well positioned with a diversified and strong suite of products catering to different target segments and markets.
45.5

25 20
17.8 14.8

50 40
38.6 32.3 44.5

6 21
Hair care

15
10.7 11

30 20
16.2

10 5 0

12

10
2001 02- 03 04 05-02 03 -04 -05 2006

33 10

Digestives & Confectionery

2001 02- 03 04 05-02 03 -04 -05 2006

OPERATING MARGIN (%)

RETURN ON NET WORTH (%)

8 22
Oral Care Baby & Skin Care

12 9 6
5.2 3.5 6.5

250
213.6

200 150 100

39.8

3.3

2.3

2.5

2001 02- 03 04 05-02 03 -04 -05 2006

2001 02- 03 04 05-02 03 -04 -05 2006

EARNINGS PER SHARE (Rs)

LOAN FUNDS (Rs crore)

500
398.9

185.8

300
261.2 81.6 415

48.6

50

20.6

CCDs sales have increased by 22 per cent from Rs.1089.9 crore in 2004-05 to Rs.1,328.7 crore in 2005-06. This growth includes sales from Balsara products in the oral care and the home care segments, which account for 12 per cent of total sales of CCD. Dabur continued with its time-tested and successful strategy of product promotion through celebrity endorsements. In 2005-06, key brand endorsements by celebrities included Amitabh Bachchan for Dabur Chyawanprash and Rani Mukherji for Dabur Anmol and Vatika hair care portfolio. The company also signed up Vivek Oberoi to endorse Babool toothpaste and Dabur Chyawanprash. The CCD business continues to lay emphasis on developing an efficient distribution channel and re-organising it according to the changing market requirements. We believe that the distribution channel has to increasingly cater to a varied set of customers such as grocery stores, chemists and organised retail outlets. Each of these has different needs, which can only be addressed by developing specialised teams that are focused on clear customer classifications and cater to their specific requirements. Dabur has embarked upon an ambitious programme named DARE (Driving Achievement of Retail Excellence) to address these varied needs to achieve greater penetration and higher levels of service for a wide range of customers. The project also focuses on increasing Daburs penetration into rural markets through a combination of marketing and distribution strategies.
HAIR CARE Our hair care category consists of hair oils and shampoos. It is the largest category in Daburs CCD portfolio with a 33 per cent share. For Dabur, 2005-06 was a challenging year in this category with sales growing by 3.4 per cent. Daburs hair oil portfolio, excluding institutional sales to the army and other channels, registered a 7 per cent increase in sales in 2005-06. However, there was poor off-take by institutional buyers due to issues arising out of VAT implementation in the first quarter of the year. These have been subsequently resolved. The companys Anmol brand, which is on the economy platform, did well with sales of the mustard and coconut oil variants increasing by 13.7 per cent and 33 per cent respectively. Dabur Amla Hair Oil, with a turnover in excess of Rs.200 crore, grew by 5.2 per cent in 2005-06. Decline in sales of value added coconut oils under the Vatika brand was a dampener in this category. A new communication package and marketing mix has been designed to re-vitalise this brand. In shampoos, sales of the Vatika shampoo portfolio grew by 8.7 per cent for the year as whole. The good news is that by the second half of 2005-06, shampoos emerged from a phase of severe price cuts to experience a degree of price stabilisation. Consequently, the second half of 2005-06 saw the Vatika shampoo portfolio grow by 12.7 per cent a significant increase from the 5 per cent growth in the first half of the year. ORAL CARE With the Balsara acquisition, the companys oral care offerings now provide a wider choice to consumers across different price points. The brands are positioned as Dabur Red Toothpaste in the popular segment, Babool in the economy segment and Meswak in the premium segment. In the classical toothpowder category, Dabur has its flagship product, Dabur Lal Dant Manjan. During 2005-06, this portfolio (including Balsara sales) increased by 6 per cent. With its range of existing and acquired brands, Dabur has been able to add market share in the toothpaste category and is now holding 7 per cent of the toothpaste market. Babool and Meswak toothpastes grew by 70 per cent and 72 per cent respectively. Babools success can be largely attributed to a carefully crafted strategy that brought about necessary changes in the product, its packaging, promotion schemes and advertising. The Meswak brand was revitalised and found a significant growth in the number of takers despite being in the premium segment. Red Toothpaste grew by 18.6 per cent to Rs.55 crore in 2005-06, which contributed to its market share increasing from 2 per cent to 2.8 per cent. Sales of the toothpowder, Dabur Lal Dant Manjan, have been under pressure because of a general slowdown in the category attributable to a shift in consumer preference from toothpowder to toothpastes. While this gradual shift to the toothpaste category may continue, we have in place a strong toothpaste portfolio to capture the migration and continue the growth momentum in the oral care category as a whole. HEALTH SUPPLEMENTS This category recorded a healthy growth of 15 per cent. Sales of Dabur Chyawanprash, which in value terms is the largest product in this category, grew by 11.8 per cent in 200506. This flagship product was promoted by a new advertisement campaign featuring Amitabh Bachchan and Vivek Oberoi. The company also did an extensive print campaign to educate consumers about the holistic benefits of consuming Chyawanprash. As a result, Daburs market share in this category has risen from 60.9 per cent to 62.6 per cent. During the year, the company launched Dabur Chyawanshakti, a unique mix of 47 herbs and natural ingredients like draksha, ashwagandha and kesar. This health supplement is targeted at working adults to help them tackle work related stress and pressures of their daily lifestyle. Dabur Honey also witnessed good growth of 9.4 per cent. Dabur Glucose increased by 40 per cent in value terms and gained significant market share. This was particularly heartening as it occurred at a time when the category itself had shrunk by 5.8 per cent. DIGESTIVE AND CONFECTIONERIES This category had a disappointing year, with sales growing by 1.6 per cent in 2005-06. Hajmola candys sales remained almost stagnant a factor that brought down the overall growth of the category. However, there were bright sparks: Hajmola tablet sales grew by 5.8 per cent; the Pudin Hara brand also did well, with a growth of 15.4 per cent. Within the Pudin Hara brand, Pudin Hara Pearls and Pudin Hara Liquid grew by 27.2 per cent and 10.6 per cent respectively. SKIN CARE/BABY OILS Although it is a small category, Daburs skin care/baby oils had a good year in terms of sales growth. In 2005-06, sales increased by 34.3 per cent over the previous year and crossed Rs.100 crore, with skin care products expanding at a much faster clip than baby oils. This was largely because of Daburs entry into the personal wash segment with the national launch of its new Vatika Honey & Saffron Soap in September 2005. With this, Dabur made its first foray into the Rs.4,800 crore Indian soap market. Vatika Honey & Saffron is targeted at the beauty and skin care conscious consumer, who accounts for around 50 per cent of total soap demand in India. Within the first six months of its launch, the cumulative sales of this soap were Rs.18.9 crore. Since the product is very competitively priced in its category and offers distinct benefits we expect the positive market response to continue. Sales of Gulabari, an extract of fragrant red roses, grew by 17.7 per cent in 2005-06. The cold cream under the Anmol brand, which was test launched last year was successfully extended to other markets in North, East and Western India. In the Baby Care segment, Dabur Janamghunti sales increased by 15.1 per cent while that of Dabur Lal Tail increased by 3.1 per cent. HOME CARE The Home Care category came to Daburs fold after the Balsara acquisition. Its contribution to CCD sales was the smallest, at 6 per cent, but it was the fastest growing portfolio with sales growth of 62.9 per cent in 2005-06 over the previous year. Daburs Home Care brands include Odonil in air fresheners, Odomos in mosquito repellents, Sani Fresh in surface cleaning and Odopic in the dish washing powders category.

400 300 200 100 0

200 100 0

332.3

222.9

112.3

262

81.7

28.3

-16.9

-70.3

2001 02- 03 04 05-02 03 -04 -05 2006

-100

2001 02- 03 04 05-02 03 -04 -05 2006

-22.9

Chart A: Value growth in key FMCG segments (%)

30 25 20 15 10 5 0

NET WORTH (Rs crore)

DIL stand alone financials

NET WORKING CAPITAL (Rs crore)

30 28

11 8 3.3 Perfumed hair oil Coconut oil Normal Shampoo Anti-Dandruff shampoo Toothpaste

Source:AC Nielson Retail Audit Report (Apr-Mar 2006)

COMPANY INFORMATION
AUDITORS M/s G. Basu & Co. Charted Accountants Internal Auditors Price Waterhouse Coopers Pvt.Ltd. Addl. GM (Finance) & Company Secretary Mr A K Jain BANKERS Punjab National Bank Standard Charted Bank HSBC Ltd. State bank of India ABN Amro Bank Citibank NA United Bank of India HDFC Bank Ltd. IDBI Bank Ltd. CORPORATE OFFICE Dabur India Limited Dabur Tower, Kaushambi, Sahibabad, Ghaziabad-201010, (U.P), India

From a strategic perspective, 2005-06 can be considered a positive inflexion point in Daburs long-term growth path. Having delivered good results in the last four years, even while the industry was undergoing adverse demand conditions, the company has spelt out its intent of entering a new growth trajectory. The new four-year plan aims at continuing the growth momentum across businesses so as to outperform the sector as a whole. Business strategies have been developed in consonance with the growth objectives, focusing on three key elements expansion, innovation and acquisition. Expansion entails expanding the companys footprint across platforms and markets. While the company will continue to leverage its herbal specialist platform and build on its core strength in Ayurveda, it will also explore newer platforms in the FMCG space that have potential and synergies with Daburs existing capabilities. Already, in 2005-06 the company has made a foray into skin care, home care and the OTC healthcare segment. In terms of markets, the company has laid specific emphasis on south India by re-organising the distribution set up, reformulating marketing strategies and customising products to that regions prevailing market needs. Innovation is about regularly introducing new products that can cater to the changing needs of the market. This is a continuation of the new product development thrust of the last few years. Dabur has successfully launched over 20 brands or variants across different segments in the last five years. The new product portfolio is expected to contribute to over 5 per cent of sales every year. The companys first major acquisition Balsara has come on line as planned during 2005-06. While Balsara had an impressive product portfolio, the business itself was generating losses. As in many such acquisitions, there were two clear tasks facing Dabur. First, was the financial challenge of turning these losses into profits. Second, was a much deeper and wider task of integrating the people and processes at Balsara with that of Dabur. Both these tasks were successfully achieved during 2005-06. Today, there is total operational and business integration of the two companies; and on the financial front, the erstwhile loss-making Balsara entity has generated profits of Rs 14.9 crore Success of this integration has provided the company with greater confidence in its ability to develop inorganic growth. With improvements in profitability leading to strong internal accruals, Dabur today has sufficient resources to pursue a concerted acquisition strategy. This will be implemented in a judicious manner keeping in view the right valuations and strategic synergies with Dabur. The approach would be to leverage the existing strengths of Dabur to drive significant value creation and quantum jump in growth. However, since this is dependent upon availability of the right opportunities at the right valuation, it cannot be built into the business plans and the growth of the Company at the moment is largely planned in organic terms. In the following sections we look at the developments in Daburs different businesses in India and abroad. This is presented in terms of markets and operations across the three entities Dabur India Limited (this includes the Balsara companies), Dabur Foods Limited and Dabur International limited. This is followed by the financials of DIL on a standalone basis and as a consolidated entity.

MARKETS
DOMESTIC BUSINESS
Dabur Indias domestic business has been divided into three separate Strategic Business Units (SBUs): Consumer Care Division (CCD) and Consumer Healthcare Division (CHD), both of which are directly under DIL, and the foods business, which is undertaken by Dabur Foods Limited (DFL). In terms of sales in 2005-06, CCD contributed 79 per cent of Daburs consolidated domestic revenues, while DFL contributed 11 per cent and CHD 9 per cent.

CONSUMER CARE DIVISION (CCD)

The consumer care division (CCD) is the largest SBU of Dabur, and its product portfolio covers hair care, oral care, health supplements, digestives and candies, baby oils and skin

MANAGEMENT DISCUSSION & ANALYSIS

Dabur India Limited Annual Report 2005-06

Odomos sales increased by 70 per cent in 2005-06. Odomos has been identified as a strong brand with significant latent equity and various products will be offered under this brand with different delivery mechanisms like gels, mats, coils, lotions and liquid vaporisers. The Odomos mosquito repellent cream, which is the original product under this brand, has been re-furbished and is displaying good growth potential in the market. Likewise, the Odonil brand is well recognised in the air-fresheners category, and the company plans to expand the product portfolio under this brand by introducing aerosols and other contemporary formats. In 2005-06, Odonil sales increased by a healthy 80 per cent. Sales of Sani Fresh were above expectations as well, with the brand showing good potential for growth. We believe that with low penetration in most of these categories and the increasing usage of home care products, there is significant scope of growth in this segment.

tries were below expectations. Dabur has also made a foray into the Pakistan market through its subsidiary Asia Consumer Care (Pak) Ltd. The initial response has been good, and the company is optimistic about its prospects there. A team has been put in place headed by a Pakistani national who has extensive experience in the local FMCG market. During the year, the company revamped the organisational structure of its international business and re-organised it to suit the emerging business requirements. Going forward, the international business will be split into two portfolios: Portfolio One: Comprises Asian markets including Pakistan, Bangladesh, Nepal, Sri Lanka Bangladesh and Malaysia, the developed markets including USA and UK; the healthcare business in CIS countries and the opportunistic markets in Asia Pacific. This portfolio will be supported by the manufacturing facility at Silvassa, which will be remodelled into a state-of-the art export oriented facility.

CONSUMER HEALTHCARE BUSINESS

In last years annual report, we had noted that the company was renewing its focus on the consumer health care business. The business comprises pure grantha based products on the Ayurveda platform, which can be classified into OTC products, branded ethicals, and generics including Asavs and Classicals. Renewed management focus and reformulated business strategy led to a strong revival in growth of this division. In 2005-06, the business achieved a milestone by registering 37.8 per cent growth in sales from Rs.107.8 crore in 2004-05 to Rs.148.6 crore in 2005-06, versus a CAGR of 8 per cent over the previous five years. There has been even and widespread growth across all segments of this business. Sales in the OTC category increasing by 65 per cent; Branded Ethicals by 81 per cent; Classicals by 32 per cent; and Asavs by 26 per cent. Some of the well-known products offered by CHD are Dabur Churna, Honitus, Asavs: Ashokarishta and Dashmularishta, Shankhapushpi Syrup, Ring Ring, Nature Care and Shilajit. The Honitus brand, which includes Honitus cough drops, syrup and the recently launched cough lozenges, was actively promoted through television advertisements. Our Asavs Ashokarishta and Dashmularishta were also advertised through various media channels in order to reach the target consumer. Dabur Churna and other OTC products were promoted through print and outdoor advertisements through dealer boards and hoardings and bus panels. Our new product launches for the year including Dabur Mensta, a product for womens healthcare, and Rheumatil, a product to prevent arthritis were well received in the market. Dabur believes that this business is a key growth driver and constitutes a critical element of its long-term strategy. With a movement towards holistic Ayurveda-based health remedies, the industry is expected to enjoy sustained levels of high growth. We believe that Dabur will be able to fully leverage its Ayurvedic knowledge and equity in the healthcare space by developing this business. The plan is to re-define the Ayurvedic space and develop strong OTC capabilities through healthcare promotion activities, pharmacy selling, media campaigns and trade promotion. The aim is to take Ayurveda to the patient. To give an example, in order to promote Ayurveda directly with patients, the company organised 1,500 health camps, developed 160 Dabur Ayurvedic Centres where Ayurvedic doctors provide free consultation, conducted 150 vaid meetings, apart from organising several seminars, exhibitions and events promoting Ayurveda among academia, doctors, vaids and consumers. The business distribution network has been expanded to cover over 140,000 urban pharmacy outlets, and the sales organisation restructured to optimise sales and productivity. The strategy includes building a strong relationship with retail pharmacists, promoting merchandising and displays, creating in-shop promotion through Dabur Consumer Health Corners (DCHC) and stressing on pharmacist education.

Table 1:Dabur's Sales,Domestic and Overseas (Rs.crore)

Domestic 2005-2006 Sales % of total Net Profit* % of total 1683.5 88.6% 208.0 91.8% 2004-2005 1355.7 88.2% 148.5 94.6% Overseas 2005-2006 216.1 11.4% 18.6 8.2% 2004-2005 181.2 11.8% 8.5 5.4%

* Before exceptional items and minority interest. Portfolio Two includes the markets in the GCC countries, the African markets including Egypt, Nigeria, Sudan and Morocco, other Middle-Eastern countries like Iran and Iraq, the personal care business in the CIS and other opportunistic markets. This business will be supported by the manufacturing facilities in the Middle East and Africa. The structure of the international business was further streamlined during the year by transferring Dabur India Limiteds shareholding in Dabur Nepal Private Limited and Dabur Overseas Limited to Dabur International Limited. With this, all international subsidiaries are now consolidated under a single entity, namely, Dabur International Limited. The strategy for growing the international business has the following elements: Making geographical expansions. Going forward, the expansion markets will be clearly identified based on strategic choice. The company will commit major investments and human resources in focus markets. Leveraging the natural platform. This will make full use of the growing global demand for natural products by occupying differentiated competitive niches in the health care and the personal care segments. Acquiring international brands / businesses and forming strategic alliances. The company will also actively explore overseas acquisitions and alliances. With this reorganisation and strategic focus, the international business is expected to contribute over 15 per cent of the consolidated sales of Dabur in the course of the next four years.

FOODS BUSINESS
DABUR FOODS LIMITED Dabur Foods Limited (DFL) is a wholly owned subsidiary of Dabur India Limited. DFLs product range in the market includes juices under three brands (Real, Activ and Coolers), culinary items like Hommade cooking paste, sauces, and items for institutional sales under the Natures Best brand. DFLs sales grew by 46.3 per cent in 2005-06 to reach Rs.190 crore. New product launches and institutional channel constituted 24 per cent of this growth. The top-line growth has been accompanied by a significant increase in profits. PAT for the business increased by 130.3 per cent from Rs.5.3 crore in 2004-05 to Rs.12.1 crore in 2005-06. In the branded juice market, DFL was the leader with a 57 per cent market share, with the nearest competitor being at 24.5 per cent. Chart C gives Daburs share in the juice market.

Chart C: Dabur's Market Share in Juice Market* (%)

Godjej-Xs Parle-Appy

3.3 13.3 2 56.9

Dabur-Real

NDDB-Safal

Pepsi-Tropicana

24.5

Source:AC Nielson Retail Audit Report (Apr-Dec 2005)

DFLs portfolio of fruit juices can be classified into the sweetened range under the Real brand, and higher end unsweetened range under the Activ brand. The Real brand has grown by 36.2 per cent. There are nine different flavours available under Real, which includes pineapple, mixed fruit and orange and sweetened nectar range comprising litchi, guava, mango, apple and cranberry. The unsweetened or Real Activ brand is targeted at health conscious young adults in the premium segment, and has had an outstanding performance during 2005-06, with sales increasing by 98.6 per cent. Sales growth was also fuelled by introduction of new 330 ml packs. The product range has five flavours two of which are fruit juices, and three being fruit and vegetable blends. Being the creator of this category, we definitely enjoy market leadership and intend to introduce newer variants under Real Activ. The economy segment of the portfolio consists of Coolers range of fruit beverage especially meant for summer. While Coolers sales increased by 58 per cent in 2005-06 over 2004-05, the base has been fairly small. There are six flavours available in this category: Aam Panna, Watermelon, Pomegranate, Musk Melon, Lemon Barley and Jamoon. All these fruits have cooling properties, which protect the body from the ill effects of the summer heat. Our culinary category which includes Hommade pastes like garlic and ginger, coconut milk, and tomato puree has also done well, pushing the category sales by 26.2 per cent. We also introduced a new mango drink under the Mango Twist brand and received a very positive response from the market. DFL made a major foray into the export market recoding export sales of Rs.14.7 crore. The exports can be classified into bulk concentrates (which are largely sold to Middle East and Europe), and branded products (which go to Australia and also the Middle East). In the year, we received a one star export house certification from the Government of India. To strengthen its competitive position in the domestic market, the business has reorganised its sales and distribution teams to focus separately on retail and institutional marketing and sales. The company has also laid stress on investing to improve its manufacturing facilities at its three plants located at Siliguri, Nepal and Jaipur. While the Nepal plant has been traditionally catering to the needs of this business, the Siliguri plant processes fruit pulp, and Jaipur plant is a blending and packaging plant acquired during 2005-06.

INTERNATIONAL BUSINESS
International business recorded a sales growth of 19per cent from Rs.181.2 crore in 200405 to Rs.216.1crore in 2005-06. This includes the exports of Balsaras portfolio of products in the oral care and private label segments. Middle East and Egypt performed very well with growth of 27 per cent and 49 per cent respectively. Sales in Bangladesh grew by 54 per cent led by Vatika and Anmol range of shampoos. However, performance in the developed markets of UK, USA and CIS coun-

MANAGEMENT DISCUSSION & ANALYSIS

Dabur India Limited Annual Report 2005-06

MASTER BRANDS

OPERATIONS
Robust manufacturing and supply chain practices support Daburs widened presence in the FMCG market place with newer and increased product offerings. The company has been undergoing a structured change in it operations structure, with emphasis on enhancing in-house manufacturing capabilities, utilising innovative procurement tools and developing an efficient supply chain. A clear reflection of gains from these functions is the fact that in an inflationary input market scenario, DIL managed to increase its operating profitability margin (PBDIT/Sales) from 14.8 per cent in 2004-05 to 17.8 per cent in 2005-06. The core operations are supported by a strong information technology (IT), human resources (HR) and research and development (R&D) backbone.

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.

MANUFACTURING
The manufacturing strategy has revolved around re-organising the companys production facilities to increase in-house production and leverage maximum benefits from economies of scale. Over the last few years new plants have been set up and inefficient ones scaled down, including reduced exposure to third party producers. As an example, six years ago over 40 per cent of Daburs products were out-sourced; today, only 8 per cent is outsourced, while 92 per cent of the companys requirements are manufactured inhouse. This has allowed for much greater control on production and stricter adherence to best in class TQM and TPM practices. 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 Jaipur. These plants have stabilised and are in a position to be ramped up to cater to the companys long-term growth plans. In addition, during 2005-06, with the acquisition of Balsara, the company inherited their plants at Baddi and Silvassa. While the Baddi plant manufactures oral care products, Silvassa caters exclusively to exports. A totally integrated plant has been set up in Jammu to produce the erstwhile Balsaras home-care line of products. All the processes of these plants have been streamlined with Daburs production systems and procedures. The company believes in cost and quality leadership through technology and innovation and being the best in the operations domain. These translate into focus on adopting best quality practices, enhancing productivity and improving asset utilisation. Productivity improvements have been achieved by following best TQM and TPM practices, reaping benefits from economies of scale and increasing the sense of empowerment among factory-level management. In 2006, for the first time the company hosted a factory heads conference in Nainital something that created much greater bonding among those who produce for the company. Some of the productivity gains were also the result of process improvements. For example, there were gains in productivity by increasing Amla hair oil batch sizes and reducing Vatika hair oil production cycle time. These improvements are paying off. Consider, for instance, an example of this the reduction in wastages as a percentage of turnover, as shown in Chart X.

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.

with each individuals goals and performance. This year, the scorecard covered 325 managers. Using the Balanced Scorecard, the company has modified key performance indicators (KPIs) of the variable pay plan, which have been communicated to employees. The company has also hired top class persons from among the best management institutes. In 2005-06 we recruited 17 such Management Trainees. They are undergoing rigorous training under the Young Managers Development Programme (YMDP), where each is put through a years cross-functional training programme while being mentored by a member of the senior management. During the year under review several other HR initiatives were undertaken, both at the corporate as well as the plant level. We provided learning opportunities to our employees through various programmes such as Prayas, Leading and Facilitating Performance, and Campus to Corporate. An audiovisual-based module, SPORT, was used to train our own frontline sales personnel as well as those on the rolls of our stockists. Approximately 2,000 people have been trained through this module in 2005-06. A competency-based selection tool was also developed for selecting the right set of front line employees. In 2005-06, we were successfully able to integrate Balsara into our fold, which included the Balsara manpower and its HR policies and processes. At the plant level, the company enjoyed excellent industrial relations across all manufacturing locations in India.

INFORMATION TECHNOLOGY
With rapid growth as well as the Balsara acquisition, there was a multitude of IT platforms for storing and analysing information. The aim of our IT initiative in 2005-06, therefore, was to bring the operations of the company under one platform a user-friendly cohesive system that would give us maximum value for money in terms of information processing. The system also had to be flexible enough to be integrated with and applied to any existing system prevailing in any company that could be an acquisition target. Keeping these objectives in mind, Dabur has installed the SAP ERP R3 system, which is the basic module. This has gone online, all at once in a big bang approach from 1 April 2006. The decision to invest in the SAP platform was taken six months before its implementation. Hence, in a very short span of time, we have moved from current practices to the best practice in managing IT. It was not an easy task. Integration required explaining the usage of new practice to all our employees across functions, ranging from manufacturing plants to sales, to logistics and finance teams. In addition to SAP going online for Dabur India Limited, it was also rolled out to Balsara. Dabur International and Dabur Nepal will be integrated by the 1 May 2006. This initiative will be extended to all our international manufacturing and international sales operations in due course. In addition to the basic module we would be implementing various SAP products for using stored information for financial reporting and management decision-making. The SAP Business Warehouse would be used for data retrieval for management information systems (MIS), with an added functionality of integrating information from various sources. SAP Business Consolidation System will enable us to report consolidated accounting numbers after taking care of inter-company transfers. For accounting purposes it is also multi-GAAP functional. We also intend to install Business Plan Simulation (BPS) software, which would help us in decision management by simulating the impact of any change in business environment on Dabur. For our employees we intend to deploy SAP-HR, a human resource information system that would store each individuals information on the system. Each employees life cycle with the company, performance appraisal and other information would be available on this system. This would also enable us to leverage technology for training our employees, as the system would flag employees that fit the training needs of a particular module. In doing so, it would form an integral part of the knowledge management programme for our employees. As a disaster recovery measure, the entire information stored on our central server at Daburs Kaushambi office is also stored in at a location in Mumbai.

a tasty fun-filled digestive available in various forms-from tablets, traditional churans to modern formats like centre-filled candyappealing to all age groups.

a relatively 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.

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.

Chart X: Wastage to turnover ratio (%)

1.0

a leading provider of Oral Care and Household Care products in the Indian market, is a new member in the Dabur family. With this acquisition, the company will further strengthen its Oral Care portfolio and make its debut in the high-growth Homecare segment.

0.8

0.79

0.75 0.63

0.6

0.68

RESEARCH AND DEVELOPMENT

0.56

0.4

01-02

02-03

03-04

04-05

05-06

All the plants have GMP certification. More significantly, four units including glucose, honey and Chyawanprash plants at Baddi and at Uttaranchal have Hazard Analysis and Critical Control Point (HACCP) certification, which requires adherence to significantly more stringent standards. The fruit juice plant at Nepal also has the HACCP certification. In some of the formulations there is the issue of presence of heavy metals. To tackle the issue of heavy metals in certain formulations, a major quality initiative has been taken by installing atomic-absorption-spectrophotometer in its plants at Baddi, Uttaranchal and Sahibabad. This is used to test all products before despatch to prevent the presence of heavy metals beyond prescribed range in the companys products. Your company continues to remain committed towards preserving and protecting the environment. The plants have efficient effluent treatment systems that prevent air, water and noise pollution. Dabur also took a lead in rain water harvesting, which is being implemented in three units, in addition to preserving and utilising artesian wells in Uttaranchal.

Research and Development (R&D) provides Dabur with critical edge in the market. The activities are focused around two basic domains. First, to continuously develop new products; and second, to test and guarantee their efficacy. R&D activities include research on Ayurvedic and herbal products, organic substances, phytochemicals, tissue culture, foods, cosmetics, oral care and other personal care. During 2005-06, the company displayed its efficiencies in terms of high speed to market by successfully developing its Vatika Honey & Saffron soap. The entire development process from concept to delivery in the market was carried out in-house and at very fast pace. The companys products regularly go through clinical research and toxicity studies. This is done in collaboration with external organisations like the Dabur Dhanwantry hospital in Chandigarh and a number of other renowned institutions. Through its agronomy department, Dabur has continued with its initiative of preserving herbs and plants in the endangered list, especially those that the company uses in its formulations. Specific plants are identified; the company then develops sufficient scientific knowledge of such plants; and then promotes their contract or corporate farming. So far, 14 such plants have been identified and the knowledge base built. Some examples of these interventions include corporate or contract farming of ghorbotch, brahmi, chiraita and pipli. The company has also leased in two wasteland areas to develop these herbs Sandila in Uttar Pradesh and a private public partnership initiative in Uttaranchal.

PROCUREMENT
As the company grows in scale with a more diverse portfolio of products that include herbal and ayurvedic formulations, the specialised procurement function gains utmost importance. At Dabur, procurement has been regularly utilising customised IT tools, innovating on purchase negotiations and procurement systems like reverse auctions. These initiatives have led to the gradual decrease in material cost to sales ratio in the last few years. The challenge in procurement is to predict the commodity price cycle and make strategic purchases. Dabur has built a fairly strong knowledge base in this domain. Empowered with technical tools of analysis, the procurement team has regularly made strategic buys and sells in the commodity market optimising on long term prices, while maintaining the minimum levels of inventory necessary to prevent stock outs. A second initiative being undertaken is to reduce material costs by venturing down the value chain and eliminating a layer of middlemen. In effect, this initiative aims at building direct relationships with the actual supplier by becoming directly visible to suppliers supplier.

FINANCIALS
The abridged financials of Dabur India Limited (DIL) for the year 2005-06 including revenue, expenditure and profits, are presented in Table 2.

Table 2: DILs profit and loss account (Rs.crore)

2005-06 1 2 3 4 5 Net Sales Other Income Total Revenue Total Expenditure EBIDTA Depreciation Amortisation Interest PBIT PBT Current Tax & FBT Deffered Tax PAT(before exceptional item) Exceptional item PAT EPS EPS (Diluted) 1,369.7 5.4 1,375.0 1,131.7 243.3 19.1 4.3 5.7 220.0 214.4 21.8 4.0 188.6 0.51 189.1 3.3 3.27 2004-05 1,268.7 11.5 1,280.2 1,092.3 187.9 17.1 1.5 4.3 169.3 165.0 13.0 4.0 148.0 0.0 148.0 2.58 2.57 27.7% 27.9% 27.2% Growth 8.0% -53.5% 7.4% 3.6% 29.5% 11.4% 185.9% 31.6% 29.9% 29.9% 67.7% 0% 27.4%

RECOGNITION

SUPPLY CHAIN
The supply chain function at Dabur comprises production planning, despatch, warehousing and transportation. Since the front end of the supply chain ends at the Clearing Forwarding Agent (CFA) or the stockist, production planning and despatch is done to meet the requirements of the CFA. This is done across all the units on a weekly basis in terms of SKUs. Decisions on warehousing and transportation rely on the despatch product mix and underlying dynamics of the transport markets. The entire supply chain has been knit together into an efficient unit through Project Garuda an initiative that integrates IT tools and compensation schemes that measure the health of the supply chain. In this, the first year of its implementation, Project Garuda lays down a set of measurable parameters to test the health of the supply chain. The system is divided into two tiers and puts in an evaluation mechanism for each element of the supply chain from forecasting and production planning to inventory management. By utilising this matrix as a tool for monitoring performance, the company has been able to devise a variable pay structure that penalises negative deviations. On the IT front, there is complete internal networking through a new SAP platform. The company is exploring to move forward and reach out to stockists and integrate them into Daburs ERP. This will go a long way to improve the quality of forecasts provided for production planning. During 2005-06, significant efficiency gains were realised from central ownership of warehousing and reverse auctions for transportation. Daburs ability to continuously service diverse markets while maintaining negative working capital bears testament to the efficiency of its supply chain management.

6 7 8 9 10 11 12 13 14 15 16 17

HUMAN RESOURCES
Recognizing that people are key constituents of Dabur and represent the DNA of the organisation, we have been constantly raising our own standards of being an employeefriendly organisation. The year under review witnessed a significant achievement: of being listed as a Great Place to Work, in a survey conducted by Grow Talent & Company and Great Place to Work Institute, USA. Dabur was listed as the 10th Great Place to Work. The results were published in Business World dated February2006. Dabur has adopted the Balance Scorecard for performance evaluation and strategy deployment. This tool ensures balanced performance by managers across multiple dimensions financial performance, customer management, internal business processes and innovation and learning and helps in sharper alignment of overall business strategy

As can be seen in Table 2, DIL continues to pursue its path of profitable growth. With the renewed strength of its brands, the company recorded a 8 per cent growth in net sales, from Rs.1,268.7 crore in 2004-05 to Rs.1,369.7 crore in 2005-06. This healthy top-line growth, accompanied by efficiencies in manufacturing and supply chain, has contributed to a 29.5 per cent growth in operating profits (EBIDTA) from Rs.187.9 crore in 2004-05 to Rs.243.3 crore 2005-06. DIL continues to operate with negative working capital accompanied by reduction in inventory and sundry debtors levels. Profit after tax (PAT) increased by 27.7 per cent during the year from Rs.148.0 crore in 2004-05 to Rs.189.1 crore in 2005-06. As evident in Table 3, all profitability ratios of the company have increased in the year under review. There has been a significant improvement in operating margin (EBDITA/Total sales), which grew from 14.8 per cent in 2004-05 to 17.8 per cent in 2005-06. Net profit margin (PAT/Total sales) has also grown from 11.7 per cent in 2004-05 to 13.8 per cent in 2005-06. Improved margins have been primarily driven by two factors. First, due to efficiency gains at our plants translating into better operating margins be it wastage reduction, fiscal incentives or economies of scale. Second, procurement led initiatives that have resulted

MANAGEMENT DISCUSSION & ANALYSIS

Dabur India Limited Annual Report 2005-06

Table 3: DIL's Profitability Ratios

2005-06 EBDITA/sales PBT/sales PAT/sales ROCE RONW 17.8% 15.6% 13.8% 43.1% 45.5% 2004-05 14.8% 13% 11.7% 38.7% 44.5%

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 Chief Risk Officer (CRO) of the company, who is responsible for and ensures Effective Risk Management both risk identification and mitigation, champions the risk management system. A team of risk officers at each company location supports the CRO. 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 we have a systematic risk identification and mitigation framework in place, there are certain business risks, which are external and intrinsic 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. In the past, all our transactional data was stored in a central server at our corporate office in Ghaziabad, UP One of the important risk reduction initiatives taken during the year was . setting up of a disaster recovery site in Mumbai where all the data is stored as a back up.

in decline in material costs as per cent of sales in spite of an inflationary environment. During the year, DIL extended loans to Dabur International Ltd and Dabur Foods Ltd., which were, in turn, utilised to repay debt. While this has reduced the groups overall exposure to outside debt, it has increased the working capital for DIL on a stand-alone business although the oveall working capital remains in the negative domain. With its focus on core businesses, the company has sold its investment in Dabon International Private Limited, a non-core investment that was not yielding any returns. This has impacted the consolidated financials by Rs.12.7 crore, as an exceptional item. DILs investments in Dabur Nepal Pvt Limited and Dabur Overseas Limited have been transferred to Dabur International Limited for consolidating international operations under one entity. While this makes no difference to the consolidated financials, it re-states the subsidiary holdings along business and operational lines making it more efficient to manage them.
Consolidated Financials Table 4 gives the abridged financials of Dabur on a consolidated basis.

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.

Table 4:Consolidated,abridged profit and loss account (Rs.crore)

2005-06 1 2 3 4 5 6 7 8 9 Net Sales Other Income Total Revenue Total Expenditure EBIDTA Depreciation Amortisation Interest PBIT 1,899.6 13.4 1,913.0 1,608.8 304.2 26.9 4.3 16.4 273.0 256.6 26.5 3.5 226.6 (12.7) 0.3 214.2 3.74 3.71 2004-05 1,537.0 9.2 1,546.2 1,328.1 218.0 28.0 1.5 12.4 188.5 176.1 15.1 4.0 157 0.00 (1.2) 155.8 2.72 2.71 37.5% 37.5% 36.9% Growth 23.6% 45.6% 23.7% 21.1% 39.5% (4.0)% 186.6% 32.2% 44.8% 45.7% 75.5% (12.5)% 44.3%

CAUTIONARY STATEMENT
Statements in this management discussion and analysis describing the companys objectives, projections, estimates and expectations may be forward looking statements within 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.

10 PBT 11 Current Tax & FBT 12 Deferred Tax 13 PAT 14 Exceptional Item 15 Minority Interest 16 PAT after minority interest & exceptional items 17 EPS 18 EPS (Diluted)

The net sales of the company on a consolidated basis registered a growth of 23.6 per cent from Rs.1, 537 crore in 2004-05 to Rs.1, 899.6 crore in 2005-06. Consolidated net profit (PAT after minority interest and exceptional items) also posted a strong growth of 37.5 per cent increasing from Rs.155.8 crore in 2004-05 to Rs.214.2 crore in 2005-06. As seen in Table 5, all profitability ratios calculated on a consolidated basis have shown a marked improvement in 2005-06.

Table 5: Consolidated,Profitability Ratios

2005-06 EBDITA/ sales PBT/ sales PAT/sales ROCE RONW 16% 13.5% 11.3% 39% 46.1% 2004-05 14.2% 11.5% 10.1% 31.5% 43.5%

The highlights of the consolidated performance are as follows: Operating profits (EBIDTA) increased by 39.5 per cent from Rs.218 crore in 2004-05 to Rs.304.2 crore in 2004-05. Operating margin (EBDITA/sales) also grew from 14.2 per cent in 2004-05 to 16 per cent in 2005-06 The interest coverage ratio (ratio of profit before interest and tax to interest payments) has increased from 15.2 times in 2004-05 to 16.7 times in 2005-06 Net profit margin (PAT/sales) increased from 10.1 per cent in 2004-05 to 11.3 per cent in 2005-06 Return on capital employed (ROCE) has gone up from 31.5 per cent in 2004-05 to 39per cent in 2005-06 Return on net worth (RONW) increased from 43.5 per cent in 2004-05 to 46.1 per cent in 2005-06. This year Dabur has undertaken a major initiative to prepare and present results as per US GAAP. Table 6 gives the results. The reconciliation of net income between Indian GAAP and US GAAP is as follows

Table 6:Consolidated financials,US GAAP

In Rs.crore (Except for earning per share,which is in Rs.) Audited for the year ended on Particulars Revenue* Cost of Revenue Gross Profit Net Income Earning Per Share Basic Diluted Total Assets Cash and cash equivalents Liquid mutual funds
*Revenues as per US GAAP are net of VAT/Sales tax and excise duty

31.03.2006 1720.0 944.8 775.2 219.0

31.03.2005 1368.4 759.9 608.5 161.2

3.8 3.8 1040.4 48.9 41.0

2.8 2.8 943.8 13.9 43.8

Audited for the year ended on Particulars Consolidated net profit as per Indian GAAP Loss on sale of long term investment net of deferred tax Additional depreciation on property,plant & equipments Deferred taxes adjustments Others Consolidated net profit as per US GAAP 31.03.2006 214.2 8.6 (7.3) 2.5 1.0 219.0 (0.3) 6.0 (0.3) 161.2 31.03.2005 155.8

REPORT ON CORPORATE GOVERNANCE

Dabur India Limited Annual Report 2005-06

s a Company, Dabur believes in good governance 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. In recognition of Companys efforts, The Institute of Company Secretaries of India (ICSI) has honoured Dabur with its most prestigious National award for excellence in Corporate Governance for the year 2005. This award recognizes our commitment in adopting best practices towards Boards independence & Governance; Transparency and Disclosure Compliances; Consistent Stakeholders Value Enhancement and Risk management Systems. This Award has motivated the Company to strive for still better governance. This chapter, along with the chapters on Management Discussion and Analysis and Additional Shareholders Information, reports Daburs compliance with the revised Clause 49 and highlights the additional initiatives taken in line with international best practices.

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. 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. 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.

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 and integrity across the Company.

BOARD OF DIRECTORS
COMPOSITION OF THE BOARD
As on 31st March 2006 the Daburs Board consists of 11 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 five 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 4 times during the year on 28th April, 2005, 26th July 2005, 24th October, 2005 and 27th January, 2006. The maximum gap between any two meetings was less than 3/4 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 2006.

RESPONSIBILITIES OF THE CHAIRMAN AND CEO

Table 1:Composition of the Board of Directors of Dabur India Ltd.

Name of the Directors Category # Attendance Particulars Number of Board Meetings Held 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 4 4 4 4 4 4 4 4 2 4 4 Attended 4 4 3 3 4 4 1 4 1 4 2 Yes No Yes Yes Yes Yes No Yes No No Yes 2 5 5 9 12 5 6 3 2 12 1 0 1 1 3 1 2 0 2 1 5 0 0 0 1 1 4 0 0 2 0 4 0 Last AGM No.of other Directorships and Committee Memberships/Chairmanships Other Committee Committee Directorships Memberships Chairmanships

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 mentoring 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.

BOARD MEMBERSHIP CRITERIA

The nominations 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. 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 Family Nominee Director/s Executive Member/s Independent Directors and Non Executive Members Constituting 50% of the board. The viz matrix gives the detailed skill set required for becoming a board member as specified by the BOD. Key Skill Area Essential Consultant /Academician with experience in 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 Expert knowledge of corporate Law At least 5 years as a CFO or as held 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 Desirable Basic understanding of Finance Experience with FMCG or other consumer products Experience in trade/consumer related laws FMCG experience FMCG experience Basic understanding of Finance and Business. Basic understanding of finance and business

# PD - Promoter Director NED - Non-Executive Director ID - Independent Non-Executive Director ED - Executive Director *Ceased to be an Executive Director from 1st May,2005 **Appointed as a member from 26th July,2005

Shareholding of Non Executive Directors

Name of Director V C Burman Dr Anand Burman Amit Burman Maharaja HH Gaj Singh R C Bhargava Stuart E Purdy P N Vijay S.Narayan
Details of Other Board Directorships is separately mentioned in Annexure 1

Status PD / NED PD / NED PD / NED ID ID ID ID ID

No of shares held 10000 74000 0 4000 0 0 0 0

Strategy/Business Leadership Corporate Strategy Consultant Sales and Marketing experience

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

Corporate law Finance Trade Policy & Economics Administration & Government Relations Ayurvedic specialist

As mandated by the revised 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:

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.

Remuneration paid to Directors

Table 2 gives details of remuneration paid to Directors for the year 2005-06 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
* Ceased to be Executive Director from 1st May,2005. ** Appointed as a member from 26th July,2005

Sitting Fees 165000 0 60000 30000 0 0 15000 300000 45000 150000 135000 900000

Salary & Perquisites 0 8513489 0 282651 11415483 11453494 0 0 0 0 0 31665117

Superannuation 0 704999 0 22500 900423 748796 0 0 0 0 0 2376718

Stock Option 0 0 0 0 14344656 13505098 0 0 0 0 0 27849754

Commission 8864000 0 0 0 0 0 0 0 0 0 0 8864000

Total 9029000 9218488 60000 335151 26660562 25707388 15000 300000 45000 150000 135000 71655589

REPORT ON CORPORATE GOVERNANCE

Annual Report 2005-06 Dabur India Limited

During 2005-2006 the company did not advance any loans to any of its Directors. Mr P D Narang and Mr Sunil Duggal were issued 781973 and 773559 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. Two erstwhile employees (relieved from their duties on 30th April, 2005) are relatives of Directors of Dabur. Mr. Mohit Burman, son of Mr. V. C. Burman (Chairman), joined as General Manager, Sales and Marketing of the Company on 12th September, 1997. Gross remuneration paid to him for 2005-2006 was Rs.269667 as per approval of the shareholders and the Government. Mr. Chetan Burman, son of Mr. Pradip Burman (Executive Director), joined the Company on 1st February, 1996 as Deputy General Manager, Sales and Marketing. Gross remuneration paid to him for 2005-06 was Rs.233867 as per approval of the shareholders and the Government. Both of them have resigned on 30th April, 2005.

Audit Committee report for the year ended 31st March, 2006
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 is recommending to the board the re-appointment of M/s G Basu & Co., Chartered Accountants as statutory auditors of the company, M/s Bansal & Co., Chartered Accountants and M/s Waring & Partners, Chartered Accountants as Branch Auditors for Alwar Division and London Branch respectively to carry out audit of the accounts of the company and of respective division/branch for the financial year 2006-07. In conclusion, the committee is sufficiently satisfied that it has complied with the responsibilities as outlined in the Audit Committees responsibility statement. Signed New Delhi April 25, 2006 P N Vijay Chairman, Audit Committee

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 b) Remuneration cum Compensation Committee

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: The name of Compensation Committee was changed to Remuneration cum Compensation Committee on 28th April, 2005 after dissolving the Remuneration Committee and merging it with the Compensation Committee. As of 31st March 2006, the Remuneration cum Compensation Committee comprises of Mr. P N Vijay (Chairman) and Mr. Stuart E Purdy, being independent Directors and Mr. V C Burman, being Non Executive Promoter Director. The Remuneration cum Compensation Committee held six meetings during 2005-06 on 28th April, 2005, 26th July 2005, 24th October, 2005, 10th November, 2005, 25th November, 2005 and 27th January, 2006. Table 4 gives the details.

a) Audit Committee
As on 31st March 2006, the Audit Committee comprises of four independent Directors. They are Mr. P N Vijay (Chairman), Mr. Stuart E Purdy, Mr. R. C. Bhargava and Dr. S. Narayan. The Audit Committee held seven meetings during 200506 on 27th April 2005, 26th July, 2005, 25th August, 2005, 24th October, 2005, 10th November, 2005, 27th January, 2006 and 27th February, 2006. The time gap between any two meetings was less than four months. The details of the audit committee are given in Table 3:

Table 4:Attendance details of Dabur's Remuneration cum Compensation Committee

Name of Members (Category) Mr P N Vijay (ID) Status Held Chairman Member Member 6 6 5 Mr Stuart E Purdy (ID) No.of Meetings Attended 6 3 4

Table 3:Attendance record of Dabur's Audit Committee

Name of Members (Category) Mr.P N Vijay (ID) Mr.Stuart E Purdy (ID) Mr.R C Bhargava (ID) Dr.S Narayan)(ID)*
* Appointed as a member from 24th October,2005.

Status Held Chairman Member Member Member 7 7 7 3

No.of Meetings Attended 6 4 6 2

Mr V C Burman (PD/NED)*
*appointed as a member w.e.f. 28/4/2005.

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, Additional 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 15th July 2005 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, re-appointment 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. 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 postaudit 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. 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. 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.

REPORT ON CORPORATE GOVERNANCE

Dabur India Limited Annual Report 2005-06

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 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; 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.

Any allied matter(s) out of and incidental to these functions and not herein above specifically provided for. Details of queries and grievances received and attended by the Company during the year 2005-06 is given in Table 6.

Table 6:Nature of complaints received and attended to during 2005-2006

Nature of Complaint Pending as on 1st April,2005 Nil Nil Nil Nil Received during the year 38 2 30 23 Answered during the year 38 2 30 23 Pending as on 31st March,2006 Nil Nil Nil Nil

1. Transfer / Transmission / Duplicate 2. Non-receipt of Dividend 3. Dematerialisation / Rematerialisation of shares 4. Others (Non receipt of bonus shares/ POA/ change of signatures/ etc.) 5. Complaints received from: Securities and Exchange Board of India Stock Exchanges Registrar of Companies/ Department of Company Affairs 6. Others Total

Nil Nil Nil Nil Nil

54 6 Nil Nil 153

54 6 Nil Nil 153

Nil Nil Nil Nil Nil

There were no complaints which were pending as on 31st March06. 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 re-materialisation, sub-division, consolidation, exchange and duplicate share certificates severally to Mr A K Jain, Additional General Manager (Finance) and Company Secretary, and Mr. R B Sachan, Asst. Manager Secretarial, subject to a maximum of 5000 shares per case.

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.
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. 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.

Shareholders/Investor Grievance and Share Transfer Committee Report for the year ended 31st March, 2006
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 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 728 cases of transfer, 120 cases of re-materialisation, 3 cases of sub-division and 29 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 no complaints pending for redressal. Signed New Delhi April 25, 2006 P N Vijay Chairman, Shareholders/Investor Grievance and Share Transfer Committee

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 job responsibilities of the IRO are clearly defined as under: 1. Building Interest in the firm on the buy side. 2. Being a strategic advisor to the Senior Management. 3. General market intelligence, including data on stock trading and shareholder characteristics. 4. General shareholder feedback/opinions. 5. Peer comparisons. 6. Intelligence on competitors. 7. Anticipated market reaction toward planned corporate developments such as mergers and acquisitions or divestitures. 8. Coping with the short term perspective of the investment committee. 9. Building Investor Confidence in the firm. 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. 2. Webcasting - Daburs presentations are webcast. Webcasts are left up on corporate Web sites for upto 1 month. 3. Group Analyst Meeting both in India and Outside at Singapore Dabur India holds at least one analyst meeting outside India for the benefit of FIIs (Foreign Institutional Investors) to enable them understand the operations at Dabur better.

Remuneration cum Compensation Committee Report for the year ended 31st March, 2006
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 respo nsibility 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 2005-2006. 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. Signed New Delhi April 25, 2006 P N Vijay Chairman,Remuneration cum Compensation Committee

c) Nomination Committee Subsidiary Companies

Daburs Nomination Committee consists of Mr. V C Burman, non-executive promoter Director, Mr. Pradip Burman, executive promoter Director, Mr. Stuart E. Purdy, independent 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. The revised 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.

Disclosures 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 four times in the year under review on 27th April, 2005, 26th July 2005, 24th October, 2005 and 27th January 2006. Table 5 gives the details. 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. Dealings in Companys shares on the part of persons in management have been reported to Board periodically and whenever required to the Stock Exchanges. The material, financial and commercial transactions where persons in management have personal interest exclusively relate to transactions involving Key Management Personnel forming part of the disclosure on related parties referred to in Note in Schedule P to Annual Accounts which was reported to Board of Directors.

Table 5: Attendance Details of Dabur's Shareholders/Investor Grievance and Share Transfer Committee
Name of Members (Category) Mr P N Vijay (ID) Mr V C Burman (PD / NED) Mr P D Narang (ED) Status Chairman Member Member 4 4 4 No.of Meetings Held Attended 4 4 4

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.37.50 crores. - Goods worth Rs.2.49 crores were purchased from Dabur International Ltd. - Goods worth Rs.3.30 crores were sold to Dabur International Limited. - Share application money of Rs. 21.78 crores has been given to Dabur International Ltd. - Sale of investments for an amount of Rs. 21.85 crores was made by the Company to Dabur International Ltd. - Dabur Foods Ltd. was given a loan of Rs.8.25 crores by the company. - Dabur International Ltd. was given a loan of Rs.27.00 crores by the company. - Balsara Home Products Ltd. was given a loan of Rs.5.00 crores by the company. - Dabur Foods Ltd. had repayed the Loan of Rs.5.25 crores given by the company. - Balsara Home Products Ltd. had repayed the Loan of Rs.5.00 crores given by the company. 2. Fellow Subsidiaries (subsidiary of a subsidiary): - Goods worth Rs.2.19 crores were sold to Asian Consumercare Private Limited. - Goods worth Rs.2.55 crores were sold to Dabur Nepal Pvt Ltd. - Goods worth Rs.59.86 crores were purchased from Dabur Nepal Pvt Ltd. - Collateral and guarantees have been given on behalf of Dabur Egypt Limited amounting to Rs.5.02 crores, on behalfof Dabur Nepal Pvt. Ltd. amounting to Rs.3.13 crores and on behalf of Pasadena Foods Limited amounting to Rs.25.50 crores. - Goods worth Rs.3.99 crores were sold to Weikfield International (UAE) LLC.

Mr. A K Jain, Additional 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 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.

REPORT ON CORPORATE GOVERNANCE

Annual Report 2005-06 Dabur India Limited

3. Associates: - Services for an amount of Rs.1.80 crores by Jetways Travels Pvt. Ltd. (Travel Agency) were received by the company. Such services were rendered at market rates. 4. Key Management Personnel and 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 detailed related party transactions can be referred to in Note in Schedule P to Annual Accounts.

General Body Meetings

Table 8 gives the details of the last five General Meetings.

Table 8:Location and time of the last 5 General Meetings.

Financial Year 2001-2002 2002-2003 2003-2004 2003-2004 2004-2005 Category * AGM AGM EGM AGM AGM Location of the meeting Air Force Auditorium Subroto Park,New Delhi - 110010 Same as above Same as above Same as above Same as above Date 5th September,2002 2nd August,2003 2nd August,2003 6th July,2004 15th July,2005 Time 11.00 AM 9.30 AM 2.00 PM 11.00 AM 11.00 AM

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.

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

The following Special Resolutions were taken up in the last three AGMs, and were passed with requisite majority.
2003-2004 Special Resolution passed through postal ballot to de-list the companys equity shares from The Delhi Stock Exchange Association Ltd., The Uttar Pradesh Stock Exchange Association Ltd., The Calcutta Stock Exchange Association Ltd., The Ludhiana Stock Exchange Association Ltd., Magadh Stock Exchange Association, Bangalore Stock Exchange Ltd., The Jaipur Stock Exchange Ltd. and The Stock Exchange, Ahmedabad. 2004 2005 Keeping of records at the place other than registered office of the Company. 2005 2006 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.

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.

Code of Ethics and Conduct

Dabur has a well-defined policy framework, which lays down procedures to be followed by employees for ethical professional conduct. The code outlines fundamental ethical considerations as well as specific considerations that need to be maintained for professional conduct. This code has been displayed on the Companys website, www.dabur.com. The CEO has affirmed to the Board that this Code of Ethics and Conduct has been complied by the Board Members and Senior Management.

Postal Ballot 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 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. 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. 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 was conducted seeking approval of the shareholders for 1. Capitalization of Share Premium Account and issue of bonus shares in the ratio of 1:1 to existing equity shareholders of the company. 2. Increase in authorized share capital of the Company from Rs.50,00,00,000/- to Rs.1,25,00,00,000/3. Amendment in Clause V of the Memorandum of Association of the Company. 4. Amendment in Article 4 of the Articles of Association of the Company The result of postal ballot was published in The Statesman, Delhi and Rashtriya Sahara Hindi on 22nd December 2005. Mr. V.K. Jhalani, Chartered Accountant was appointed as Scrutinizer for conducting the postal ballot process. He reported the vote count on 21st December, 2005. The results of the ballot are given below:

Table 9 A: Result of the Postal Ballot ( Special resolution 1)

Particulars Number of Postal Ballot Forms received In Favour Against Invalid Ballots Total Receipts No. of Votes 1992 222942103 0 52340 222994443 99.98% 0.00% 0.02% 100.00% %

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.

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 Directors retire every year and, if eligible, offer themselves for re-election at every Annual General Meeting. Consequently, Dr. Anand Burman, Mr. Sunil Duggal, Mr P N Vijay and His Highness Maharaja Gaj Singh would retire this year and being eligible, offer themselves for re-appointment in accordance with the provisions of the Companies Act, 1956. Their brief CVs are given below: Dr. Anand Burman: M.Sc., Ph.d. (University of Kansas, USA) was born in 1952 and was appointed as a member on the Board in 1986. He is the promoter Director and currently holds the Vice chairmans position on the Board of Directors. The current shareholding of Dr. Anand Burman in the Company is 74000 shares. Mr. Sunil Duggal: M.B.A. (IIM, Kolkata) was born in 1957 and joined the Board in 2000. He is currently the Chief Executive Officer of the Company. His current shareholding in the Company is 469676 shares. Mr. P N Vijay: Post Graduate from IIT, Chennai was born in 1951 and joined the Board in 2001. He is a leading expert in stock market. He currently has no shareholding in the Company. His Highness Maharaja Gaj Singh: M.A. (Oxford) was born in 1948 and joined the Board in 1993. He is the Founder and Managing Trustee of various philanthropic Institutions and religious charitable Trusts associated with education and women welfare. He is the chief patron of certain renowned educational societies. His current shareholding in the Company is 4000 shares.

Appointment of New Director

Dr. S Narayan has been appointed as an Independent director w.e.f 26th July, 2005. He is retired IAS, born in 1943 and has done M.Sc. Physics, Master in Business Management (Finance), M.Phil in Development Economics from Cambridge University- UK and Ph.d from IIT Delhi. He has been in public service in the State and Central Government for nearly four decades. During 2003-04 he was Economic Advisor to the Prime Minister. He has also served as Finance and Economic Affairs Secretary, Secretary in the Departments of Revenue, Petrolium, Industrial Development and coal and secretary in Rural Development in Tamil Nadu. Besides the above he is visiting faculty at several academic Institutions. He brings into the board a rich experience from his various stints in the government concerns. He currently has no shareholding in Dabur India Ltd.

Means of Communication with Shareholders

Half yearly financial information, including summary of significant events, for the half-year ended 30 September 2005 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 newspapers. Table 7 gives details of the publications of the financial results in the year under review.

Table 7:Publications of the financial results during 2005-2006

Description Unaudited Financial Results for the quarter ended on 30th June,2005 Audited Financial Results for the quarter / half year ended on 30th September,2005 Unaudited Financial Results for the quarter / Nine months ended on 31st December,2005 Date 28th July,2005 26th October,2005 29th January,2006

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.

10 REPORT ON CORPORATE GOVERNANCE Dabur India Limited Annual Report 2005-06

Table 9 B: Result of the Postal Ballot ( Special resolution 2)

Particulars Number of Postal Ballot Forms received In Favour Against Invalid Ballots Total Receipts No. of Votes 1992 221977628 964275 52605 222994508 99.55% 0.43% 0.02% 100.00% %

26th July, 2005: First Quarter 24th October, 2005: Half Yearly 27th January, 2006: Third Quarter 25th April, 2006: Fourth Quarter and Annual For the year ending 31st March, 2007, results will be announced in: End July, 2006 First Quarter End October, 2006: Half Yearly End January, 2007: Third Quarter End April, 2007: Fourth Quarter and Annual

Book Closure
The dates of book closure are from 23rd June, 2006 to 8th July, 2006 inclusive of both days.

Table 9 C: Result of the Postal Ballot ( Special resolution 3)

Particulars Number of Postal Ballot Forms received In Favour Against Invalid Ballots Total Receipts No. of Votes 1992 221977473 964375 52660 222994508 99.55% 0.43% 0.02% 100.00% %

Dividend Payment
An interim dividend of Re.1.50 per equity share was paid on 14th November, 2005 and final dividend of Rs. 1.00 per equity share will be paid on 12th July, 2006 subject to approval by the shareholders at the Annual General Meeting.

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 2005-2006 to NSE and BSE has been paid.

Table 9 D: Result of the Postal Ballot ( Special resolution 4)

Particulars Number of Postal Ballot Forms received In Favour Against Invalid Ballots Total Receipts No. of Votes 1992 221976563 964375 53570 222994508 99.55% 0.43% 0.02% 100.00% %

Table A:Daburs Stock Exchange codes

ISIN No: Mumbai Stock Code: National Stock Code: Bloomberg Code: Reuters Code: INE016A01026 500096 DABUR DABUR IB DABU.BO

The Chairman after receiving the Scrutinizers Report announced that the Special Resolutions at Item No.1 to 4 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.

Stock Market Data

Table B and Chart A gives details

Compliance
Table B: High,low and volume of Daburs shares for 2005-06 at BSE and NSE Mandatory requirements
MUMBAI STOCK EXCHANGE Dabur is fully compliant with the applicable mandatory requirements of the revised Clause 49. Date Apr-05 May-05 Clause of listing agreement 49 (I) 49(IA) 49 (IB) 49 (IC) 49 (ID) 49 (II) 49 (IIA) 49 (IIB) 49 (IIC) 49 II(D) 49 (IIE) 49 (III) 49 (IV) 49 (IV A) 49 (IV B) 49 (IV C) 49 (IV D) 49 (IV E) 49 (IV F) 49 (V) 49 (VI) 49 (VII) Compliance status Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Not Applicable Yes Yes Yes Yes Yes Yes
100 150 200 250

NATIONAL STOCK EXCHANGE High (Rs.) 60.47 65.50 69.90 81.00 80.00 84.75 94.70 91.00 106.05 119.90 120.10 125.90 Low (Rs.) 54.50 58.15 60.00 63.32 69.05 74.62 79.00 81.15 85.25 102.32 101.65 109.85 Volume 6,169,601 5,563,490 6,624,221 14,549,406 9,998,422 7,778,446 18,637,984 10,882,802 14,792,191 23,707,112 22,009,984 30,236,000

High (Rs.) 60.75 65.22 68.50 78.12 79.85 84.85 93.20 90.77 105.90 119.00 120.00 125.95

Low (Rs.) 54.50 55.50 62.57 63.00 71.30 71.37 77.50 81.20 85.12 102.27 107.00 109.25

Volume 2,700,658 2,110,625 5,728,947 5,681,302 2,382,438 2,497,428 6,103,536 3,380,733 4,558,362 6,696,522 7,710,303 25,697,384

Table 10:Compliance report

Particulars I. Board of Directors (A) Composition of Board (B) Non-executive Directors Compensation & Disclosures (C) Other provisions as to Board and Committees (D) Code of Conduct II. Audit Committee (A) Qualified & Independent Audit Committee (B) Meeting of Audit Committee (C) Powers of Audit Committee (D) Role of Audit Committee (E) Review of Information by Audit Committee III. Subsidiary Companies IV. Disclosures (A) Basis of related party transactions (B) Board Disclosures (C) Proceeds from public,rights,preference issues,etc. (D) Remuneration of Directors (E) Management (F) Shareholders V. CEO/CFO Certification VI. Report on Corporate Governance VII. Compliance

Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06

Note:The value of Dabur share has been adjusted to half of its market price for April`05 to Jan`06 to give effect to bonus of 1:1 allotted on 27/01/06.

Chart A:Daburs Share Performance versus BSE Sensex

Dabur

BSE Sensex
50

April

May

June

July

August September
2005

October

November December

January

February
2006

March

Adoption of non-mandatory requirements

a) Maintenance of the Chairmans office 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 a Remuneration cum Compensation Committee that comprises of three members, two members being independent directors and one being non executive director. The Chairman of the Committee is an independent director. d) Half-yearly Declaration Dabur prepared a half-yearly report of financial performance in the year under review including a section on Management Discussion and Analysis. The half-yearly report was sent to all shareholders. e) Audit Qualifications

Note:Daburs adjusted closing price and BSE Sensex indexed to 100 as on 1st April 2005.

Distribution of Shareholding
Table C and D lists the distribution of the shareholding of the equity shares of the Company by size and by ownership class as on 31st March, 2006.

Table C :Shareholding pattern by size

Number of equity shares held up to 5000 5001 10000 10001 and above Total Physical form No.of No.of share shares holders 5834 26 4 5864 6991316 194000 97000 7282316 Dematerialisation form No.of No.of share shares holders 76878 403 415 77696 28728819 3056844 534234805 566020468 Total number of share holders 82712 429 419 83560 % of share holders 98.99% 0.51% 0.50% 100.00% Total % of number share of shares holding 35720135 3250844 534331805 6.23% 0.57% 93.20%

The Auditors have raised no qualification for the Financial Statements of the Company.
f) Mechanism for evaluating performance of non-executive Directors

573302784 100.00%

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.
g) 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.

Table D:Shareholding Pattern by ownership

Particulars No.of share Holders Directors,promoters and family members FIIs Mutual Funds Financial Institutions/Banks NRIs Corporates Individuals Total 34 51 44 29 2418 1675 79309 83560 As on 31st March,2006 % of share Holders 0.04% 0.06% 0.05% 0.03% 2.89% 2.00% 94.91% 100.00% No.of shares held 426004818 55620603 8354761 27529700 4064240 9170725 42557937 573302784 % of share Holding 74.31% 9.70% 1.46% 4.80% 0.71% 1.60% 7.42% 100.00% No.of share holders 31 32 37 9 1959 957 43836 46861 As on 31st March,2005 % of share holders No.of % of shares share held holding 78.27% 6.19% 1.05% 4.19% 0.98% 1.58% 7.73%

0.07% 224174178 0.07% 0.08% 0.02% 4.18% 2.04% 93.54% 17740997 3011414 11995874 2819833 4524985 22152432

Additional Shareholder Information

Annual General Meeting
Date: 8th July, 2006 Time: 9:30 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, 2006, results were announced on:

100.00% 286419713 100.00%

REPORT ON CORPORATE GOVERNANCE 11

Annual Report 2005-06 Dabur India Limited

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, 2006, about 98.73% shares of the Company were held in dematerialized form. The equity shares of the Company are frequently traded at Mumbai and National Stock Exchange.

ANNEXURE 1 - DETAILS OF OTHER DIRECTORSHIPS HELD

Name of the Director V C Burman Status Directorship Committee Membership Shareholders/Investors Grievance Committee Remuneration cum Compensation Committee Dabur Ayurvedic Specialities Limited Burmans Finvest Limited Dr Anand Burman PD/NED Dabur India Limited Dabur Pharma Limited Dabur Pharmaceuticals Limited Dabur Overseas Limited Dabur Oncology Plc Hindustan Motors Limited PradipBurman PD/ED Dabur India Limited Ayurvet Limited Sanat Products Limited Dabur Exports Limited Burmans Finvest Limited CNS Infotech Ltd. Amit Burman PD/NED Dabur India Limited Dabur Pharma Limited Dabur Foods Limited Apollo Health Street Limited E-medlife.com Limited Pasadensa Foods Limited Q H Talbros Limited Radico Khaitan Limited Burmans Finvest Limited PVR Ltd. P D Narang ED Dabur India Limited Dabur Egypt Limited Sanat Products Ltd. Shareholders/Investors Grievance Committee Remuneration Committee Remuneration Committee Audit Committee Audit Committee Audit Committee Audit Committee Shareholders/Investors Grievance Committee Committee Chairmanship

PD/NED

Dabur India Limited

Outstanding GDRs/ADRs/Warrants/Options
The Company has 66,91,484 outstanding Options as on 31st March, 2006 with vesting period from 1 to 5 years from the date of grant.

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 27th 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, 41709885 Fax: 011-41709881

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 authorised to approve transfer of shares in the physical 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.

Companys Registered Office Address:

8/3, Asaf Ali Road, New Delhi-110002 Ph: 011-23253488

PLANT LOCATIONS
Sahibabad Unit I & II 22,Site IV,Industrial Area,Sahibabad,Ghaziabad (U.P.) Tel:0120 3982000,3001000:Fax:0120 2779048 Unit III Plot No.5/1,Site IV,Sahibabad 201 010,Ghaziabad (U.P.) Tel:0120 3982000,3001000:Fax:0120 2779048 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 Narendrapur Alwar Katni Jammu Uttaranchal 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 Fax :0144-2881302 10.4,Mile Stone,Village Padia,Katni,Madhya Pradesh,Tel:07622-262317 Fax :07622-262297 Lane No.3,Phase II,SIDCO Ind.Complex,Bari Brahmna,Jammu,Tel:01923-220123 Fax :01923-220123 Plot No.4,Sector-2,Integrated Industrial Estate,Rudrapur Dist.Udham Singh Nagar.Uttaranchal.,Tel:05944-239231 Fax :05944-242480

Address for Correspondence

For share transfer / dematerialisation of shares, payment of dividend and any other query relating to the shares For queries of Analysts, FIIs, Institutions, Mutual Funds, Banks, Media and others For investors assistance 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 / Mr Sharad Goel Dabur India Limited, Punjabi Bhawan 10 Rouse Avenue, New Delhi 110002 Tel: 011-42786000; Fax: 011-23222051 Mr. A K Jain Additional 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

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. We have reviewed the Balance Sheet and Profit and Loss Account of the company for the year ended 31st March, 2006 and all its schedule and notes on accounts, as well as the Cash Flow Statement. 2. To the best of our knowledge and information: a. these statements do not contain any materially untrue statement or omit to state a material fact or contains statement that might be misleading; b. 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. 3. 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. 4. 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. 5. 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. All significant deficiencies in the design or operation of internal controls, which we are aware and have taken steps to rectify these deficiencies; b. Significant changes in internal control over financial reporting during the year; c. 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; d. Significant changes in accounting policies during the year. We further declare that all board members and senior management have affirmed compliance with the code of conduct for the current year. New Delhi April 25, 2006 Signed Sunil Duggal CEO, Dabur India Limited Signed Rajan Varma CFO, Dabur India Limited

12 REPORT ON CORPORATE GOVERNANCE Dabur India Limited Annual Report 2005-06

Name of the Director

Status

Directorship

Committee Membership

Committee Chairmanship Audit Committee

Name of the Director

Status

Directorship

Committee Membership

Committee Chairmanship Remuneration cum compensation committee Audit Committee

Dabur Finance Limited Dabur Ayurvedic Specialities Ltd. Dabur Foods Limited

Audit Committee Remuneration Committee Eicher Limited Reed Relay & Electronics Limited Eicher Motors Limited Stuart Edward Purdy ID Dabur India Limited Shareholders/Investors Grievance Committee Audit Committee Remuneration cum Compensation Committee Eagle Insurance Company Ltd. Dr. S Narayan * Remuneration Committee Audit Committee R C Bhargava ID ID Dabur India Limited Apollo Tyres Ltd. Multi Commodity Exchange of India Ltd. Dabur India Limited ILFS Limited Polaris Software Lab Ltd. Taj Asia Ltd. Roulunds Codan India Ltd. Grasim Industries Limited Lord Krishna Bank Ltd. Optimus Outsourcing Co. Ltd. Maruti Udyog Limited Maruti Suzuki Automobiles India Ltd. Omax Auto Ltd. Thomson Press Ltd. UltraTech Cement Co.Ltd. Shareholders/Investors Grievance Committee
* appointed as director w.e.f. 26th July, 2005

Shareholders/Investors Grievance Committee

Audit Committee

Dabur Pharma Limited Dabur International Ltd. Balsara Hygiene Products Limited Balsara Home Products Limited Besta Cosmetics Limited African Consumer Care Ltd. Punjab Tractors Limited Sunil Duggal ED Dabur India Limited Dabur Foods Limited

Shareholders Grievance Committee

Audit Committee

Audit Committee

Audit Committee Audit Committee

Balsara Hygiene Products Limited Balsara Home Products Limited Besta Cosmetics Limited Dabur International Limited HH Mah.Gaj Singh ID Dabur India Limited Jodhna Medical & Research Centre Limited Maharaja Heritage Resorts Limited Shankar Packagings Limited Tourism Finance Corporation of India Limited Fortune Park Hotels Limited Birla Sunlife Insurance Company Limited P N Vijay ID Dabur India Limited

Audit Committee Audit Committee Audit Committee

Audit Committee

Audit Committee Shareholders/Investors Grievance Committee Audit Committee

Audit committee Shareholders/Investors Grievance Committee Audit Committee

DIRECTORS REPORT 13
Annual Report 2005-06 Dabur India Limited

To, The Members, Your Directors have pleasure in presenting the 31st Annual Report on the business and operations of the Company together with the Audited Accounts for the year ended 31st March, 2006.

Fixed Deposits
During the year the Company has not accepted any fixed deposits from the public. However, as on 31st March, 2006 the Company had unclaimed deposits of Rs.7.53 lacs due to 51 depositors. In addition to this an amount of Rs.5.57 lacs is outstanding as unclaimed towards interest accrued and due to 524 depositors. During the year, the Company has deposited a sum of Rs.1,23,768/- towards unclaimed deposits and interest in the Investors Education & Protection Fund.

Financial Results
Financial results are presented in Table 1. Table 1:Financial results (Rs.crore) 2005-06 Turnover (including other income) Profit before Tax Add: Provisions of earlier years written back Less Provision for Taxation - Current Provision for Taxation - Deferred Provision for taxation - Fringe Benefit Profit after Tax Add: Balance in Profit & Loss Account brought forward from the previous year Transferred from Investment Allowance Reserve Transferred from Investment Deposit Reserve Transferred from Capital Redemption Reserve Profit available for appropriation Appropriation to: General Reserve Interim Dividend - Paid Final Dividend - Proposed Corporate tax on Dividend Balance carried over to Balance Sheet Total 25.20 42.99 57.33 14.07 175.00 314.67 25.15 28.63 42.96 9.77 125.23 231.74 125.23 0.57 314.67 81.12 0.83 1.82 231.74 1375.03 214.36 0.29 214.65 18.08 4.00 3.70 188.87 2004-05 1280.22 165.02 165.02 13.00 4.00 147.97

Nature of business
With the acquisition of Balsara Group of companies, the Company has entered in the Home Care business. Detailed discussion on the Company's nature of business is covered under the chapter Management Discussion and Analysis which forms part of this report. Dabur Foods Limited, a wholly owned subsidiary, has during the year extended its activities into manufacturing of fruit juices/pulps in addition to its existing business of trading in these products. 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 and Besta Cosmetics Limited became subsidiary companies of the Company. During the year in view of the restructuring in the investment portfolio Dabur Nepal Private Limited, Dabur Overseas Limited have ceased to be direct subsidiaries and have now become indirect subsidiaries through Dabur International Limited. As required under the provisions of Section 212 of the Companies Act, 1956, a statement of the holding company's 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 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 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 54,14,927 options in 8 trenches were granted to eligible employees of the Company in terms of Employees Stock Option Plan (Dabur ESOP 2000). During the year, 2,31,679 options got vested in the employees, and were exercised by them immediately after vesting. Accordingly, the Company made the allotment of 62,500 equity shares on 30th May, 2005, 1,36,989 equity shares on 5th August, 2005 and 32,190 equity shares on 7th November, 2005 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.

Dividend
An interim dividend of Re.1.50 per share (i.e. 150%) was declared and paid during the year. The Board of Directors has recommended a final dividend of Re.1 per share (i.e.100%) to the members for their approval. The final dividend, if approved, will be paid to members within the period stipulated by the Companies Act, 1956. The Dividend Payout Ratio for the current year (inclusive of corporate tax on dividend distribution) will be 60.57%.

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 Operations and Business Performance
Kindly refer to Management Discussion & Analysis covered under Corporate Governance which forms part of this Report.
A. Conservation of energy:

a)

Energy conservation measures taken:Various energy conservation techniques were initiated at large scale and successfully implemented. Auto modulation system installed in Boiler feed system at Baddi. 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%. Auto Power Factor correction system installed. Power Capacitor Bank of 100 KVAR installed at Alwar to maintain the Power Factor. Strict control of Power Factor in range of 0.99 to 0.997.

Amalgamation of Balsara Group of companies with the Company

Board of Directors have decided to amalgamate with the Company three Balsara Group of companies namely Balsara Hygiene Products Limited, Balsara Home Products Limited and Besta Cosmetics Limited with effect from 1st April, 2006, subject to approval of shareholders and other appropriate regulatory authorities. This will help us in cost cutting and saving infrastructure cost and to have a more efficient corporate structure. Detailed discussion on this is presented in the Management Discussion and Analysis section of this report.

Corporate Governance
It has always been the Company's 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 period Dr Anand Burman and Mr Amit Burman have resigned from the executive directorship of the Company, although they continue to remain non-executive members on the Board of the Company. At the ensuing Annual General Meeting Dr Anand Burman, His Highness Maharaja Gaj Singh, Mr Sunil Duggal and Mr P N Vijay will retire by rotation and being eligible offer themselves for reappointment in terms of provisions of Articles of Association of the Company. 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.

b)

Additional investments and proposals, if any, being implemented for reduction of consumption of energy:Efficiency Monitoring System planned at Pant Nagar to check and control the steam generation efficiency. Commissioning is expected by May'06. This system works by controlling the ratio of fuel and air. 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.130 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. Total energy consumption and energy consumption per unit of production as per Form A Attached herewith as Annexure 6

c)

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) ii) iii) iv) 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; 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; That they had prepared the annual accounts on a going concern basis. d)

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: The impetus on international business continued to gain momentum. This was done through sharper strategic focus & superior deployment strategies. The acquisition of Balsara business gave access to market& product segments, which further strengthened the business. Continued attention & resource deployment was done on Brand development with specific emphasis on "Dabur" & " Vatika" brands. Local celebrities were used in Brand promotion in markets like Pakistan & Egypt. As part of the strategic exercise seven 'focus' and eight "potential" markets were identified for resource Investment. Work continued to develop the Developed Market Health care & Oral strategies through the High end Private label route. Towards that work continued to prepare Dabur facilities for Medicines & Health Care Products Regulatory Agency (MHRA) as also FDA compliant manufacturing bases. To provide focus on International Business as a growth engine, the Business has been split with 2 business heads located respectively in Dubai & India. ii) Development of New markets for Products & Services: In continuation with the focus & potential markets exercise, & with a view to consolidate the opportunities offered by Balsara integration markets in "Arabia" like Sudan, Morocco, Libya, Jordan, those in CIS like Russia, Ukraine & other markets like Ghana were developed for growths. Marketing Offices manned by Dabur employees were set up in some of these markets with a view to get closer to the Consumer & Customer In Pakistan avenues for local trading/manufacturing would be evaluated & actioned for a much wider portfolio of products next year. The positive experience with the launch of Sarson Amla in Pakistan gave further confidence in the potential of the market. iii) Export Plans: Organic & inorganic growth will be pursued in the coming & future years to bolster sales growths & gain economies of scale, thereby boosting profitability. Health care & Oral Care through the private label route will be a thrust area with necessary R&D & backroom inputs. Pakistan, Bangladesh & Nigeria would take major investments & expected to grow substantially. In addition a major thrust is being put in the Russian & select CIS markets to tap the oral care & Health Care opportunities. Manufacturing consolidation is also planned to be completed in United Arab Emirates with a new state of the art plant in Dubai Investment Park. Total Foreign Exchange used during 2005-06: Rs.536.18 lacs. Total Foreign Exchange Earned during 2005-06: Rs.2658.21 lacs.

Change in Capital Structure and Listing of shares

The Company's 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 to NSE and BSE against the options exercised by employees pursuant to Employees Stock Option Scheme of the Company; 62,500 equity shares allotted by the Company on 30 May 2005 1,36,989 equity shares allotted on 5 August 2005 32,190 equity shares allotted on 7 November 2005 In addition, 28,66,51,392 equity shares were allotted on 27 January 2006 as bonus shares.

Auditors
M/s G. Basu & Company, Chartered Accountants, Statutory Auditors, M/s Bansal & Company, Branch Auditors of Alwar Division and M/s Waring & Partners, Branch Auditors of London Branch of the Company retire at the conclusion of ensuing Annual General Meeting and being eligible offer themselves for reappointment as statutory auditors & branch auditors respectively.

Cost Auditor
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 2006-07.

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 2005-06. Consolidated sales grew by 23.6% to Rs.1899.57 crore as compared to Rs.1536.95 crore in the previous year. Similarly, net profit after tax and after minority interest for the year at Rs.214.18 crore is higher by Rs.58.38 crore as compared to Rs.155.80 crore in the previous year.

Internal Control System

The Company's 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.

Group for interse transfer of shares

As required under Clause 3 (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

14 DIRECTORS REPORT Dabur India Limited Annual Report 2005-06

aforesaid SEBI Regulations, are given in the Annexure 8 attached herewith and form part of this report.

Annexure '1'
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, 2006, 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 Membership No. 51717 New Delhi 25th April 2006

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 Company's 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 V C Burman Chairman New Delhi 25th April, 2006

Annexure '2'
Statement pursuant to Section 212 of the Aompanies Act,1956 relating to subsidiary companies
1 Name of the Subsidiary *Dabur Nepal Pvt.Ltd. *Dabur Overseas Ltd. Dabur Foods Ltd. 20,000,000 Equity Shares of Rs.10 Each fully Paid Up 100% 31/03/2006 Dabur International Ltd. 1,000,000 Equity Shares of Pens Sterling 1 Each fully Paid Up 100% 31/03/2006 *Dabur Egypt Ltd. *Asian Consumer Care Pvt.Ltd. *Pasadensa Foods Ltd. *Weikfield International (UAE) Ltd. *African Consumer Care Ltd. Balsara Home Products Ltd. 12,290,711 equity shares of Rs 10 each fully paid up 94.18% 31/03/2006 Balsara Hygiene Products Ltd. 3,862,100 equity shares of Rs 10 each fully paid up 99.52% 31/03/2006 *Besta Cosmetics Ltd.

Holding Company's Interest

3 4 5

Extent of Holding Subsidiary Financial Year ended on Net aggregate amount of subsidiaries Profit/(Loss) not dealt within the holding company's accounts : (i) For the financial Year of the subsidiaries (ii) For the previous financial year of the subsidiaries since they become the holding company's subsidiaries.

31/03/2006

31/03/2006

31/03/2006

31/03/2006

31/03/2006

31/03/2006

31/03/2006

31/03/2006

Rs.12,10,18,111

Rs 5,75,60,758 AED 47,38,681 Rs.5,83,99,567 AED 48,86,993

Rs.13,88,61,289

(Rs.32,77,374)

(Rs.14,81,28,846)

Net aggregate amount of subsidiaries Profit/(Loss) dealt within the holding company's accounts : (i) For the financial Year of the subsidiaries (ii) For the previous financial year of the subsidiaries since they become the holding company's subsidiaries.

* Subsidiary Undersection 4(1)(c) Exchange Rate as on 31.03.2006 1 AED=Rs.12.147

Annexure '3'
Details of Subsidiary Companies
(Amount in Lacs) Particulars 1.Capital 2 Reserves 3. Total Assets 4. Total Liabilities 5. Details of Investments 6. Turnover 7.Profit before Taxation 8. Provision for Taxation 9. Profit after Taxation 10. Proposed Dividend
Exchange Rate as on 31.03.2006 1 US $ = Rs. 44.615 1 NR=Rs.0.625 1 AED=Rs. 12.147 1BDT= Rs 0.64 1 ND=Rs.0.36119 INR= Indian Rupee (all amount in INR, unless specified otherwise)

Dabur Nepal Pvt. Ltd. 499.08 NR 798.52 5,980.85 NR 9569.36 15,961.56 NR 25538.50 15,961.56 NR 25538.50 12.49 NR 19.98 19,481.76 NR 31170.82 604.03 NR 966.45 105.54 NR 168.86 498.49 NR 797.58

Dabur Foods Ltd. 2,000.00 -271.12 5,970.71 5,970.71 500.21 19,253.41 1,370.37 160.21 1,210.16

Pasadensa Foods Ltd. 500.00 -298.65 2,221.90 2,221.90 727.03 1.32 -1.32

Dabur International Ltd. 2,906.82 AED 239.30 1,508.04 AED 124.15 9,376.02 AED 771.88 9,376.02 AED 771.88 3,194.28 AED 262.97 7,713.93 AED 635.05 570.43 AED 46.96 570.43 AED 46.96

Weikfield InterAsian Consumernational (UAE) Ltd. care Pvt. Ltd. 194.47 AED 16.01 424.69 AED 34.96 1,644.94 AED 135.42 1,644.94 AED 135.42 3,341.43 AED 275.08 -31.82 AED - 2.62 -31.82 AED - 2.62 95.85 BDT 149.77 -93.31 BDT -145.80 617.45 BDT 964.76 617.45 BDT 964.76 1,443.36 BDT 2255.25 -56.31 BDT -87.98 5.50 8.59 -61.80 BDT -96.56

African Consu- Dabur Egypt mercare Ltd. Ltd. 159.10 ND 440.49 -136.93 ND -379.11 302.27 ND 836.88 302.27 ND 836.88 802.07 ND 2220.63 -105.43 ND -291.90 -105.43 ND -291.9 234.67 USD 5.26 30.27 USD 0.68 820.30 USD 18.39 820.30 USD 18.39 1,324.96 USD 29.70 85.91 USD 1.93 85.91 USD 1.93

Dabur Over- Balsara Home seas Ltd. Products Ltd 223.08 USD 5 -10.60 USD -0.24 234.50 USD 5.26 234.50 USD 5.26 195.06 USD 4.37 -4.21 USD -0.09 -4.21 USD -0.09 1,305.00 -32.24 8,945.47 8,945.47 80.29 19,156.53 1,514.56 125.95 1,388.61

Balsara Hygeine Products Ltd 388.08 1,163.98 1,976.15 1,976.15 731.94 171.39 7.56 40.33 -32.77

Besta Cosmetics Ltd 90.00 26.92 186.74 186.74 121.83 115.35 28.86 86.48

DIRECTORS REPORT 15
Annual Report 2005-06 Dabur India Limited

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, 2006.
For the Year 1. 2. Number of Options granted: Pricing formula: 54,14,927 Each option carries the right to the holder to apply for equity shares of the Company at par. 2,31,679 2,31,679 2,31,679 17,504 None Rs.2,31,679/66,91,484 9,52,303 9,34,803 14,36,562 12. 6. 7. 8. 9. 10 Options lapsed/Cancelled: Variation in terms of options: Money realized by exercise of options: Total number of options in force: Employee-wise details of options granted during the year to: Mr P D Narang Mr Sunil Duggal Mr Charanjit Mohan Mr V S Sitaram Mr Nitin Ghadiyar Mr N Venkatakrishnan Mr Jude Magima Mr A Sudhakar Mr S Raghunandan Mr Devender Garg Mr Rajan Varma ii. Employees who received the options amounting to 5% or more of options granted during that year: Mr P D Narang Mr Sunil Duggal Mr Charanjit Mohan Mr Nitin Ghadiyar Mr Jude Magima Mr S Raghunandan Mr Devender Garg Group Director - Corp.Affairs Chief Executive Officer Executive Director-Operations Executive Director-CCD Executive Director-CHD Executive VP - Commercial Executive VP - CPPD Executive VP - Human Resources Executive VP - Sales (CCD) Executive VP - Marketing (CCD) Chief Financial Officer Group Director - Corp.Affairs Chief Executive Officer Executive Director-Operations Executive Director-CHD Executive VP - CPPD Executive VP - Sales (CCD) Executive VP - Marketing (CCD) 781973 773559 370498 260416 324718 221112 286887 221112 280438 280438 190436 781973 773559 370498 324718 286887 280438 280438 13. 3,49,250 None Rs.14,36,562/(Rs.in lacs) 66,91,484 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 Weighted average exercise price (per option) Weighted average fair value of per option: (per intrinsic value method) (per black scholes model) 14. Rs.110.73 Rs.110.47 Basic 3.30 3.30 0.0001 Diluted 3.27 3.27 0.0001 Re.1 18915.37 18908.37 685.99 678.99 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) Guide Lines 1999,to account for stock options issued under Dabur ESOS 2000,the Company's 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:Cumulative 79,75,537 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

3. 4. 5.

Options vested: Options exercised: Total number of shares arising as a result of exercise of option:

Rs.3.27

i. Senior managerial : personnel

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 5.84 1 to 5 years 2.04 250 Rs.111.73

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,2006 Name Designation/ Nature of Duties Business Head - UK and Europe Unit Head - Uttranchal Senior General Manager - S&M (Consumer Health Division) Director Dy.General Manager - Sales & Mktg. General Manager - Sales & Mktg. Director Chairman Additional General Manager - Operations Head of Manufacturing Chief Executive Officer Executive Vice President - Marketing (Consumer Care Division) Senior General Manager - Projects Executive Director - Consumer Health Division General Manager - Operations Head - Corporate QA General Manager - Supply Chain Manager - Regulatory Head - Talent Management Executive Vice President - Supply Management Sales Manager -UK Executive Director - Operations Group Director - Corporate Affairs Executive Vice President - Sales (Consumer Care Division) Executive Director - Consumer Care Division Executive Vice President - Human Resources Chief Financial Officer Executive Vice President - Commercial Qualifications Experience (in yrs) 23 18 29 13 10 13 39 42 22 34 25 18 33 27 34 33 18 21 20 21 11 32 30 17 25 30 33 20 Remuneration 6,722,650 2,250,728 2,827,177 335,151 233,867 269,667 9,218,488 8,864,000 2,361,992 4,556,596 12,202,290 4,113,661 2,950,196 6,360,843 1,234,295 1,103,627 1,473,708 4,033,590 3,119,367 4,166,154 2,392,750 7,887,426 12,315,906 4,301,846 1,558,705 3,999,977 5,063,025 4,134,924 Date of Appointment 11/01/2004 04/25/2005 04/01/2002 12/09/1997 01/02/1996 12/09/1997 11/02/2002 01/07/1963 05/16/2002 04/01/2005 05/20/1995 12/03/1993 07/31/1993 26/10/2004 10/01/2002 18/12/2002 09/01/2005 07/01/2004 04/22/2004 02/25/2002 03/08/2004 07/26/1999 07/01/1983 06/05/2002 01/18/2006 09/17/2001 11/01/2000 02/06/2003 Age (in yrs) 47 44 52 37 34 37 63 69 45 56 49 41 57 48 54 56 40 45 42 42 34 52 52 41 48 55 56 45 Particulars of Last employment General Manager ,Dabur International Limited Factory Manager,Britannia Industries Limited General Manager,Weikfield International (UAE) Ltd Project Manager,Dabur Nepal Private Limited -Executive Director,Dabur Finance Limited Director,The Printers House Private Limited Managing Director,Dabur (Dr.S.K.Burman) Private Limited Factory Manager,Hindustan Lever Limited Executive Director - Production and Operations,Balsara Home Products Limited All India Sales Operations Manager,Pepsi Foods Limited Sales Operation Manager,Pepsi Foods Limited Dy General Manager (Engg),Vam Organics Chemicals Limited President and CEO ,Morepen Laboratories Limited Factory Manager,Hindustan Lever Limited Head Development - Regional Innovation Center,Hindustan Lever Limited Head - Supply Chain,Apollo Tyres Limited ACGB Director - Corporate HR,Whirlpool of India Limited General Manager - Materials,Marico Industries Limited Regional Sales Manager ,Harwin Plc General Manager - Technical,Hindustan Lever Limited Management Accountant,Dabur (Dr S K Burman) Private Limited Vice President - Sales & Distribution,Home Trade Vice President - Strategy,Unilever UK Vice President - HR,Owens Brockway Vice President & CFO,Carrier Aircon Limited Manager - Special Projects,Hindustan Lever Limited

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 Notes: 1 2 3 4 5

Ananthanarayan S. Bhaumik Asim (*) Bhujbal Dilip Burman Amit (*) Burman Chetan (*) Burman Mohit (*) Burman Pradip Burman Vivek Chand Das Arabind (*) Deshpande S.W. Duggal Sunil Garg Devendra Garg Rajiv Ghadiyar Nitin Ghosh P.C.(*) Governor Rusi (*) Guha Sujit (*) Gunawant Deepika Krishnan V. Magima Jude Mahmood Naeem Mohan Charanjit Narang P.D. Raghunandan S. Sitaram V.S.(*) Sudhakar A. Varma Rajan Venkatakrishnan N.

M Sc,MMS M Sc,M Phil. B Sc,MBA Graduate in Business Admn.(USA) BBA Graduate in Business Admn.(USA) B.Sc.(Mech.Engg.),MIT (USA) B.Sc.in Business Admn.(USA) B Tech,M Tech BE,PGDM BE(H),PGDBM B Sc,PGDM B Sc.- Engg. BA (Eco & Stats),MMS B Sc.- Engg. B Tech,ME B Tech,PGDM BAMS ,MD (Ayurveda) B Sc.- Engg.,MBA MA (Eco) BBA BE B Com,CA,MIIA,CS BE,PGDM B Tech,PGDM MSc.,MA (Social Work),LLB,PGDPM B Com (Hons),CA B Com (Hons),CS,ICWA,CA

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 except Mr Mohit Burman & Mr Chetan Burman who are the sons of Mr V C Burman & Mr Pradip Burman respectively. 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 and relatives of directors whose terms have been approved by the Central Government.

16 AUDITORS REPORT Dabur India Limited Annual Report 2005-06

Annexure '6'
FORM - A (See Rule 2)

Form of Disclosure of particulars with respect to Conservation of Energy A. Power and Fuel Consumption 2005-06 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) 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. 211 4822504 22820.86 356 7910683 22191.41 239 5305338 22176.45 761 16874078 22176.15 5561 106950230 19230.82 5645 75822911 13431.39 Nil Nil Nil Nil 4158856 2.79 8.23 34226465 4754389 3.13 6.96 33112705 21641998 89451865 4.13 15724186 63388569 4.03 2004-05

New Technology introduced in manufacturing & utilities Odomos Coils at Jammu Dust free LDM facility at Nepal Thermic Fluid Heater for Guar Food grade Pilot Plant for Soap making in R&D Ultra tack filtration in Real Juices. Water Harvesting commence. Atomic A.Spectrophotometer installed at DRF (FMCG). Innovative Packaging Concept LDM - Container Shape & Pkg.Change Vatika Soap Gulabari 60 ml - in PET bottle. Anmol Cold Cream Chyawanshakti Fit N Activ

Consistency in Quality of Products. Better working condition. Better R&D controls. Improved Hygiene condition and Safety. Improve water level & quality in ground water. To Detect & Control heavy metals in product.

Different appearance / Aesthetic appeal / Trend setting / Environmental friendly and better self-life of Products.

3. In case of imported technology (imported during the last 5 years reckoned from the beginning of this financial year) following information may be furnished: Not applicable

Annexure '8'
Group for interse transfer of shares under clause 3(e) of Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,1997 1. Mr Ashok Chand Burman 2. Mrs Sudha Burman 3. A C Burman HUF 4. Mr Ratan Chand Burman 5. Mr Vivek Chand Burman 6. Ms Sujata Burman 7. Mrs Asha Burman 8. Mr Amit Burman 9. Mrs Gauri Tandon 10. G C Burman HUF 11. Mr Pradip Burman 12. Mr Chetan Burman 13. Pradip Burman HUF 14. Mr Sidharth Burman 15. Mrs Indira Burman 16. Dr Anand Burman 17. Mrs Minnie Burman 18. Mr Aditya Burman 19. V C Burman HUF 20. Mrs Monica Burman 21. Mr Mohit Burman 22. Mr Gaurav Burman 28. Milky Investment & Trading Co. 29. Poonmudi 30. Chowdry Associates 31. VIC Enterprise Private Limited 32. Acee Enterprises 33. Gyan Enterprises Private Limited 34. Puran Associates Private Limited 35. Ratna Commercial Ent.Pvt.Ltd. 36. Ms Anisha Burman 37. Mrs Meera Burman 38. Mrs Pooja Burman 39. Ms Devika Burman 40. Mrs Divya Burman 41. Master Adhiraj Burman 42. Ms Diya Burman 43. Mr Sandeep Tandon 44. Hotels Private Limited 45. Dabur Exports Limited 46. Dabur Securities Private Limited 47. Flagship Trading Company 48. Interx Laboratories Private Limited 49. KBC India Private Limited 50. Margdarshak Dabur Invest Corp 51. Southern Enterprises 52. Western Enterprises 53. Eastern Enterprises 54. Dr S K Burman Charitable Trust 55. Dabur Foundation 56. Chunilal Medical Trust 57. Mateshwari Dham Trust 58. Estate of Durga Prasad Makkar Trust 59. Amit Laboratories Private Limited 60. Angel Softech Private Limited 61. Barcelona Investment & Trading Co. 62. Burmans Finvest Limited 63. Cavendish Constructions Private Ltd. 64. Miracle Commercial Private Ltd. 65. Prayag Commercial Private Limited 66. Pasadansa Foods Limited 67. Wakarusa Laboratories Private Ltd. 68. Welltime Gold & Investment Pvt.Ltd. 69. Dabur Ayurvedic Specialities Ltd. 70. B R Bee Products Pvt Ltd. 71. Dabur Research Foundation 72. Vansh Holdings Pvt Ltd. 73. Dabur Finance Ltd. 74. Dabur Pharmaceuticals Ltd. 75. Excellent (India) Private Limited 76. Malhotra Trading Company Pvt.Ltd. 77. Moonlight Ranch Private Ltd. 78. Shree Investments Limited 79. Adbur Pvt Ltd. 80. Newage Capital Services Pvt Ltd.

Annexure '7'
FORM - B (See Rule 2)

23. Mr Sidharth Burman (HUF) 24. Mr Saket Burman 25. Upvan Farms & Services Pvt.Ltd. 26. Sahiwal Inv.& Trading Company 27. Maneswari Trading Company

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 caters to a wide range of products that the company has business interests.The activity involves not only development of new products but also the continuous improvement in process,delivered cost and delivered quality.The areas of expertise cover herbal products,Ayurvedic products,personal care products,fruit juices and other food products,tissue culture,agro- technological research,product registration and validation. 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 following products:Honitus cough drops: Cough lozenges containing goodness of Honey & Menthol to soothe the irritating cough, sore throat & bad breath in 3 different flavors namely Ginger,Lemon & menthol. Mensta: A women health syrup for Menstrual Irregularities & painful menstruation (Dysmenorrhea). Chyawanshakti:Goodness of Chywanprash with Draksha,Honey in a great tasting product. New Rheumatil Gel: A blend of age old & time tested ayurvedic oils with potent rubifeicients,counter irritants & essential oils for effective penetration to provide quick & long lasting relief from joint pains. New Rheumatil Tablet:Guggulu based tablets indicated for providing symptomatic relief from Joints pains,swelling,stiffness in Osteoarthritic pains & Musculoskeltal disorders. Gokshuradi Guggulu - A classical Ayurvedic formulation which was a need gap for Ayurvedic physicians in edematous conditions of joints and in urinary disorders. Simhanad Guggulu - This is a classical Ayurvedic formulation,which is highly recommended for management of Rheuamtoid Arthirits.This has been developed based on the ancient knowledge from Ayurveda Texts. Somraji Tail - Ayurvedic formulation useful in fungal skin infections.This is also a classical product and was the need gap for the practioners of Ayurveda. Dabur Anmol Cold Ceam:A low priced product with performance levels of the market leader. Heavy Metal Testing Facilities: DRF is working on several projects to ensure that all the herbal medicines rolling out should be complying to the standards of Govt. of India as well as of the respective countries where these drugs are being exported.Three AAS equipments have been installed one each in DRF (Sahibabad),Rudrapur (Uttaranchal factory) and in Baddi to ensure fast track analysis. Product Registration:Dossiers prepared for 47 products covering 9 countries. Technology Transfer:Oral care and hair oils product technology transferred to Bangladesh,Nepal and Dubai manufacturing locations 3. Future plan of action: To continue to provide the benefits of ayurvedic healthcare system to masses by continuing R & D efforts through DRF Ayurvedic research group in the upcoming lifestyle ailments & other niche areas. 4. Expenditure on R&D (2005-06) a) Capital b) Recurring c) Total d) Total R&D expenditure as a percentage of Total Turnover Technology Absorption,Adoption and Innovation 1. Efforts,in brief,made towards technology absorption,adoption and innovation

Rs.Nil Rs.663 lacs Rs.663 lacs 0.48%

2. Benefits derived as a result of the above efforts e.g.product improvement,cost reduction, product development,import substitution etc.

Up gradation of manufacturing Amla Pisthi Mfg.process through Hamilton Kettles at Katni. Guar Gum Flakers with latest Technology.

Saving of Rs 3.35 Lacs / Annum from 2 Kettles. Improved Hygiene condition. Consistency in quality and improved productivity.

Dabur India Limited

ANNUAL REPOR T 2005-06
18 CONSOLIDATED FINANCIALS 25 DABUR INDIA FINANCIALS
Auditors Report
To the Members of Dabur India Limited, We have audited the attached Balance Sheet of Dabur India Limited as at 31st March, 2006 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. 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 hereby report that the report on the accounts of Alwar and London branches audited by the branch auditors were received and properly dealt with by us while preparing our report. Name of Statute Nature of the dues Amount Sales Tax -do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-do-doClassification 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 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 4.88 9.63 28.60 89.00 1.44 0.74 0.03 117.63 120.09 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

S E C T I O N II

17

FINANCIALS AS PER US GAAP 31

Rs.in lacs
Period to which the amount relates 2002-03 2002-03 1991-2002 1990-93 1993-94 1999-00 2000-01 2001-02 2002-03 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 Forum where the dispute is pending Dy.Commissioner (Appeal) -doSales Tax Tribunal High Court High Court Dy.Commissioner (Appeals) Dy.Commissioner (Appeals) Dy. Commissioner Dy. Commissioner Dy. Commissioner (Appeals) Dy. Commissioner (Appeals) Dy. Commissioner (Appeals) 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

ii.

iii. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of audit. iv. 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. v. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts.

vi. 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. vii. On the basis of written representations received from the directors as on 31st March, 2006 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. viii. 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) In the case of Balance Sheet, of the State of Affairs of the company as at 31st March, 2006, and,

b) In the case of Profit and Loss Account, of the Profit for the year ended on that date; and c) In the case of cash flow statement, of the cash flows for the year ended on that date. For G Basu & Co Chartered Accountants S.LAHIRI Partner, Membership No. 51717 New Delhi 25th April 2006

Annexure to the auditors' report as referred to in para i of the said report of even date.
1 a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b) 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. c) Fixed assets disposed of during the year were not material enough to affect the going concern identity of the company. 2 a) The inventories have been physically verified at reasonable intervals by the management. b) 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. c) 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. 3 a) The company has granted unsecured advances of the nature of loan aggregating Rs.3000 lacs to two 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 three involving maximum due of Rs. 3500 lacs. b) Terms and conditions of the loans are prima-facie not prejudicial to the interest of the company. c) As has been stated to us, due dates of realization of principal due of existing loans are yet to commence. d) 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. 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.

Income Tax :Income Tax -doDemand u/s 263/143(3) Demand u/s 263/143 (3) 34.80 138.87 1998-99 2002-03 ITAT CIT (A) (III)

Excise Duty :Excise Duty -do-do-do-do-do-do-do-do-do-do-do-do-do-do-doClassification of Anmol Coco-nut Oil Classification of Saunf Ka Ark/ Clove Oil Modvat on Cap-ital goods Modvat on in-puts (57H) Hajmola Candy Classification on Animal Feed supplement Post manufactu-ring expenses Post manufacuuring expenses Classification of Janma Ghunti Import of Honey Removal of Input MOT charges Post Manufacturing expenses Post manufacturing expenses Valuation of Paclitaxel Valuation of Docetaxel/Paclitaxel 514.60 23.44 0.82 2.42 113.07 174.75 0.30 0.38 388.96 1.78 5.91 0.23 67.55 42.02 963.99 498.34 1993-2001 1998-2004 1996 1998 2004-05 1994-2003 2002-2003 2004-05 1994-2000 2000 2000-01 2003 2000-03 2000-03 1995-2000 1997-2003 Dy.Commissioner Commissioner- Appeals Dy.Commissioner Tribunal Commissioner Appeals/High Court Commissioner-Appeals Tribunal Commissioner Commissioner Commissioner - Appeals Commissioner-Appeals Tribunal Commissioner-Appeals Commissioner-Appeals Settlement Commission Tribunal

5 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. b) 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. 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 (i) (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.

7 8

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. The company has not granted any loan or advance secured by pledge of share, debenture or other security. 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. The company has given guarantees for loans taken by others from banks or financial institutions. The terms and conditions there-of are not prima facie prejudicial to the interest of the company. The term loans taken by the company have been applied for the purpose for which they were raised. No fund raised on short term basis has been used by the company for long term investment. 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. The Company has not issued any secured debenture during the year. The Company has not raised any fund through public issue during the year 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. Other clauses of the order are not applicable to the Company. S.LAHIRI Partner, Membership No. 51717 New Delhi 25th April 2006

11 12

9 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. 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.

13 14 15 16

Rs. in lacs
Name of Statute Nature of the dues Amount Period to which the amount relates 1996-97 1997-98 1998-99 1999-2000 2000-01 Forum where the dispute is pending

17 18

Sales Tax :Sales Tax -do-do-do-doDemand on Hajmola Candy -do-do-doClassification of Hajmola Candy 27.78 25.88 27.05 70.35 12.36 Sales Tax Tribunal Dy. Commissioner (Appeal) -do-doDy. Commissioner (Appeal)

19 20

For G Basu & Co Chartered Accountants

18 FINANCIAL STATEMENTS Dabur India Limited Annual Report 2005-06

Balance Sheet as at 31st March,2006

Schedule As at 31st March,2006 (Rs.in lacs) As at 31st March,2005 (Rs.in lacs)

Profit and Loss Account for the year ended 31st March,2006
Schedule For the year ended 31st March,2006 (Rs.in lacs) 136,968.29 535.02 137,503.31 K L M N O IB 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 0.00 0.00 31,509.26 Appropriations Interim Dividend Proposed Final Dividend Corporate Tax on Interim Dividend Corporate Tax on Proposed Dividend Transferred to Capital Reserve 4,299.29 5,733.03 602.97 804.06 19.27 2,550.00 17,500.64 31,509.26 Earning per share ( In Rs.) ( Face Value Re 1/- each) (7,025.81) 581.04 Basic Diluted No of Shares Basic Diluted 48,515.89 39,947.84 Notes to Accounts P 3.30 3.27 573,149,195 577,524,999 2,862.89 4,296.30 374.14 602.56 0.00 2,515.08 12,522.97 23,173.94 2.58 2.57 572,839,426 575,809,845 Current Deferred Fringe Benefit 19,160.61 27,094.25 137.75 Net Profit after Taxation & 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 Transferred from Investment Allowance Reserve Transferred from Investment Deposit Reserve For the year ended 31st March,2005 (Rs.in lacs) 126,871.51 1,150.32 128,021.83 54,365.36 4,248.86 2,919.46 8,208.56 39,488.95 429.57 149.33 1,709.92 111,520.01 16,501.82 1,300.00 399.83 0.00 14,801.99 0.00 14,801.99 8,112.18 0.00 (5.30) 0.00 82.58 182.50 23,173.94

Sources of funds :
Shareholders' funds: A) Share Capital B) Reserves and Surplus Loan Funds: A) Secured Loans B) Unsecured Loans C D 1,923.23 134.29 2,057.52 Deferred Tax Liability Total EB 1,671.50 48,515.89 1,570.38 3,292.60 4,862.98 1,277.51 39,947.84 A B 5,733.03 39,053.84 44,786.87 2,864.20 30,943.15 33,807.35

Income :
Sales Less Returns Other Income Total Income

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

Application of Funds :
Fixed Assets : (a) Gross Block (b) Less :Depreciation (c) Net Block Investments Deferred Tax Assets Current Assets,Loans & Advances: (a) Inventories (b) Sundry Debtors (c) Cash & Bank Balances (d) Loans & Advances G EB H 11,560.90 2,694.25 3,804.41 10,376.66 28,436.22 Less:Current Liabilities & Provisions EA 12,802.57 4,928.27 1,065.38 6,400.96 25,197.18 F 34,129.37 14,245.69 19,883.68 27,507.77 131.74 32,672.44 13,511.83

(a) Liabilities (b) Provisions

19,342.06 11,388.94 30,731.00

23,838.05 8,384.94 32,222.99 (2,294.78)

Transferred to General Reserve Balance Carried over to Balance Sheet

Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Notes to Accounts Total P IA

3,287.48

Statement of Cash Flow ( Pursuant to AS-3 issued by ICAI)

Rs.Lacs For the year ended 31st March,2006 For the year ended 31st March,2005 Corporate Tax On Dividend 21,435.53 16,501.82 Cash Used(-)/(+)Generated for Operating Activities (A) For the year ended 31st March,2006 1,205.54 3,955.31 19,434.49 (3,324.80) 785.73 (6,279.88) 6,067.63 0.48 (2,750.83) 2.31 (253.87) 606.72 (44.97) (3,151.40) (2,532.61) (8,570.82) (13,944.63) 2,740.39 1,065.38 3,804.41 Rs.Lacs For the year ended 31st March,2005 887.60 2,604.03 20,698.77 (5,607.94) 227.56 (152,824.68) 143,260.48 160.13 (14,784.45) 1.71 (330.49) (8.50) 25.93 1,215.10 (86.01) (6,855.40) (6,037.66) (123.34) 1,188.72 1,065.38

A.Cash Flow from Operating Activities

Net Profit Before Tax And Extraordinary Items Add: Depreciation Loss on Sale of Fixed Assets Miscellenous Expenditure written off Miscellenous Expenditure written off ( Included In Director Remuneration) Interest 1,904.59 (69.33) 426.24 369.67 565.87 3,197.03 24,632.57 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 As per our report of even date attached For G.Basu & Co. Chartered Accountants S.Lahiri Partner New Delhi 25th April 2006 563.68 2,186.09 (1,241.67) (2,234.83) 4,552.00 1,075.51 23,391.16 439.34 1,277.09 1,850.64 768.42 (7,498.63) (4,879.57) 23,302.80 0.48 96.09 69.33 165.90 24,466.67 160.13 407.38 0.00 567.51 18,423.23 1,709.92 4.18 149.34 195.91 429.57 2,488.92 18,990.74

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)

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

For Dabur India Ltd. V.C.Burman P.D.Narang Sunil Duggal A.K.Jain Chairman Director Director Addl.General Manager (Finance) & Company Secretary

FINANCIAL STATEMENTS 19
Annual Report 2005-06 Dabur India Limited

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
As at 31st March,2006 (Rs.in lacs) As at 31st March,2005 (Rs.in lacs) Short Term Loans - from Banks : Secured By : Equity Shares of Re.1 Each (Previous year 500000000 equity shares of Re.1 ) Issued and subscribed: 573302784 Equity shares of Re.1 each fully called up (Previous year-286419713 equity shares of Re.1)
Notes : 1. Authorized share capital during the year increased by Rs.7500 lacs. 2. Equity shares issued & subscribed includes following issues for consideration other than cash :A) 4548000 equity shares of Rs.10 each fully paid up were issued pursuant to the scheme of amalgamation (without payment being recieved in cash). B) 18202080 equity shares of Rs.10 each fully paid up were issued as bonus shares by way of capitalisation of free reserves to shareholders in the ratio of 4 equity shares for every share held as on 1st december,1993. C) During the year the company has issued 286651392 equity shares of Re.1 each shares by way of alloting one bonus share against each one share held by a shareholder. 3 Pursuant to section 94 of Companies Act 1956,equity shares of Rs.10 were sub-divided in equity shares of Re.1/- each on Dec 15,2000 by way of issue of 10 shares against each share formerly held by a shareholder. 4 231679 ( previous year170661) equity shares of Re.1 each were issued during the year 2005-06 under employees stock option scheme". 5. 6691484 ( previous year 1534740) equity shares of Re.1 each are outstanding under "employee stock option scheme" as on 31st March 2006

As at 31st March,2006 (Rs.in lacs) 1,168.01

As at 31st March,2005 (Rs.in lacs) 561.29

Schedule A - Share Capital

Authorised : 1250000000 12,500.00 12,500.00 5,000.00 5,000.00

5,733.03 5,733.03

2,864.20 2,864.20

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 1,923.23 1,570.38

Schedule D - Unsecured Loans

Security deposit from dealers and others Other Loans : Book overdraft of current account with banks Commercial papers External commercial borrowings -ABN Amro Bank NV Total
Notes: 1. Maximum amount of commercial papers outstanding during the period Rs.5000 (previous year Rs.2000) 2. External commercial borrowings repayble within a year Rs nil (previous year Rs.805.93)

9.00

15.92

125.29 134.29

470.75 2,000.00 805.93 3,292.60

Schedule B- Reserves and Surplus

Capital Reserve : As per last account Add :Transferred from profit & loss account Share Premium Account Less :Allotment of bonus shares 1,628.36 19.27 5,758.08 2,866.51 2,891.57 Add:Premium on issue of shares Capital Redemption Reserve : As per last account Less :Transferred to profit & loss account General Reserve : As per last account Add :Transferred from profit & loss account Profit and Loss Account Employee Stock Option Scheme Outstanding: As per last account Add:Addition during the year 915.66 3,503.78 4,419.44 Less:Deletion during the year Total 176.46 4,242.98 39,053.84 728.81 279.03 1,007.84 92.18 915.66 30,943.15 10,061.14 2,550.00 12,611.14 17,500.64 7,546.06 2,515.08 10,061.14 12,522.98 56.93 56.93 0.00 56.93 159.88 3,051.45 1,647.63 1,628.36 5,665.90 5,665.90 92.18 5,758.08 1,628.36

Schedule EA - Current Liabilities & 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 & Protection Fund to be credited by : Unpaid dividend Unpaid matured public deposit Interest accured on public deposit 121.19 7.53 5.57 19,342.06 B.Provisions : For dividend (proposed) - final For corporate tax on proposed final dividend For staff welfare For leave salary For taxation : Brought forward Provision for the year 2,917.99 2,178.36 5,096.35 Adjusted during year 743.00 4,353.35 755.22 1,009.09 Total 11,388.94 30,731.00 2,171.59 1,300.00 3,471.59 553.60 2,917.99 8,384.94 32,222.99 5,733.03 804.06 480.00 18.50 4,296.30 602.56 360.00 208.09 96.42 10.69 5.88 23,838.05 4,933.26 1,037.21 2,574.26 10,594.82 51.24 4.33 12.65 9388.39 873.87 2731.76 10627.95 53.71 2.14 47.24

Schedule C - Secured Loans

Term Loans : PICUP under trade tax loan scheme Secured by: A) Loan amounting to Rs.1338.72 ( in term of original agreement) First charge on the movable and immovable assets inlcuding plant and machinery of the Company ( present and future) situated at plot no.5/1 and 5/13,site IV,industrial area,Sahibabad,Ghaziabad B) Loan amounting to Rs.125.00 ( in term of original agreement) First charge on immovable assets ( present and future) of the Company situated at plot No.5/1 and 5/13,site IV, industrial area,Sahibabad,Ghaziabad Second charge on movable assets including plant and machinery of the Company (present and future) located at plot no.22 site IV, industrial area,Sahibabad,Ghaziabad

Schedule EB - Deferred Tax Liabilites (Net)

Deferred tax liaibility : Depreciation Less:Deferred tax assets : VRS Payment Other disallowances under section 43B of income tax act 1961 Total 74.55 57.19 131.74 1539.76 6.01 131.74 137.75 1139.76 1671.50 1277.51

Schedule F-Fixed Assets

Gross Block As At 01.04.2005 Leasehold Land Freehold Land Building,Roads & Culverts Plant & Machinery Computer Vehicles Furniture Fixtures Patents Livestock Capital Work in Progress Total Previous Year 748.33 291.38 9,495.14 14,318.11 2,406.56 772.07 2,618.58 1,095.97 0.22 926.08 32,672.44 27,450.18 Additions 2005-2006 6.70 3.64 557.72 1,527.33 508.14 189.22 151.28 1,502.30 4,446.33 9,043.48 Transfer/ Adjustment 2005-2006 60.73 1,304.59 279.77 185.93 36.86 1,121.52 2,989.40 3,821.22 As at 31.03.2006 755.03 234.29 10,052.86 14,540.85 2,634.93 775.36 2,733.00 1,095.97 0.22 1,306.86 34,129.37 32,672.44 Upto 01.04.2005 35.80 2,624.41 7,231.48 1,701.87 347.72 1,330.85 239.70 13,511.83 11,955.85 Depreciation Block For the period 2005-2006 8.79 288.15 933.31 246.16 134.05 170.46 123.67 1,904.59 1,709.92 Adjustment 2005-2006 772.67 268.82 107.43 21.82 1,170.74 153.94 Upto 31.03.2006 44.59 2,912.56 7,392.12 1,679.21 374.34 1,479.49 363.37 14,245.69 13,511.83 As at 31.03.2006 710.44 234.29 7,140.30 7,148.73 955.72 401.02 1,253.51 732.60 0.22 1,306.86 19,883.69 19,160.61 Net Block As at 31.03.2005 712.53 291.38 6,870.73 7,086.63 704.69 424.35 1,287.73 856.27 0.22 926.08 19,160.61 15,494.33

Note:Capital work in progress includes advance against capital goods Rs.1075.84 (previous year Rs.588.47).

20 FINANCIAL STATEMENTS Dabur India Limited Annual Report 2005-06

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
Number As at 31st March,2006 (Rs.in lacs) As at 31st March,2005 (Rs.in lacs) C. Share Application money pending allotment (Subscription of 600000 equity shares of Dabur International Ltd of Pound 1 each at a price of Rs.363 per share INC) Total 0.00 0.00 Less provision for diminution in long term trade investment Total (17,259,242.05) 0.00 1,775.00
Notes : Aggregate Book Value of Unquoted Investments Aggregate Book Value of Quoted Investments Aggregate Market Value of Quoted Investments (Based on 31st March 2006 Quotes) 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 % Stake Dabur International Ltd 100% held by Dabur India Limited Dabur Foods Ltd. 100% held by Dabur India Limited Pasadensa Foods Ltd 100% held by Dabur Foods Ltd African Consumercare Ltd 90% held by Dabur International Ltd Dabur Overseas Ltd 100% held by Dabur International Ltd Asian Consumer Care Pvt Ltd 76% held by Dabur International Ltd Besta Cosmetics Ltd 2.13% held by Balsara Home Products Ltd 49.89% held by Balsara Hygeine Products Ltd 47.98% held by Dabur India Ltd Balsara Hygeine Products Ltd 99.52% held by Dabur India Ltd Balsara Home Products Ltd 94.18% held by Dabur India Ltd 5.82% held by Balsara Hygeine Products Ltd Dabur Egypt Ltd. 24% held by Dabur International Ltd 76% held by Dabur Overseas Ltd Weikfield International (UAE) Ltd 38.41% held by Dabur International Ltd Dabur Nepal Pvt.Ltd 97.5% held by Dabur International Ltd

As at 31st March,2006 (Rs.in lacs) 2,178.00

As at 31st March,2005 (Rs.in lacs) 17,103.15

Schedule G - Investments
A Current investments Quoted-other than trade 1 Alliance Mutual Fund (Purchased during the year) Units 19361076.60 (Sold during the year) Units 19361076.60 ABN Mutual Fund (Purchased during the year) Units 54525669.05 (Sold during the year) Units 71784911.1 Birla Mutual Fund (Purchased during the year) Units 11325215.95 (Sold during the year) Units 11325215.95 CHOLA Liquid Fund - Institutional Plus-Growth (Purchased during the year) Units 40193243.81 (Sold during the year) Units 42097339.89 DSP Mutual Fund (Purchased during the year) Units 5619790.69 (Sold during the year) Units 5519790.69 Deutsche Bank Mutual Fund (Purchased during the year) Units 3590135.74 (Sold during the year) Units 3590135.74 HSBC Mutual Fund (Purchased during the year) Units 1663874.52 (Sold during the year) Units 1663874.52 JM Floter Fund- S T P Growth (Purchased during the year) Units 14021759.21 (Sold during the year) Units 14021759.21 Kotak Mahindra Mutual Fund (Purchased during the year) Units 22070258.03 (Sold during the year) Units 9909963.24

27,534.76 26.99 27,507.77

23,442.97 4,091.79 4,342.80

27,094.25 0.00 27,094.25

22,712.46 4,381.79 4,617.80

0.00

0.00

6,121,645.75 (8,025,741.82) 100,000.00

871.00

1,080.00

1,000.00

0.00

0.00

0.00

0.00 0.00

0.00 0.00

Schedule H -Current Assets,Loans and Advances

A. Current Assets : Inventories Raw Materials 3,464.00 2,059.37 794.39 5,243.14 11,560.90 Sundry Debtors (Unsecured) : Debts Outstanding For A Period Exceeding Six Months : 4,383.16 1,957.67 614.82 5,846.92 12,802.57 Packing Materials,Stores And Spares Stock In Process Finished Goods

12,160,294.80

1,716.00

0.00

10 Principal Mutual Fund (Purchased during the year) Units 131782808.67 (Sold during the year) Units 136852376.59 11 Prudential Mutual Fund (Purchased during the year) Units 11673863.38 (Sold during the year) Units 7163385.54 12 Reliance Liquid Fund (Purchased during the year) Units 14965422.50 (Sold during the year) Units 14965422.50 13 Sahara Mutual Fund (Purchased during the year) Units 22583566.95 (Sold during the year) Units 30979167.65 14 SCB Mutual Fund (Purchased during the year) Units 5709112.89 (Sold during the year) Units 5709112.89 15 Sundram Mutual Fund (Purchased during the year) Units 19160961.65 (Sold during the year) Units 19160961.65 16 TATA Mutual Fund (Purchased during the year) Units 4635609.87 (Sold during the year) Units 4635609.87 17 UTI Mutual Fund (Purchased during the year) Units 246888.06 (Sold during the year) Units 246888.06 B. Long term investement I) Quoted-Equity Shares- Other than Trade 1 Dabur Pharma Ltd II) Unquoted -Equity Shares - Trade Investments 1 2 3 Sanat Products Ltd Dabon International Pvt Limited (13230000 shares sold during the year) Green Valley Products Pvt.Ltd (65000 shares sold during the year)

(5,069,567.91) 4,510,477.84

0.00

522.00

500.00

0.00

Considered Good Considered Doubtful

23.62 119.89 143.51 119.89 23.62 2,670.63 28.63 3,661.55 49.71 2,694.25

219.51 11.98 231.49 11.98 219.51 4,708.76 18.90 950.23 38.09 4,928.27

0.00

0.00

Less :Provision For Doubtful Debts Other Debts (Considered Good)

(8,395,600.71)

0.00

1,000.00

Cash And Bank Balances : Cash In Hand Balances With Scheduled Banks In Current Accounts ( Includes Rs.121.19 In Unpaid Dividend Account ; Previous Year Rs.96.49) In Fixed Deposit Accounts

0.00

0.00

0.00 0.00

0.00 0.00

( 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) 0.95 2.25 3,804.41 18,059.56 B. Loans and advances (unsecured,considered good,unless stated otherwise) Loans & Advances To Subsidiaries 3,000.00 758.39 4,353.53 1,326.52 158.16 434.39 345.67 10,376.66 Total (A+B) 28,436.22 901.04 2,910.44 847.15 170.53 990.91 580.89 6,400.96 25,197.18 Security Deposit With Various Authorities(Including Deposit With Govt.Authorities Rs.264.54 Previous Year Rs.435.89) Advance Payment Of Tax Advances to suppliers (including due from subsidiaries Rs.142.14 previous year Rs.72.64) Advances To Employees Balance With Excise Authorities Other advances recoverable in cash or in kind or for value to be received 0.95 7.48 1,065.38 18,796.22 61.32 49.73

0.00

0.00

Remittance-In-Transit & Cheques-In-Hand

479,400.00 50,000.00 270,000.00

4.79 105.00 27.00 0.00

4.79 105.00 1,350.00 6.50

III) Unquoted Equity Shares - Trade Investments in Subsidiary Companies 1 2 3 4 5 6 Dabur Overseas Limited (50000 shares sold during the year) Dabur Nepal Private Limited (638520 shares sold during the year) Dabur Foods Limited (1000000 Shares allotted during the year) Dabur International Limited Balsara Hygiene Products Limited (3862100 Shares purchased during the year) Balsara Home Products Limited (10000000 Shares allotted during the year and 2290711 shares purchased during the year) (759300 shares held by Balsara Hygeine Products Ltd.) Besta Cosmetics Limited (431800 Shares purchased during the year) [449000 shares held by Balsara Hygeine Products Ltd] (19200 shares held by Balsara Home products Ltd) 20,000,000.00 1,000,000.00 3,862,100.00 12,290,711.00 0.00 0.00 2,000.00 2,287.50 11,650.73 3,404.55 161.06 699.07 1,000.00 2,287.50 0.00 0.00

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. 2. Loans and advances A. Debts due from director/officer of the company B. Maximum amount due from director/office of the company At any time during the year 3. Additional disclosure as per clause 32 of listing agreement 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 Balsara Home Products Ltd Maximum outstanding during the year B. Loans and advances to associates

0.00 0.00

0.00 0.00

300.00 300.00 2,700.00 2,700.00 0.00 500.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00

Schedule IA - Miscellaneous Expenditure (To the extent not written off or adjusted)
431,800.00 1,790.01 0.00 Technical knowhow fees paid Less:Amortised during the year Deferred employee compensation under ESOP Opening balance 15.00 3.00 250.00 650.00 500.00 0.02 0.01 0.03 0.07 0.05 0.02 0.01 0.03 0.07 0.05 Less:Amortised related to subsidiary Less:Amortised during the year Total Addition during the year Less:Cancelled during the year 515.42 3503.78 1.43 4017.77 91.17 685.99 3240.61 3287.48 575.33 279.03 0.00 854.36 338.94 515.42 581.04 65.62 18.75 46.87 84.37 18.75 65.62

IV) Unquoted Equity Shares - Other than Trade 1 2 3 4 5 Commerce Centre Cooperative Housing Society Limited Capexil (Agencies) Limited Dabur Employees Consumers Co-op Stores Limited Dabur Employees Cooperative Credit Society Ltd Co-operative Stores Limited,Super Bazar

FINANCIAL STATEMENTS 21
Annual Report 2005-06 Dabur India Limited

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
For the year ended 31st March,2006 (Rs.in lacs) For the year ended 31st March,2005 (Rs.in lacs) Reimbursement Of Expenses Provident Fund And Certificates 132,454.64 4,513.65 136,968.29 B. Other Income : Export Subsidy Rent Realised ( Tax Deducted At Source Rs.Nil Previous Year Rs.Nil) Sale Of Scrap Dividend From Subsidiary Companies ( From Long Term Trade Investment) ( Tax Deducted At Source Rsnil Previous Year Rs.7.98) Other Dividend - (From Long Term Investment Other Than Trade Investments) ( Tax Deducted At Source Rs.Nil Previous Year Rs Nil) Royalty ( Tax Deducted At Source Rs.Nil Previous Year Rs.14.22) Miscellaneous Receipts Profit On Sale Of Long Term Investment Profit On Sale Of Current Investments- Other Than Trade ( Net Of Loss Of Rs.1274.05 Previous Year Rs.Nil) Profit On Sale Of Fixed Assets ( Net Of Loss Of Rs.366.92 Previous Year Rs.Nil) ( Including Capital Profit Of Rs.19.27; Previous Year Rs.Nil) Total Notes : 1. Dividend from Current Investments 2.Dividend from Long Term Investments 0.48 0.00 0.50 159.63 48.06 13.46 196.78 44.65 19.27 187.59 159.63 122,023.32 4,848.19 126,871.51 Donation Contribution For Scientific Research Expenses Provsion For Doubtful Debts Loss On Sale Of Fixed Assets (Net Of Profit Rs Nil Previous Year Rs.10.66) Provision For Contingent Liability Provision For Diminution In Long Term Trade Investment Total Notes : 1.Bad Debts Written Off Due From Related Parties 0.48 0.50 2.Commission,Rebate & Discount Includes Commission To Selling Agents 0.00 367.21 0.00 365.85 For the year ended 31st March,2006 (Rs.in lacs) 11.55 5.85 35.66 320.50 663.00 108.36 26.99 39,394.05 For the year ended 31st March,2005 (Rs.in lacs) 8.13 6.07 30.79 240.98 540.97 1.53 4.18 89.08 39,488.95

Schedule J- Sales and Other Income

A. Sales : Domestic Sales Less Returns Export Sales

26.36 84.46 96.09 69.33

254.62 76.68 10.41 396.97

Schedule O- Financial Expenses

Interest Paid On : Fixed Period Loan Others ( Net Of Int.Received Rs.6.81; Previous Year Rs.36.48 T.D.S.Rs.Nil;Previous Year Rs.6.32) Bank Charges Total 57.34 247.73 70.21 71.31

305.07 260.80 565.87

141.52 288.05 429.57

535.02

1,150.32

Schedule IB- Misc.Expenditure Written Off

Technical Knowhow Fees Paid Deferred Employee Compensation Under Esop Less:Transferred To Director Remuneration Total 4,383.16 25,015.34 29,398.50 3,464.00 1,491.43 14,454.12 15,945.55 1,728.47 14,217.08 16,935.43 25,934.50 4,257.19 22,388.50 26,645.69 4,383.16 793.12 11,140.25 11,933.37 1,491.43 10,441.94 22,456.43 22,262.53 685.99 278.50 407.49 426.24 18.75 326.49 195.91 130.58 149.33 18.75

Schedule K- Cost of Materials

Raw Materials Consumed : I) Opening Stock Ii) Add :Purchases Iii) Less :Closing Stock Packing Materials Consumed : I) Opening Stock

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. 2. Accounting Convention: The accounts have been prepared in accordance with the historical cost convention. Fixed Assets and Depreciation: G Fixed assets are stated at carrying amount i.e. subject to deduction of accumulated depreciation. G Cost includes inward freight, duties, and taxes and expenses incidental to acquisition and installation. G 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, where depreciation have been provided on straight line methods at the rates specified in the aforesaid Schedule. G Patents are being amortized over the period of ten years on straight line basis. 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. 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. 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. Inventories: Stocks are valued at lower of cost or net realizable value. Basis of determination of cost remain as follows: G Raw materials, Packing materials, stores & Spares On FIFO Basis G Work-in-process At cost of input plus overhead upto the stage of completion. G Finished goods At cost of input plus appropriate Overhead. 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. Retirement Benefits: Liabilities in respect of retirement benefits to employees are provided for as follows:G 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. G 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. G 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. G VRS, if paid, is charged to revenue in the year of payment. Recognition of Income and expenses: G Sales and purchases are accounted for on the basis of passing of title to the goods. G Sales comprise of sale price of goods including excise duty and sales tax but exclude discount. G All items of incomes and expenses have been accounted for on accrual basis.

Ii) Add :Purchases Iii) Less :Closing Stock Purchase Of Finished Products Adjustment Of Stocks In Process And Finished Goods Opening Stock : Stock In Process Finished Products Closing Stock : Stock-In-Process Finished Products Increase(-)/Decrease in stock in process & finished goods Total

614.82 5,846.92 6,461.74 794.39 5,243.14 6,037.53 424.21 57,511.22

1,116.98 4,549.22 5,666.20 614.82 5,846.92 6,461.74 (795.54) 54,365.36

3.

4.

5.

Schedule L- Mfg.& Operating Expenses

Power and Fuel Stores & Spares Consumed Repairs & Maintenance: Building Plant & Machinery Others Processing Charges Total 51.12 27.34 252.44 54.79 3,745.55 88.19 27.62 279.36 47.42 2,919.46 2,627.96 731.90 2,169.48 307.39

6.

7. 8.

Schedule M- Payments to & Provisions for Employees

Salaries,Wages And Bonus Contribution To Provident And Other Funds Workmen And Staff Welfare Directors' Remuneration ( Inclduing Perquisites Rs.326.03 Previous Year Rs 208.83) Total 6,053.70 861.31 2,208.23 707.54 9,830.78 4,849.68 724.90 1,924.07 709.91 8,208.56 9.

Schedule N - Selling & 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 11.22 7.04 9.36 7.23 629.23 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 9.00 506.58 92.03 195.97 10,527.22 3,287.48 1,236.78 17,178.91 1,405.88 702.26 251.55 136.22 3,053.69 6.85

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: G 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. G 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. G Capital as well as revenue implication of exchange fluctuation, charged or credited to revenue, are disclosed in notes to accounts. 13. Employee Stock Option Purchase (ESOP): Aggregate of quantum of option granted under the scheme in monetary term 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. 14. Miscellaneous Expenditure: G Technical know-how fee paid to Technical Collaborators upto 31.03.2004 are being amortized equally over a

22 FINANCIAL STATEMENTS Dabur India Limited Annual Report 2005-06

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
G

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.

5D

Value of raw materials,stores and spares parts consumed

Raw Material 31.03.2006 Value Imported Indigenous Total 188.52 25745.98 25934.50 % 0.73 99.27 100.00 31.03.2005 Value 308.64 21953.89 22262.53 % 1.39 98.61 100.00 Value 31.56 14917.41 14948.97 Packing Material,Stores & Spares 31.03.2006 % 0.21 99.79 100.00 31.03.2005 Value 31.75 10717.58 10749.33 % 0.30 99.70 100.00

B. 1.

NOTES TO ACCOUNTS Building constructed on leasehold land included in the value of building shown in Fixed Assets Schedule: As at 31st March 2006 As at 31st March 2005 Cost/Revalued 6757.63 5378.72 Written Down 4781.37 3607.73 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. a) 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. b) CGUs include Narenderpur plant, Sahibabad plant, Baddi plants, Jammu plants and Rudrapur Plant all belonging to FMCG segments. c) 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.

2.

5E

Net Dividend remitted in foreign currency

2003-04 Final Dividend to 147 shareholders on 147020 shares 2004-05 Interim Dividend to 140 shareholders on 141000 shares 2004-05 Final Dividend to 128 shareholders on 129000 shares 2005-06 Interim Dividend to 110 shareholders on 111000 shares Total

2005-06
1.94 1.66 3.60

2004-05
2.06 1.41 3.47

6.

Managerial Remuneration under section 198 of the Companies Act,1956 paid or payable during the year,to the Directors:
31.03.2006 Salary Commission (as computed below) Contribution to Provident Fund Residential Accommodation Medical & Leave Travel Benefit Contribution to Superannuation Fund Others (Including Rs.278.50 Previous year Rs.83.55 Under ESOP) Total 158.45 88.64 19.73 95.08 4.72 23.77 317.15 707.54 31.03.2005 286.54 38.80 26.92 97.40 8.12 31.62 220.51 709.91

3.

4.

Contingent Liabilities: a) Claims against the company not acknowledged as debts: i. In respect of civil suits filed against the company Rs. 235.13 (previous year Rs.251.71) ii. In respect of claims by employees Rs.0.50 (previous year Rs 0.50) iii. In respect of letters of credit Rs. Nil (previous year Rs.1366.66) iv. In respect of Bank Guarantees executed Rs .811.41 (previous year Rs.576.62) v. In respect of Sales Tax under appeal Rs.592.65 (previous year Rs.956.69)) vi. In respect of excise duty disputes pending with various judicial authorities Rs.2798.56 (previous year Rs.2131.93). vii. In respect of Corporate Guarantees given by the Company Rs. 14759.72 (previous year Rs.14148.94) viii. In respect of Income tax under appeal Rs.173.67 (previous year Rs.326.22) ix. Estimated Amount of contract remaining to be executed on capital Account Rs.441.49 (previous year Rs.588.47). b) Information pursuant to AS 29 issued by ICAI: i. During the year, the Company has provided Rs.Nil (previous year Rs.89.08) against disputed liabilities formerly not being accounted for on the ground of contingent liability in respect of amount reliably estimable within the meaning of relevant standards. ii) Existing provision referred to in a above relates to nil (Rs. 62.64), nil (Rs.26.15) and nil ( Re.0.29) towards liabilities on account of VAT, Sales Tax and Entry Tax respectively to be carried as such at the year end in view of absence of any additional provision therefore during the year. iii) Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCTs, if mature, are expected to be in succeeding financial year. iv) Provisions are made herein for medium risk oriented issues as a measure of abundant precaution. v) Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 4 (a) above.

Computation of net profit in accordance with Section 198 and section 309 (5) of the Companies Act,1956 and calculation of Directors commission : 31.03.2006 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 Less:Capital Profit Adjusted net profit Commission payable:To one non whole-time Director 707.54 9.00 716.54 19.27 22159.49 88.64 21435.53 26.99 21462.52 709.72 6.85 716.57 0 .00 15518.39 38.80 14801.82 0.00 14801.82 31.03.2005

7A

Particulars Of Consumption Of Important Raw Materials (Rs.In Lacs) Class Of Goods

Sugar And Molases Vegitables Oils Herbs, Jari Booti & Raw Madhu Chemicals & Perfumery Compounds Others Raw Materials Total Raw Materials Glass Containers Plastic Containers/Caps/Jar Printed Packing Materials Laminates & Lamitubes Pcs In Lacs Pcs In Lacs Assorted Assorted Assorted 1017.76 (869.35) 5660.96 (3798.52)

Unit
Tonnes Tonnes Tonnes Tonnes Assorted

Quantity
14915.24 (11676.65) 10376.90 (6533.87) 5782.65 (4698.38) 17378.12 (13314.55)

Value
2610.45 (1820.66) 5293.98 (3705.13) 7144.41 (7117.96) 8479.39 (5670.35) 2406.26 (3948.43) 25934.49 (22262.53) 2198.58 (1743.60) 4914.42 (3254.45) 3429.28 (2319.40) 2134.87 (1390.47) 1539.92 (1734.02) 14217.07 (10441.94)

5A. Expenditure in Foreign Currency

Professional & Consultation Fees Interest Salary Others (Travellling,Conveyance & administration)

31-03-2006
14.95 13.49 0.00 69.72 98.16

31-03-2005
4.30 25.65 111.55 52.09 193.59 310.75 41.02 75.10 261.71

5 B. CIF Value of Imports:

Raw Materials Stores & Spares (Including of packing material) Capital Goods 152.95 154.84 130.23 438.02

5C

Earning in Foreign Exchange:

Export sales at FOB Royalty/Technical Consultancy Dividend 2631.85 26.36 0.00 2658.21 3682.77 35.59 0.00 3718.36

Other Packing Materials Total Packing Materials

Note:Figures In Brackets Are For Previous Period.

7B

Particulars In Respect Of Goods Manufactured

Licenced Class Of Goods Hair Oils Chyawanprash Honey Tooth Powder & Paste Hajmola Asava - Arishta Others Total Note:Figures In Brackets Are For Previous Period. Unit Kilo-Ltrs Tonnes Tonnes Tonnes Tonnes Kilo-Ltrs Capacity Installed Capacity 20000.00 (20000.00) 22000.00 (20000.00) 6000.00 (6000.00) 7200.00 (7200.00) 6000.00 (6000.00) 12000.00 (12000.00) Production Qty 13261.90 (9004.38) 11049.86 (11151.19) 4531.64 (3746.18) 3292.45 (1884.96) 4006.07 (3829.46) 6153.92 (5642.48) Qty 416.53 (71.08) 611.47 (365.51) 126.71 (57.54) 143.63 419.15 (272.89) 811.67 (454.93) Opening Stock Value 475.02 (81.51) 665.88 (318.08) 162.28 (67.69) 178.03 423.62 (279.27) 316.42 (240.50) 2038.74 (1667.57) 4259.99 (2654.61) Closing Stock Qty 717.35 (416.53) 248.21 (611.47) 142.05 (126.71) 170.13 (143.63) 324.94 (419.15) 556.11 (811.67) Value 771.14 (475.02) 262.88 (665.88) 136.19 (162.28) 176.29 (178.03) 506.57 (423.62) 250.19 (316.42) 2113.42 (2038.74) 4216.67 (4259.99) Qty 12961.09 (8658.93) 11413.13 (10905.22) 4516.30 (3677.02) 3265.96 (1741.33) 4100.28 (3683.19) 6409.47 (5285.75) Sale Value 26809.57 (17208.39) 15006.62 (13665.36) 7814.50 (7046.99) 6318.88 (3389.39) 7264.94 (6103.18) 5315.99 (4163.31) 36107.81 (28754.56) 104638.31 (80331.17)

7C

Particulars Of Traded Goods

Purchases Class Of Goods Hair Oils Tooth Powder & Paste Hajmola Others Total Note:Figures In Brackets Are For Previous Period. Unit Kilo-Ltrs Tonnes Tonnes Qty 3793.95 (7828.39) 7803.91 (9883.50) 1100.84 (1541.38) Value 4061.28 (8669.11) 5946.62 (7737.74) 1123.20 (1701.55) 5804.32 (4348.02) 16935.43 (22456.43) Qty 164.73 (470.49) 360.40 (300.19) 35.39 (23.92) Opening Stock Value 198.83 (517.50) 326.91 (304.52) 44.00 (32.16) 1017.21 (1040.41) 1586.95 (1894.59) Qty 150.34 (164.73) 288.68 (360.40) 30.89 (35.39) Closing Stock Value 163.18 (198.83) 256.98 (326.91) 62.29 (44.00) 606.31 (1017.21) 1026.47 (1586.95) Qty 3808.34 (8134.16) 7875.62 (9823.30) 1105.34 (1529.92) Sale Value 7195.90 (15759.01) 13345.14 (16613.72) 2110.84 (3039.22) 11788.94 (11128.39) 32329.99 (46540.34)

FINANCIAL STATEMENTS 23
Annual Report 2005-06 Dabur India Limited

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
8. 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 2006 for more than 30 days are :4R Health Care Products A N Products Abhimanyu Containers Abhinav Printing & Packagings Adchem Industries 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 Enterprises 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 Ltd. 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 b) Amit Burman (upto 30.04.2005) c) P. D. Narang d) Sunil Duggal (ii) (i) Subsidiaries Dabur Foods Ltd. Pasadensa Foods Ltd. Balsara Hygeine Products Ltd. Balsara Home Products Ltd. Besta Cosmetics Ltd. Asian Consumercare Pvt Ltd . Dabur Nepal Pvt. Ltd. Dabur Egypt Ltd. Dabur Overseas Ltd. Dabur International Ltd. WeikField International (UAE) African Consumercare Limited (Domestic Subsidiary) (Domestic Subsidiary) [Domestic Subsidiary] [Domestic Subsidiary] [Domestic Subsidiary] (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) (Foreign Subsidiary Company) [Foreign Subsidiary Company] (a) 10. 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. Related party Disclosures Related party disclosures as required under AS 18 issued by the Institute of Chartered Accountants of India are given below: Name of related party and nature of related party relationship where control exists:

11. A.

[b] Other related parties in transaction with the company : [i] Joint Ventures/ Joint Venture Partners Green Valley Products Pvt. Ltd. (upto 08.11.2005] Key management personnel (whole time directors) a) Pradip Burman Relatives of Key Management personnel R C Burman Chetan Burman Asha Burman

9.

Particulars of Balances with Non-Scheduled Banks:

Current year: a) b) In Current Account - Barclays Bank,London In Postal Savings Bank Account Balance as on 31.03.2006 61.32 0.95 Balance as on 31.03.2005 49.73 0.95 Maximum Balance during the year 141.67 0.95 Maximum Balance during the year 114.41 0.95

(iii) Associate entities over which Key Management Personnel are able to exercise significant influence: 1. Welltime Housing & Finance Pvt. Ltd. 2. Miracle Commercial Enterprises Pvt Ltd. 3. Wakarusa Laboratories Pvt Ltd. 4. Jetways Travels Pvt Ltd.

Previous year: a) b) In Current Account - Barclays Bank,London In Postal Savings Bank Account

[iv]

An Enterprise owned by any Director (KMP) of Dabur India Limited: 1. Welltime Housing & Finance Pvt. Ltd.

11 B. Transactions with related parties

Transaction Purchases of Goods Sale of Goods Sale of Assets Sale of Investments Receiving of Services Loans Given Rent Paid Interest Recd On Loans Given Share Application Money Remuneration/Exgratia/Pension Repayment of Loans Given(Instl.Recd) Emplloyee Stock Option Scheme Guarantees & collaterals given Dividend Recd. Royalty Received
(Figues in brackets are of previous year]

Subsidiary 248.68 (96.45) 371.35 (820.36) 0.00 (0.00) 2185.37 (0.00) 0.00 (0.00) 4025.00 (0.00) 0.00 (0.00) 8.75 (0.00) 2178.00 (0.00) 0.00 (0.00) 1025.00 (0.00) 90.74 (0.00) 3750.00 (4614.38) 0.00 (159.36) 0.00 (207.75)

Fellow Subsidiaries 5986.22 (5706.00) 907.85 (718.08) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.43 (0.00) 3365.00 (1883.13) 0.00 (0.00) 26.36 (46.87)

Associates 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 180.00 (159.75) 0.00 (0.00) 6.00 (6.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 3.50 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00)

Key Mgt. Personnel 0.00 (0.00) 0.00 (0.00) 6.47 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 340.71 (472.65) 0.00 (0.00) 278.50 (195.91) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00)

Relatives Of Key Mgt. Personnel 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 125.98 (169.01) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00)

Total 6234.9 (5802.45) 1279.20 (1538.44) 6.47 (0.00) 2185.37 (0.00) 180 (159.75) 4025.00 (0.00) 6.00 (6.00) 8.75 (0.00) 2178 (0.00) 466.69 (641.66) 1028.50 (0.00) 369.67 (0.00) 7115 (6497.50) 0.00 (159.36) 26.36 (254.62)

Outstanding As On 31.03.2006 506.24 (93.53) 298.30 (686.22) 0.00 (0.00) 0.00 (0.00) 0.00 (2.57) 3082.50 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) (0.00) (0.00) 7115 (6497.50) 0.00 (0.00) 57.26 (171.66)

The amounts or appropriate proportions of outstanding items pertaining to related parties at the balance sheet date and provisions for doubtful debts due from such parties at that date - 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).

12 Exchange loss works out to Rs 80.43 ( Previous Year Rs.58.05) net of gain which has been charged to Profit & Loss Account. 13 Information (to the extent applicable) pursuant to AS 19 issued by ICAI: The future minimum lease payment under non-cancelable operating lease :(i) Not later than 1 year (ii) Later than 1 year not later than 5 year (iii) Later than 5 year

16 Earnings per Share has been computed as under: Profit after Tax Less Provision for Taxation for earlier year written off Add Provision for Taxation for earlier year written back Weighted average number of shares outstanding Basic Diluted Earning per Share (face value Re.1 per share) Basic Diluted 2005-2006 18908.37 7.62 18915.99 573149195 577524999 3.30 3.27 2004-2005 14801.99 5.30 14796.69 572839426 575809845 2.58 2.57

9.60 8.10 Nil

14 The treatment of share issue expenses has been changed during the year by way of charging the same in revenue as against former practice of amortizing same equally over 10 years. This reduced the profit of the year by Rs. 43.87. 15 Sundry Creditors include Rs.75.13 (previous year nil) being dues to subsidiaries.

24 FINANCIAL STATEMENTS Dabur India Limited Annual Report 2005-06

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
17 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 Hair Oil Baddi March,04 FMCG 33.37 (33.37) 4.21 (4.21) 0.00 (-5.3) 0.00 (0.00) 0.00 (-0.01) 0.00 (-71.46) 0.00 (24.14) 0.00 (0.00) MSY Unit Baddi Nov,2000 FMCG 28.35 (28.35) 0.01 (0.01) 0.00 (-1.79) 0.00 (0.00) 0.00 (0.00) 0.00 (-0.47) 0.00 (0.00) 0.00 (0.00) Daburgram Unit July,2003 FMCG 44.27 (44.27) 0.32 (0.32) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (-3.97) 0.00 (0.00) 0.00 (0.00) III II 19 Extraordinary items represents : Profit on Sale of Long Term Trade Investments in Subsidiaries Loss on sale of Long Term Trade Investments Net profit/(loss) on Sale of Long Term Trade Investments Rs.1325.25 Rs.1274.05 Rs.51.20

20 a. Pension to relative of deceased director Rs.31.50(previous year Rs.7.87) b. Pension of retired director Rs.68.24 (previous year Rs.17.06) 21 Dividend paid and proposed dividend are not subject to deduction of income tax at source. 22 Figures for the previous year have been rearranged/regrouped as and where necessary in terms of current year's grouping. 23 Additional information as required under Part IV of Schedule VI of the Companies Act 1956: I. Registration Details: Registration No. State Code : Balance Sheet Date: Capital raised during the year (Amount in Rs thousand): Public Issue Right Issue Bonus Issue Private Placement Position of Mobilisation of Deployment of Funds (Amount in Rs.Thousand): Total Liabilities Total Assets Sources of Funds: Paid up capital 573303 3905384 192323 13429 167150 1988368 2750777 -229478 328748 13174 13696829 11606778 214553 1890837 3.30 250% 30049001 Ayurvedic Medicines 33059001 Hair Oils 33061000 Dentifrices Reserve & Surplus Secured Loans Unsecured Loans Deferred Tax Liaiblity Application of Funds: Net Fixed Assets Investments Net Current Assets Misc Expenditure Deferred Tax Assets IV Performance of Company (Amount in Rs.thousand): Turnover Total Expenditure Profit/(Loss) Before Tax Profit/(Loss) After Tax Earning per share in Rs. Dividend Rate % V 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 Signatures to the Schedules "A" to "P" Annexed to and forming part of the Accounts. As per our report of even date attached For G.Basu & Co. Chartered Accountants S.Lahiri Partner New Delhi 25th April 2006 For Dabur India Ltd. V.C.Burman P.D.Narang Sunil Duggal A.K.Jain Chairman Director Director Addl.General Manager (Finance) & Company Secretary 7924689 7924689 Nil Nil 286651 Nil 7908 55 31.03.2006

Note :

1. 2.

Figures in brackets are for previous year. 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

18 Information pursuant to AS - 17 issued by ICAI FMCG Current Period 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+FBT) Profit from ordinary activities Exceptional Item {Profit/(loss) on Long Lerm Trade Investment} Net profit OTHER INFORMATION Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure 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's.Out of the total sales of Rs.136968 (Rs.126872) ,the export sales is of Rs.4514 ( Rs.4848 ) and domestic sale is Rs.132454 ( Rs.122024) 29826 2944 1858 35121 5316 1656 46 54 149 187 70630 29826 67377 35121 844 149 1164 187 70630 67377 844 1164 71474 4354 75828 29975 4353 34328 2944 1904 3241 68541 2910 71451 35308 2918 38226 5316 1710 515 20927 15990 508 512 20927 15990 508 512 2578 18857 51 18908 14802 1700 14802 21478 551 16405 415 523 15 527 15 22001 566 16932 430 21478 16405 523 527 22001 16932 133406 122541 3562 4331 136968 126872 133406 122541 3562 4331 136968 126872 Previous Period OTHERS Current Period Previous Period Dabur India Ltd. Current Period Previous Period

CONSOLIDATED FINANCIAL STATEMENTS 25

Annual Report 2005-06 Dabur India Limited

The Board of Directors, Dabur India Limited, We have audited the attached consolidated balance sheet of Dabur India Limited group, as at 31st March, 2006 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.15566.37 lacs as at 31st March, 2006, the total profit of Rs.2778.11 lacs and cash flows (net) amounting to Rs.425.05 lacs for the year ended 31st March, 2006. 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) In the case of the consolidated balance sheet, of the state of affairs of Dabur India Ltd. group as at 31st March, 2006. b) 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

c)

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.

For G Basu & Co Chartered Accountants S.LAHIRI Partner Membership No. 51717 New Delhi 25th April 2006

Profit and Loss Account for the year ended 31st March,2006
Schedule For the year ended 31st March,2006 (Rs.in lacs) 189,957.00 1,336.68 191,293.68 K L M N O IB 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 Current Deferred Fringe Benefit For the year ended 31st March,2005 (Rs.in lacs) 153,695.33 920.62 154,615.95 65,942.25 4,280.40 4,050.37 10,848.34 47,691.25 1,243.59 149.53 2,800.01 137,005.74 17,610.21 1,509.88 399.83 0.00 15,700.50

Income : Sales Less Returns Other Income Total Income 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 Provision For Taxation Provision For Taxation Extraordinary Item

Balance Sheet as at 31st March 2006

Schedule As at 31st Marc,006 (Rs.in lacs) As at 31st March,2005 (Rs.in lacs)

Sources Of Funds : Shareholders' Funds: (A) Share Capital (B) Reserves And Surplus A B 5,733.03 43,972.79 49,705.82 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 Investments Deferred Tax Assets Current Assets,Loans And Advances: (A) Inventories (B) Sundry Debtors (C) Cash & Bank Balances (D) Loans & Advances G EB H 21,277.84 7,435.01 5,117.22 13,301.93 47,132.00 Less:Current Liabilities And Provisions (A) Liabilities ' (B) Provisions EA 30,280.64 13,329.29 43,609.93 Net Current Assets Miscellaneous Expenditure (To The Extent Not Written Off Or Adjusted) Notes To Accounts Total P 62,399.72 54,281.12 IA 3,522.07 3,287.48 30,443.32 9,526.30 39,969.62 783.09 581.04 20,312.92 7,589.28 1,473.29 11,377.22 40,752.71 F 72,148.62 20,903.32 51,245.30 4,213.15 131.72 48,148.63 18,698.43 29,450.20 23,329.02 137.77 C D EB 8,080.01 2,352.75 1,715.06 62,399.72 9,705.16 5,383.23 1,277.51 54,281.12 B2 546.08 2,864.20 33,528.98 36,393.18 1,522.04

Net Profit After Taxation And Before Add Extraordinary Item (Profit/(Loss) On Long Term Tarde 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 Appropriation/Allocation Interim Divided 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 P

-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 35,664.73 3.74 3.71 573,149,195 577,524,999

0.00 15,700.50 119.89 15,580.61 8,979.40 0.00 82.58 182.50 0.00 -26.26 24,798.83 2,862.89 4,296.30 374.14 602.56 3.25 0.00 1.75 2,565.08 14,092.86 24,798.83 2.72 2.71 572,839,426 575,809,845

As per our report of even date attached For G.Basu & Co. Chartered Accountants S.Lahiri Partner New Delhi 25th April 2006

For Dabur India Ltd. V.C.Burman P.D.Narang Sunil Duggal A.K.Jain Chairman Director Director Addl.General Manager (Finance) & Company Secretary

26 CONSOLIDATED FINANCIAL STATEMENTS Dabur India Limited Annual Report 2005-06

Statement of Cash Flow ( Pursuant to AS-3 issued by ICAI)

Rs.Lacs For the year ended 31st March,2006 A.Cash Flow From Operating Activities Net Profit Before Tax And Extraordinary Items Add: Depreciation Loss On Sale Of Fixed Assets Miscellenous Exp.Written Off Miscellenous Exp.Written Off( Included In Director Remun. Interest 2,692.46 65.85 426.24 777.16 1,615.15 5,576.87 28,236.69 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 Including Investment In Subsidiaries Sale Of Investments Dividend Received Cash Used(-)/(+)Generated For Investing Activities (B) 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 & cashe equv.(A+B+C) Cash And Cash Equivalents Opening Balance Cash And Cash Equivalents Closing Balance 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 1.71 (457.43) 1,878.15 (266.86) 1,589.68 (750.08) (6,817.40) (4,822.23) (547.66) 2,020.95 1,473.29 (7,287.80) 1,171.02 (4,826.98) 6,067.63 0.48 (4,875.65) (7,852.75) 500.02 (153,206.88) 143,260.48 0.50 (17,298.63) 1,604.87 2,649.11 1,205.54 5,459.52 21,868.96 964.92 (102.11) (273.66) 589.14 27,328.48 1,222.18 1,668.57 887.60 3,778.35 21,573.20 5,028.47 304.20 (8,983.98) (3,651.31) 25,351.55 0.48 10.28 96.39 211.91 319.06 27,917.63 0.50 0.00 407.38 0.00 407.88 21,700.24 2,800.01 108.87 149.53 195.91 1,243.59 4,497.92 22,108.12 22,659.82 17,610.21 For the year ended 31st March,2005

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
As At 31st March 2006 (Rs.In Lacs) As At 31st March 2005 (Rs.In Lacs)

Schedule B2- Minority Interest

Share Capital Share Premium Capital Reserve General Reserve Profit & Loss 178.54 9.38 126.91 15.15 216.10 546.08 264.17 75.00 126.91 91.55 964.41 1,522.04

Schedule C-Secured Loans

I Term Loans : GE Capital Services Deferred Payment PICUP Under Trade Tax Loan Scheme II Short Term Loans - From Banks : 1845.99 253.41 755.22 5225.39 8,080.01 1,090.91 82.16 1,009.09 7,523.00 9,705.16

Schedule D - Unsecured Loans

Deposits : Directors Companies Security Deposit From Dealers And Others Other Loans : West Bengal State Industrial Development Corporation Limited Term Loan - From Banks Book Overdraft Of Current Account With Banks Commercial Papers External Commercial Borrowings -ABNAmro Bank NV Deferred Payment Credit Total 999.47 125.30 0.00 0.00 148.35 2352.75 883.44 754.67 2,000.00 805.93 5383.23 0.00 75.00 48.13 1021.92 9.58 48.13 800.00 16.06

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 Dividend Payable 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 B Provisions : For Dividend (Proposed) - Final For Corporate Tax On Proposed Dividend- Final For Leave Salary For Housing,Bonus & Gratuity & Other Welfares For Taxation 5,733.03 804.06 122.00 755.08 5,915.12 13,329.29 43,609.93 4,296.30 602.56 328.94 536.05 3,762.45 9,526.30 39,969.62 121.19 7.53 5.57 30,280.64 96.42 10.37 6.20 30,443.32 8,050.56 1,037.21 7,394.54 13,272.32 273.63 62.66 55.43 12,206.55 874.67 4,220.69 12,578.32 38.00 325.78 39.08 47.24

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
As At 31st March 2006 (Rs.In Lacs) As At 31st March 2005 (Rs.In Lacs)

Schedule A-Share Capital

Authorised : 1250000000 Equity Shares Of Re.1 Each (Previous Year 500000000 Equity Shares Of Re.1 ) Issued And Subscribed: 573302784 Equity Shares Of Re.1 Each Fully Called Up (Previous Year- 286249052 Equity Shares Of Re.1)
Note : Authorized Share Capital During The Year Increased By Rs.7500 Lacs

12,500.00 12,500.00

5,000.00 5,000.00

Total (A + B)

5,733.03 5,733.03

2,864.20 2,864.20

Schedule EB - Deferred Tax Liabilites ( Net)

Deferred Tax Liaibility : Depreciation Technical Knowhow Fees 1715.08 0.00 1715.08 Less:Deferred Tax Assets : VRS Payment Other Disallowances Under Section 43B Of Income Tax Act 1961 Toral 1583.34 1139.76 74.55 57.19 131.74 6.01 131.74 137.75 1277.51 0.00 1277.51

Schedule B-Reserves and Surplus

Capital Reserve Share Premium Account Employees Housing Reserve Fund Capital Redemption Reserve : General Reserve : Legal Reserve Profit And Loss Account Employee Stock Option Scheme Outstanding Total 1818.78 3051.45 456.03 0.00 12775.82 41.61 21586.11 4242.99 43,972.79 1,799.51 5,758.08 420.71 56.93 10,450.49 34.74 14,092.86 915.66 33,528.98

Schedule F - Fixed Assets ( Rupees In Lacs)

Gross Block Name Of Asset Freehold Land Leasehold Land Building,Roads & Culvert Plant & Machinery Vehicles Furniture & Off Equipment Computers Patents Live Stock Capital Work In Progress Goodwill Total Opening Balance 645.65 748.33 12,801.93 23,006.00 1,145.68 3,828.73 2,534.56 1,095.97 0.22 938.81 1,402.75 48,148.63 Inherited from new subsidiary 192.46 0.82 1,452.20 922.19 163.88 597.44 0.00 16.90 0.00 0.00 10.30 3,356.19 Additions 3.64 115.79 1,011.25 4,633.18 242.59 382.89 532.60 0.00 0.00 1,500.11 15,582.35 24,004.40 Transfer/ Adjustment 60.73 0.00 (6.45) 1,429.41 302.74 245.50 194.43 0.00 0.00 1,134.24 0.00 3,360.60 Closing Balance 781.02 864.94 15,271.83 27,131.96 1,249.41 4,563.56 2,872.73 1,112.87 0.22 1,304.68 16,995.40 72,148.62 Opening Balance 0.00 35.80 3,635.41 10,166.45 478.12 1,905.28 1,802.82 239.70 0.00 0.00 434.85 18,698.43 Inherited from new subsidiary 0.00 0.24 174.37 221.17 61.87 316.66 0.00 5.35 0.00 0.00 0.00 779.66 Depreciation For the Year 0.00 9.87 498.34 1,705.88 201.19 329.07 257.60 125.36 0.00 0.00 (434.85) 2,692.46 Transfer/ Adjustment 0.00 0.00 (2.62) 737.93 162.31 100.80 268.81 0.00 0.00 0.00 0.00 1,267.23 Closing Balance 0.00 45.91 4,310.73 11,355.56 578.88 2,450.21 1,791.61 370.41 0.00 0.00 0.00 20,903.32 Net Block As on 31.03.2006 781.02 819.03 10,961.09 15,776.39 670.54 2,113.35 1,081.12 742.46 0.22 1,304.68 16,995.40 51,245.30 As on 31.03.05 645.65 712.53 9,166.52 12,839.55 667.56 1,923.45 731.74 856.27 0.22 938.81 967.90 29,450.20

Note :Capital work-in-progress includes advance agaisnt capital goods Rs.1075.84 (previous year Rs.588.47).

CONSOLIDATED FINANCIAL STATEMENTS 27

Annual Report 2005-06 Dabur India Limited

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
As At 31st March 2006 (Rs.In Lacs) As At 31st March 2005 (Rs.In Lacs) As At 31st March 2006 (Rs.In Lacs) As At 31st March 2005 (Rs.In Lacs)

Schedule G- Investments
A CURRENT INVESTMENTS QUOTED-OTHER THAN TRADE 1 Alliance Mutual Fund (Purchase during the year) Units 19361076.60 (Sold during the year) Units 19361076.60 2 ABN Mutual Fund (Purchased during the year) Units 54525669.05 (Sold during the year) Units 71784911.1 Birla Mutual Fund (Purchased during the year) Units 11325215.95 (Sold during the year) Units 11325215.95 CHOLA Liquid Fund - Institutional Plus-Growth (Purchased during the year) Units 40193243.81 (Sold during the year) Units 42097339.89 DSP Mutual Fund (Purchased during the year) Units 5619790.69 (Sold during the year) Units 5519790.69 Deutsche Bank Mutual Fund (Purchased during the year) Units 3590135.74 (Sold during the year) Units 3590135.74 HSBC Mutual Fund (Purchased during the year) Units 1663874.52 (Sold during the year) Units 1663874.52 JM Floter Fund- S T P Growth (Purchased during the year) Units 14021759.21 (Sold during the year) Units 14021759.21 Kotak Mahindra Mutual Fund (Purchased during the year) Units 22070258.03 (Sold during the year) Units 9909963.24 6,121,645.75 (8,025,741.82) 100,000.00 (17,259,242.05) 0.00 0.00 0.00 0.00

Schedule H - Current Assets,Loans and Advances (Contd.)

Less :Provision For Doubtful Debts 153.84 324.51 - Other Debts (Considered Good) 7,110.50 7,435.01 0.00 1,775.00 Cash And Bank Balances : 'Cash In Hand - Remittance-In-Transit & Cheques-In-Hand - Balance With Scheduled Banks In Current Accounts 873.34 1,080.00 In Fixed Deposit Accounts - Balance With Non Scheduled Banks 1,000.00 0.00 In Current Accounts In Fixed Deposit Accounts - Postal Savings Bank Accounts 0.00 0.00 (Deposited With Excise Authority) 5,117.22 33,830.07 0.00 0.00 0.00 0.00 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) 12,160,294.80 1,716.00 0.00 Advance Payment Of Tax Advances To Suppliers (5,069,567.91) 4,510,477.84 0.00 522.00 Advances To Employees Balance with Excise Authorities 500.00 0.00 Other advances recoverable in cash or in kind or for value to be received 5,914.13 2,084.01 324.48 434.84 2,884.06 13,301.93 0.00 0.00 Total (A+B) 47,132.00 3,690.49 2,471.18 344.72 992.80 1,135.51 11,377.22 40,752.71 1,660.41 2,742.52 1,473.29 29,375.49 219.07 86.24 0.95 131.45 0.95 4,621.98 137.28 1,105.33 84.40 49.45 2.25 27.91 123.25 25.98 253.31 7,335.97 7,589.28

10 Principal Mutual Fund (Purchased during the year) Units 131782808.67 (Sold during the year) Units 136852376.59 11 Prudential Mutual Fund (Purchased during the year) Units 11673863.38 (Sold during the year) Units 7163385.54 12 Reliance Liquid Fund (Purchased during the year) Units 14965422.50 (Sold during the year) Units 14965422.50 13 Sahara Mutual Fund (Purchased during the year) Units 22583566.95 (Sold during the year) Units 30979167.65 14 SCB Mutual Fund (Purchased during the year) Units 5709112.89 (Sold during the year) Units 5709112.89 15 Sundram Mutual Fund (Purchased during the year) Units 19160961.65 (Sold during the year) Units 19160961.65 16 TATA Mutual Fund (Purchased during the year) Units 4635609.87 (Sold during the year) Units 4635609.87 17 UTI Mutual Fund (Purchased during the year) Units 246888.06 (Sold during the year) Units 246888.06 B. LONG TERM INVESTEMENT I) Quoted-Equity Shares- Other than Trade 1 Dabur Pharma Ltd II)Unquoted -Equity Shares Trades Investments 1 Sanat Products Ltd 2 Dabon International Limited 3 Green Valley Products Pvt.Ltd (65000 shares sold during the year) 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 Certificate 7 Kisan Vikas Patra 8 Saraswat Coop Bank Ltd 9 5% Special Bond IV) Share Application Money TOTAL

Schedule IA- Miscellaneous Expenditure

(8,395,600.71) 0.00 1,000.00

(To the extent not written off or adjusted)

Technical Knowhow Fees Paid Less:Amortised During The Year Deferred Employee Compensation 65.62 18.75 46.87 84.37 18.75 65.62

0.00

0.00

0.00 0.00

0.00 0.00

Under ESOP Opening Balance Addition During The Year Less:Cancelled During The Year

515.42 3503.78 1.43 4017.77

575.33 279.03 0.00 854.36

0.00

0.00

Less:Amortised Related To Subsidiary Less:Amortised During The Year Total

91.17 685.99 3240.61 3287.48 338.94 515.42 581.04

479,400.00 50,000.00 270,000.00 -

4.79 105.00 27.00 0.00

4.79 105.00 1,350.00 6.50

15.00 3.00 250.00 650.00 500.00

0.02 0.01 0.03 0.07 0.05 1.26 0.07

0.02 0.01 0.03 0.07 0.05 0.21 0.00 0.00 12.06 17,473.29 23,329.02 0.00 23,329.02

1,000.00

0.01 12.49 0.00 4,240.13 26.99 4,213.14

LESS PROVISION FOR DIMINUTION IN LONG TERM INVESTMENT TOTAL

Schedule H - Current Assets,Loans and Advances

A. Current assets : Inventories - Raw materials - Packing materials,stores and spares - Stock in process - Finished goods 7,753.23 4,820.50 1,402.38 7,301.73 21,277.84 Sundry debtors (unsecured): - Debts outstanding for a period exceeding six months : Considered good Considered doubtful 324.51 153.84 478.35 253.31 25.98 279.30 8,068.03 3,646.80 746.23 7,851.86 20,312.92

28 CONSOLIDATED FINANCIAL STATEMENTS Dabur India Limited Annual Report 2005-06

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
For the year ended 31st March,2006 (Rs.in lacs) For the year ended 31st March,2005 (Rs.in lacs) Donation Contribution For Scientific Research Expenses 171,140.50 18,816.50 189,957.00 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 ( Net Of Loss Of Rs.16.74 Previous Year Rs.Nil) ( Including Capital Profit Of Rs.19.27 Previous Year Rs.Nil) Interest Received 172.37 17.30 278.78 0.48 18.54 530.63 96.39 211.91 44.65 21.10 276.60 0.50 170.39 396.96 10.42 134,423.64 19,271.69 153,695.33 Provsion For Doubtful Debts Loss On Sale Of Investments (Other Than Trade) Loss On Sale Of Fixed Assets (Net Of Profit Rs.Nil,Previous Year Rs.10.66) Provision For Contigent Liability Provision For Diminution In The Market Value Of Long Term Trade Investment For the year ended 31st March,2006 (Rs.in lacs) 331.37 720.00 145.82 9.88 65.85 26.99 56,522.85 For the year ended 31st March,2005 (Rs.in lacs) 257.90 597.97 44.08 108.87 89.08 47,691.25

Schedule J- Sales and Other Income

A. Sales : Domestic Sales Less Returns Export Sales

Schedule O-Financial Expenses

Interest Paid On : Fixed Period Loan Others Bank Charges 389.33 735.70 513.70 1,638.73 402.33 419.36 421.90 1,243.59

10.28 1,336.68 920.62

Schedule IB-Miscellaneous Expenditure written off

Technical Knowhow Fees Paid Deferred Employee Compensation Under Esop Less:Transferred To Director Remuneration 685.99 278.50 407.49 426.24 18.75 326.49 195.91 130.58 149.53 18.95

Schedule K-Cost Of Materials

Raw Materials Consumed : I) Ii) Iii) Iii) I) Ii) Iii) Opening Stock Add :Stock Inherited From New Subsidiaries Add :Purchases Less :Closing Stock Packing Materials Consumed : Opening Stock Add :Stock Inherited From New Subsidiaries Add :Purchases 26,831.23 30,146.52 Iii) Less :Closing Stock 4,254.78 25,891.74 15,385.77 18,235.57 20,341.18 3,009.44 17,331.74 19,784.12 3,009.44 305.85 2,105.61 38,693.11 45,985.68 7,227.27 38,758.41 32,233.70 38,146.48 7,154.31 30,992.17 7,154.31 138.26 5,912.78 -

Total

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. Balsara Home Products Ltd., Balsara Hygiene Products Ltd., Besta Cosmetics Ltd., (all four wholly owned subsidiary companies incorporated in India 50% stake .in last named entity held by Balsara Hygiene Products Ltd. and 2% by Balsara Home Products Ltd.) Dabur International Ltd., (wholly owned body corporate incorporated in Isle of MAN), Dabur Overseas Ltd. (a 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.), Pasadensa Foods Ltd. (a wholly owned subsidiary company incorporated in India, 100% stake wherein is held by Dabur Foods Ltd.,), Dabur Egypt Ltd. (a wholly owned subsidiary body corporate incorporated in Egypt, 76% & 24% of stake wherein are held by Dabur Overseas 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 d'etre of subsidiary status) and African Consumer Care Ltd ( a subsidiary body corporate incorporated in Nigeria, 90% 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. (2,165.77) 65,942.25 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 company's assets at exchange rates ruling on year-end-date has been recognized as reserve specifically earmarked for the purpose. 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 company's separate financial statements unless stated otherwise.

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 1,506.17 7,190.02 8,696.19 813.84 7,784.26 834.47 9,432.57

1,212.78 5,219.54 6,432.32 746.23 7,851.87 8,598.10 736.38 80,772.30

Schedule L-Manufacturing and Operating Expenses

Power And Fuel Stores & Spares Consumed Repairs & Maintenance Building Plant & Machinery Others Processing Charges 156.77 202.15 392.22 327.70 5,711.24 118.57 120.57 315.69 209.79 4,050.37 3,548.77 1,083.63 2,740.15 545.60 II

III. 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. IV 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. 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 a. Accounting Convention: The accounts have been prepared in accordance with the historical cost convention. 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 and Corporate Office of parent company, Dabur Egypt Limited, Balsara Home Products Ltd., Dabur International Limited, Dabur Nepal Pvt. Ltd, Weikfield Limited, Pasadensa Foods Ltd and African Consumercare Ltd where the depreciation have been provided on straight line method. For Balsara Hygiene Products Ltd., depreciation on fixed asset acquired upto 31.03.1991 has been provided on written down method and subsequent addition on straight line method. For Besta Cosmetics Ltd. fixed assets acquired upto 31.03.1994 has been provided on written down value method and subsequent addition on straight line method. Fixed Assets of Daman factory of Balsara Home Products Ltd. has been provided on written down value method. Patent and trade marks are amortized equally over a period of 10 years. Moulds are depreciated 100% in the year of addition. 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 rel-

Schedule M- Payments to & provisions for Employees

Salaries,Wages And Bonus Contribution To Provident And Other Funds Workmen And Staff Welfare Directors' Remuneration 10,057.40 1,110.58 2,432.48 895.29 14,495.75 6,978.67 818.88 2,226.64 824.15 10,848.34

Schedule N-Selling and Adminstrative 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: 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 71.55 738.89 119.00 304.40 11,996.24 4,339.22 1,702.74 20,375.91 1,891.14 876.31 404.17 141.51 3,645.47 6.80 51.55

CONSOLIDATED FINANCIAL STATEMENTS 29

Annual Report 2005-06 Dabur India Limited

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
evant assets. Impairment loss, when crystallizes, is charged against revenue of the year. c. 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. 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. 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 FIFO basis for all units except for Balsara Hygiene Products Ltd., Balsara Home Products Ltd. and Besta Cosmetics Ltd. where the same are valued at weighted average cost. 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. 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/insurer's advice Gratuity liability on the basis of actuarial valuation/management estimate/insurer's advice. Liability for superannuation fund on the basis of insurer's advice VRS, if paid, is charged to revenue on actual basis in the year of payment. h. 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. 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. 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 to accounts. However, present obligation as a result of past event with possibility of outflow of resources, when reliably estimable, is recognized in accounts. Foreign Currency Translation: In respect of foreign branches/offices, the company has adopted 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. Exchange Loss / Gain arising out of transactions of revenue and capital nature are separately disclosed in notes to accounts. Capital as well as revenue implication of exchange fluctuation, accounted for in profit and loss account, are disclosed in notes to accounts. Employee Stock Option Purchase (ESOP): Aggregate of quantum of option granted under the scheme in monetary term 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. b. Existing provisions referred to in "a" above relates to nil (Rs.62.64), nil (Rs.26.15) and nil (Rs.0.29)towards liabilities on account of VAT, Sales Tax and Entry Tax respectively to be carried as such at the year end in view of absence of any additional provision therefor during the year. Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCT's if any matured are expected to be in subsequent financial year's. Provisions are made herein for medium risk oriented issues as a measure of abundant precaution. Remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 4(a) above is presumed.

c. d. e.

d.

5.

e.

Other Notes to Accounts containing inter-alia explanatory material, except for quantitative particulars pertaining to foreign subsidiaries disclosure of which is not required under respective statute, are disclosed with the accounts of different companies under consolidation.

6A. 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) Associates / Joint Ventures Mr Rukma Rana, joint venture partner in Dabur Nepal Pvt Ltd ACI Ltd. Bangladesh Weikfield Product Co. Pvt. Ltd Green Valley Products Pvt Ltd (ii) Key management personnel (Whole time directors) a) Pradip Burman b) Amit Burman c) Dr. Anand Burman d) Siddharth Burman e) P. D. Narang f) Sunil Duggal g) Sanjay Sharma h) T K Gupta i) S. Ramakrishna j) Mohit Burman k) Arvind Kumar l) Chetan Burman Relatives of Key Management Personnel R C Burman Asha Burman A.C.Burman

g.

j.

(iii) Associate Entities over which Key Management Personnel are able to exercise significant influence: 1. Welltime Housing and Finance Pvt.Ltd 2. Miracle Commercial Enterprises Pvt Ltd 3.Wakarusa Laboratories Pvt Ltd 4. Jetways Travels Pvt Ltd 5. Gyan Enterprises Pvt.Ltd. 6. Puran Associates Pvt. Ltd [iv] An Enterprise owned by any Director (KMP) of Dabur India Limited / subsidiary: 1. Welltime Housing and Finance Pvt. Ltd. 2. Prayag Commercial Private Limited 6B. Transactions with related parties (Consolidated) for the period from 01.04.2005 to 31.03.2006 Associates Key Management Personnel 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00) 0.00 (0.00) 532.84 (638.58) 0.00 (0.00) 0.00 [0.00] 0.00 [0.00] 0.00 (0.00) 278.50 (195.91) 6.47 (0.00) Relatives Of Key Management Personnel 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 125.98 [169.01] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) Total Outstanding As On 31.03.2006 0.00 [0.00] 0.00 [18.93) 0.00 [2.85] 0.00 [0.00] 0.00 [200.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 [0.00] 0.00 (0.00) 0.00 (0.00) 0.00 (0.00)

k.

Purchases of Goods Sale of Goods Receiving of Services Repayment of Loans Recd Loans Given Rent Paid

0.00 [0.00) 0.00 [1565.05] 180.00 [190.66] 0.00 [200.00] 00.00 (100.00) 6.00 [20.77] 0.00 (0.00) 0.00 [4.28] 3.50 (0.00) 0.00 [4.09] 0.00 [0.00] 0.00 (0.00) 0.00 (0.00) 0.00 (0.00)

0.00 [0.00] 0.00 [1565.05] 180.00 [190.66] 00.00 [200.00] 00.00 [100.00] 6.00 [20.77) 0.00 (0.00) 658.82 [811.87] 3.50 [0.00] 0.00 [4.09] 0.00 [0.00] 0.00 (0.00) 278.50 (195.91) 6.47 (0.00)

l.

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.

Interest Recd On Loans Given Remuneration/Exg./Pension Repayment of Loans Given (Instl.Recd) Interest Paid On Loan Recd Donation Given

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 2006 6757.63 4781.37 As at 31st March 2005 5378.72 3607.73

Cost/Revalued Written Down 2. 3.

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. b. Beside those referred to in parent company financial statements, each plant of each subsidiary constitutes independent CGU. c. 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. Contingent Liabilities: a) i) Claims not acknowledged as debts: a) In respect of civil suits filed against the company Rs.338.61 (Previous year 276.82) b) In respect of claims by employees Rs.0.01 (previous year 0.50) c) In respect of letters of credit Rs.2119.04 (previous year 3271.92) ii. In respect of Bank Guarantees executed Rs.2933.96 (previous year 1988.20) iii. In respect of Sales Tax under appeal Rs.1291.95 (previous year 1042.21) iv. In respect of excise duty disputes pending with various judicial authorities Rs.2832.24 (previous year Rs.2227.26) v. In respect of Corporate Guarantees given by the Company Rs.7644.85 (previous year Rs.14148.94) vi. In respect of Income tax under appeal Rs.319.79 (previous year Rs.401.25) vii.Estimated Amount of contract remaining to be executed on capital Account Rs.450.89, net of Advance (previous year Rs.1064.15) viii. In respect of Bill Discounting of Company Rs.277.54 (Previous year Rs.535.42) b) Information pursuant to AS 29 issued by ICAI: a. Rs. NIL (previous year Rs.89.08) has been provided during the year against disputed liabilities in respect of amount reliably estimable within the meaning of relevant standards.

Royalty Received Employee Stock Option Scheme Sale of assets

Figures in brackets are of previous year

4.

The amounts or appropriate proportions of outstanding items pertaining to related parties at the Balance Sheet date and 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). 7. Earnings per share has been computed as under: 2005-06 Profit after Tax and after Minority Interest Less:Provision for taxation of earlier years written off Add Provision for taxation of earlier years written back Weighted average number of shares outstanding: Basic Diluted Earnings per share (face value Re.1 per share): Basic Diluted 3.74 3.71 2.72 2.71 573149155 577524999 572839426 575809845 21418.24 51.83 0.00 21470.07 2004-05 15580.61 26.26 0.00 15554.35

30 CONSOLIDATED FINANCIAL STATEMENTS Dabur India Limited Annual Report 2005-06

Schedules annexed to and forming part of the accounts for the year ended 31st March,2006
8 Information purusant to as - 17 issued by ICAI. FMCG Current Period 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+FBT) Profit from ordinary activities Exceptional Item {Profit/(loss) on Long Lerm Trade Investment} Net profit OTHER INFORMATION Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure 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. 189957 (Rs.153695) the export sales is of Rs.18816 (Rs. 19272) and domestic sale is Rs.171141 (Rs.134423) 46681 22504 2125 44290 7876 2353 448 316 119 132 9872 9749 (7970) (2762) 1083 1159 98823 46681 82271 44290 14572 9872 11615 9749 (19412) (7970) (7152) (2762) 2693 1083 3106 1159 98823 82271 14572 11615 (19412) (7152) 2693 3106 96676 5914 102590 49666 6506 56172 22504 2692 3241 89840 3690 93530 52436 5282 57718 7876 2801 515 23678 16670 1372 327 612 613 23678 16670 1372 327 612 613 3002 22660 (1274) 21386 15700 1910 15700 24732 1054 17390 720 1891 519 773 446 678 66 691 78 27301 1639 18854 1244 24732 17390 1891 773 678 691 27301 18854 164490 133264 20573 14215 4894 6216 189957 153695 164490 133264 20573 14215 4894 6216 189957 153695 Previous Period FOODS Current Period Previous Period ELIMINATIONS Current Period Previous Period OTHERS Current Period Previous Period Total Consolidated Current Period Previous Period

9.a) Pursuant to parent Company's take over of 99.52%, 100% and 100% (after considering 52% held indirectly through Balsara Hygiene Products Ltd.and Balsara Home Products Ltd) stake in Balsara Hygiene Products Ltd, Balsara Home Products Ltd. and Besta Comsetics Ltd. respectively, with effect from April 01, 2005, following assets and liabilities of respective entities have been incorporated in CFS. Balsara Hygiene Products Ltd 1. Assets Gross Fixed Assets Accumulated depreciation Net Fixed Assets Investments Inventories Sundry Debtors Cash & Bank Loans and Advances Profit & Loss (Debit) 2. Liabilities General Reserve Capital reserve Capital redemption reserve Share Premium Profit & Loss Deferred tax liabilities Secured Loans Un-secured loans Current Liabilities Provisions 3. Income and expenses of the year are added by : Total Income Total expenses 4. The value of investment in excess of net assets of subsidiary accounted for as good will. 171.39 204.16 10073.54 16436.87 15048.26 4249.61 121.83 35.35 1840.62 772.90 423.85 43.75 112.30 378.50 102.78 660.00 45.54 1039.62 46.75 3673.40 335.15 2.57 30.01 1.24 41.99 45.20 992.98 430.24 562.74 731.94 5.57 819.13 0.00 2737.30 339.12 2398.18 1.12 1293.65 549.18 126.27 656.20 3949.64 13.89 8.82 5.07 7.76 106.05 92.13 Balsara Home Products Ltd Besta Cosmetics Ltd.

11. Information pursuant to AS 24 on discontinued operations (pertaining to parent company only] Particulars 1 Discontinued since 2 Segment the operation of the Unit relates to in financial statement 3 Carrying amount of total assets 4 Carrying amount of total liabilities 5 Profit from ordinary activities 6 Income Tax expenses 7 Gain on disposal of assets 8 Cash flow from discontinued operations: Operating activities Investing Activities Financial Activities
Note:

Hair Oil Baddi March,04 FMCG 33.37 (33.37) 4.21 (4.21) 0 (-5.3) 0.00 (0.00) 0.00 (-0.01) 0 (-71.46) 0.00 (24.14) 0.00 (0.00)

MSY Unit Baddi Nov,2000 FMCG 28.35 (28.35) 0.01 (0.01) 0 (-1.79) 0.00 (0.00) 0.00 (0.00) 0 (-0.47) 0.00 (0.00) 0.00 (0.00)

Daburgram Unit July,2003 FMCG 44.27 (44.27) 0.32 (0.32) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0 (-3.97) 0.00 (0.00) 0.00 (0.00)

1. Figures in brackets are for previous year. 2. Parts 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

12. Extraordinary item represents loss on sale of Long Term Trade Investments amounting to Rs.1274.05. 13. Exchange loss works out to Rs.100.14 (Previous Year Rs. 57.34) net of gain which has been charged to Profit & Loss Account. 14. Deferred payment credit Rs. 148.35 (previous year Rs. NIL) 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. 15. 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 year's grouping. Signatures to the Schedules "A" to "P" Annexed to and forming part of the Accounts. As per our report of even date attached For G.Basu & Co. Chartered Accountants S.Lahiri Partner For Dabur India Ltd. V.C.Burman P.D.Narang Sunil Duggal A.K.Jain Chairman Director Director Addl.General Manager (Finance) & Company Secretary

To above extent,the figures of previous year are not comparable with those of current year. 10. Pursuant to parent Company's enhancement of stake in Dabur Nepal Pvt. Ltd. from 79.96% to 97.5% (stake herein being held during the year through Dabur International Ltd., another wholly owned subsidiary unlike direct holding in previous year) CFS for the year have been affected as follows : Particulars Minority interest reduced by Share of profit of minority reduced by Value of investments falling short of proportionate net assets of subsidiary accounted for as goodwil To above extent,figures of previous year are not comparable with those of current year. Amount 946.21 87.32 581.41

New Delhi 25th April 2006

CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP 31

Annual Report 2005-06 Dabur India Limited

To 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, 2006 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 company's 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 signif-

icant 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, 2006, 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. G. Basu & Co. Kolkata

Consolidated balance sheet as of 31st March,2006

Current Assets Cash and Cash equivalents Marketable securities Accounts Receivable,net of allowances Inventories Other current assets 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 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 sharesauthorised 573302784 issued and outstanding Additional paid in capital Retained earning Accumulated & other comprehensive income Total liabilities and stock holders' equity
The accompaying notes are an integral part of these consolidated financial statements

Consolidated statement of income for the year ended 31st March,2006

INR in Lac 1387.94 4378.09 7589.28 20312.92 26106.05 59774.28 29530.41 967.90 856.27 357.68 2829.81 94316.35 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 41290.52 6930.40 3417.85 1638.70 53277.46 24243.98 875.10 25119.08 2185.80 598.48 463.31 -32.51 21904.00 3.82 3.79 573149195 577524990 138.01 16119.10 2.81 2.80 572694600 575535148 34685.14 4964.41 2830.95 1243.59 43724.09 17121.24 447.21 17568.45 1509.88 -198.54 2005-06 171996.64 94475.19 77521.45 INR in Lac 2004-05 136838.94 75993.61 60845.33

4892.75 4096.15 7435.01 21617.30 11609.50 49650.71 33911.52 17566.51 632.02 364.31 1916.88 104041.95

7420.77 16482.32 20300.90 44203.99 3002.08 6837.21 9839.29 1171.45 55214.73 565.76

12890.17 17301.91 17959.66 48151.74 2311.21 4595.06 6906.27 470.39 55528.40 1858.76

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

5733.03 4068.97 38438.93 20.53 104041.95

2864.20 6158.32 27793.90 112.77 94316.35

The accompaying notes are an integral part of these consolidated financial statements

Consolidated statement of stockholders' equity and comprehensive income

INR in Lac Common Stock Particulars No.of Shares Amount Additional paid in capital 5819.38 5819.38 338.94 -3.25 -2862.89 -4296.30 -374.14 -602.56 16119.10 -9.02 -28.31 0.69 149.41 2864.20 2.32 2866.51 -2866.51 777.16 6158.32 112.77 -9.02 -28.31 0.69 149.41 112.77 27793.90 96.70 0.00 0.00 Comprehensive income Accumlated other comprehensive income (loss) Retained earings (Accumulated earnings) 19840.54 -26.60 2862.49 170661 1.71 19813.94 Total stockholders' equity 28522.41 -26.60 28495.81 1.71 338.94 -3.25 -2862.89 -4296.30 -374.14 -602.56 16119.10 -9.02 -28.31 0.69 149.41 36929.19 96.70 2.32 0.00 777.16 0.00 -4303.03 -5733.03 -602.98 -716.63 21904.00 -100.10 3.79 4.06 5733.03 4068.97 21924.53 -100.10 3.79 4.06 20.53 38438.93 21904.00 -4303.03 -5733.03 -602.98 -716.63 43808.01 -100.10 3.79 4.06 70165.46

Balance as of 01.04.2004 Adjustment for prior period items (Refer note No.22 ) Balance as of 01.04.2004 Issue of share against exercise stock option Amortization of employees stock option Employees share of Profit Interim Dividend Proposed Dividend Tax on Interim Dividend Tax on Proposed Dividend Net Income Translation adjustment Investment realised during year net of deferred tax (16.34) Unrealised gain on short term investment (net of deffered Tax 0.4) Unrealised gain on long term investment (net of deffered tax 86.22) Balance as of March 31,2005 Adjustment for prior period items (Refer note No.38 ) Issue of share against exercise stock option Bonus Shares Amortization of employees stock option Change resulting from purchase of additional share in subsidiaries Employees share of Profit 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) Balance as of March 31,2006
The accompaying notes are an integral part of these consolidated financial statements

286249052

2862.49

As per our report of even date attached For G.Basu & Co. Chartered Accountants S.Lahiri Partner New Delhi 25th April 2006

For Dabur India Ltd. V.C.Burman P.D.Narang Sunil Duggal A.K.Jain Chairman Director Director Addl.General Manager (Finance) & Company Secretary

32 CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP Dabur India Limited Annual Report 2005-06

Consolidated statement of cash flow for the year ended 31st March,2006
INR in Lac 31.03.2006 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 propety,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 Net cash provided by financing activities 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
The accompaying notes are an integral part of these consolidated financial statements

Weikfield International (UAE) Ltd Dabur Foods Ltd. Pasadensa Foods Ltd. Dabur Egypt Ltd. African Consumercare Ltd Asian Consumercare Pvt.Ltd Balsara Home Products Limited Balsara Hygiene Products Limited Besta Cosmetics Limited

United Arab Emirate India India Egypt Nigeria Bangladesh India India India

38.41% by Dabur international Ltd. 100% 100% by Dabur foods Ltd 76% by Dabur overseas Ltd & 24% by Dabur International Ltd 90% by Dabur International Ltd 76% by Dabur International Ltd 99.52% 100% 48% by Dabur India Limited,50% by Balsara Hygiene Products Limited and 2% by Balsara Home Products Limited

31.03.2005 16119.89

21904.00

3436.80 2185.80 598.48 (146.00) (55.00) 777.16 (32.51) 96.70 1638.70 54.17 (1304.38) 912.93 (2439.45) (819.59) 2341.24 2242.15 (2240.41) (1638.70) 27512.09 (7841.71) (11.55) (364.80) (4089.34)

2830.95 1509.88 (198.54) 14.00 202.63 (407.38) 338.94 138.01 (26.60) (0.50) 1243.59 (487.91) (5,028.47) 870.16 g) 6476.76 2613.41 1069.72 (1,668.57) (1,222.18) 39394.8 (7,134.77) 500.02 (717.99) h) f) e) d)

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 management's analysis of inventory levels. Inventories worth INR 21250.87 lac has been encumbered with banks towards security against short-term borrowing. 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 holder's 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. 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.

143,259.86 55.00 4377.00 0.50 (7875.40) 2.32 (5469.40) 690.87 (1319.61) (10036.06) (16131.88) 3504.81 1387.94 4892.75 (34,772.73) 1.71 3177.40 (528.57) 0 (7,761.23) (5,110.69) (488.62) 1876.56 1387.94

A. Assets held & used 31.3.06

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

Notes to consolidated financial statement for the year ended 31.3.2006

(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. 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 management's 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. 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. 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 intercompany 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 overseas Ltd Dabur International Ltd Country of incorporation Nepal British Virgin Island Isle of MAN Shareholding 97.5% by Dabur International Ltd 100% 100% i) j)

Assets under construction relate to Uttaranchal and Jammu manufacturing units, which are expected to be in full operation by Sept 2006. Property, plant & equipment aggregating INR 28241 lac are mortgaged / hypothecated to bank & financial institutions towards security on loan. Intangible ( Patent & Trade mark) 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. 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. 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 USGAAP, 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. Research and Development Expenses Contributions towards scientific research expenses are charged to the statement of income in the year in which the contribution is made. 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 in 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. 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

2)

k)

l)

m) b)

n) o) p)

c)

q)

CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP 33

Annual Report 2005-06 Dabur India Limited

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 in the statement of income in the period of change. Based on management's 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. 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.

8)

Inventories : Inventories comprises of the following :INR in Lac 2006 Raw Materials Packing materials,stores & spares Stock in process Finished goods Total 8092.69 4820.50 1402.38 7301.73 21617.30 2005 8068.03 3646.80 746.23 7851.86 20312.92

9)

Other Current assets : Other current assets comprise of the following : INR in Lac 2006 Fixed deposit Securty deposits with various authorities 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 Advance against acquisition of equity shares of Balsara Hygience Products Ltd. Total 0.00 0.00 5914.13 2084.01 292.48 434.84 2884.04 0.00 11609.50 2005 22.00 10.31 3690.49 2471.18 310.47 992.80 1135.51 17473.29 26106.05

s)

3) 4)

Advertising and Publicity costs during the period amounted to INR 22168 lac. Changes in Accounting Procedures: This being the 1st financial period of presentation of account in US GAAP, accounting treatments remain in terms of latest pronouncement of appropriate bodies and as such the question of disclosure on the changes in accounting procedure does not arise.

5)

Business Combination : a) On April 1, 2005, the parent company acquired 99.52%, 100% and 100% (50% being held by Balsara Hygiene Products Limited & 2% by Balsara Home Products Limited) of Balsara Home Products Limited, Balsara Hygiene Products Limited and Besta Cosmetics Limited respectively by way of acquiring equity shares of INR 10 each numbering 12290711, 3880800 and 431800 in the respective entities. The total purchase considerations paid in cash for acquisition of respective investment were INR 3405.00 lac, INR 11651.00 lac and INR 1790.00 lac. Estimated fair value assigned to assets of new subsidiaries on the date of acquisition were as follows: INR in Lac Balsara Home Products Limited Current Assets Cash and Cash equivalents Accounts Receivable,net of allowances Inventories Other current assets Total current assets Property,plant and equipment,net 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 Total current liabilities Other non-current liabilities Total non-current liability Deffered Tax liabilities (net) Total liabilities Stockholders' equity Additional paid in capital Retained earning Total liabilities and stock holders' equity 305.00 2766.00 -3654.21 4557.26 1196.75 2119.38 388.08 90.00 0.00 -59.56 118.86 1039.62 3673.41 335.15 5048.18 46.75 5094.93 45.54 490.80 43.75 112.30 378.50 490.80 41.99 45.20 87.19 0.00 87.19 1.23 4557.26 2119.38 118.86 126.27 549.18 1293.65 656.20 2625.30 1930.84 1.12 819.12 824.70 562.74 731.94 5.58 7.75 0.00 0.00 106.04 113.79 5.07 Balsara Hygiene Products Limited Besta Cosmetics Limited

10) Property, Plant & Equipment: Property, Plant & Equipment Comprise of the following : INR in Lac 2006 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 781.01 864.94 15271.82 27132.00 1249.40 4563.55 2872.73 1304.70 54040.14 -19232.95 -895.70 33911.50 2005 645.65 748.33 12801.93 23006.00 1145.68 3828.73 2534.56 938.81 45649.69 -16119.28 0.00 29530.41

The depreciation expenses relating to Property, Plant and Equipment for the year is 3634.48 11) Investment: a) Current Investment INR in Lac Cost of the investment Gross unrealized holding gain in accumulated other comprehensive income Carrying value b) Investment readily available for sale (I) Readily marketable equity securities: INR in Lac Cost of the investment Gross unrealized holding gain in accumulated other comprehensive income Carrying value (II) Readily marketable debt securities: INR in Lac Cost of the investment Gross unrealized holding gain in accumulated other comprehensive income Carrying value INR in Lac 2006 2005 27.91 123.25 1105.33 131.45 0.00 0.00 0.00 1387.94 12) Goodwill and intangibles : I) a) Component of goodwill (valued as per 2j) Goodwill arising out of consolidation of Balsara Home Products Limited, Balsara Hygiene Products Limited and Besta Cosmetic limited due to DIL's owning 99.52% in Balsara Home, 100% in Balsara Hygiene and 48% in Besta Cosmetics. (Balsara Hygiene holding 50% and Balsara Home Products Limited holding 2% in Besta Cosmetics.). With effect from 1st April 2005, have been reported in business combination in para 5 above. 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. Cost of the investment Gross unrealized holding gain in accumulated other comprehensive income Carrying value (III) Not readily marketable equity securities INR in Lac 105.00 Nil 105.00 12.50 Nil 12.50 4.80 241.60 246.40 4089.30 6.90 4096.20

b)

Excess of purchase consideration over fair value of net assets, accounted for as Goodwill amount to INR 4249.6 lac, INR 10073.54 lac and INR1840.62 lac for three respective entities. In addition to above note, the group stake in Dabur Nepal Private Limited has been enhanced during the year by way of enhancing the same to 97.5% from 79.96% formerly held therein by way of acquiring additional 140000 number of shares of INR 10 each in INR at total sum consideration of INR 364.80 Lac. Pursuant to relevant enhancements share of minority interest in liability side of balance sheet reduced by INR 1293.00 lac.

6)

Cash & Cash Equivalent : Cash & cash equivalent comprises following:

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

49.45 2.25 4621.98 219.07 0.00 0.00 0.00 4892.75

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 31,2006, net of allowance for doubtful account of INR 154.97 lac amounts to INR 7435.00 lac. INR in Lac 2006 Allowance at the beginning of the year Allowance for Doubtful debts for the year Account receivable written off during the year Balance for allowance for Doubtful debts 25.98 273.68 145.82 153.84 2005 11.98 58.08 44.08 25.98 d)

b)

c)

34 CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP Dabur India Limited Annual Report 2005-06

II)

Details of other intangible assets (Patent & Trademark) : INR in Lac 2006 Gross Carrying Amount Accumulated amortisation Net Carrying amount Amortisation in succeeding five years 1112.87 480.85 632.02 235.79 2005 1095.97 239.70 874.67 235.79

18) Other non-current Liabilities : INR in Lac 2006 Leave salary Housing gratuity & other welfare Taxation Dividend payable Deferred payment credit against machine 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. 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. Dividend During the period Interim dividend INR 4299.29 lac @ 150% and Final dividend of INR 5733.03 Lac @ 100% have been distributed and proposed respectively. 122.00 700.00 5959.78 0.00 148.40 55.43 6985.61 2005 1009.09 112.99 16.06 2311.21 0.00 0.00 3449.35

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. INR in Lac 2006 Fixed deposit Post office savings bank for excise regis. Securty deposits with various authorities Advance to employees Total 223.52 0.95 1660.41 32.00 1916.88 2005 62.40 0.95 2732.21 34.25 2829.81

b)

c)

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 entity Name of Bank Amount in INR Lac 823.70 Rate of interest per anum 11.00% Nature of security

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: 31st Mar 06 Outstanding,beginning of the year Stocks,movable properties & guarantee by Dabur India ltd. Do Do Stocks,movable properties & guarantee by Dabur India ltd. Movable & immovable assets 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 Stock / Book Debt 6-Nov-02 30-Apr-03 30-Apr-03 10-Oct-03 10-Oct-03 5-May-04 23-Jul-04 23-Jul-04 23-Jul-04 26-Oct-04 26-Oct-04 26-Oct-04 28-Apr-05 28-Apr-05 28-Apr-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 26-Jul-05 24-Oct-05 24-Oct-05 24-Oct-05 24-Oct-05 24-Oct-05 24-Oct-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 25-Nov-05 27-Jan-06 27-Jan-06 27-Jan-06 27-Jan-06 27-Jan-06 20000 137500 262500 150006 1549982 74998 7148 87206 150108 34080 5454 71572 136056 95240 12218 52606 30476 101746 111250 18700 4572 6858 3810 3810 2500 2500 18750 106250 9376 53124 6100 7010 6100 6310 1500 1500 4500 13876 13876 121498 8250 8250 8250 85250 4500 13876 13876 121498 49500 143256 143256 1261488 75000 75000 600000 7776 44374 41250 41250 442918 1825 1095 1826 1024 1389 1182 729 1094 1825 551 1106 1282 364 364 1643 365 1826 365 1826 980 365 1826 365 1826 365 980 370 735 370 735 372 1825 890 1825 372 890 535 901 1266 1631 535 901 1266 1631 535 901 1266 1631 535 901 1266 1631 901 1266 1631 364 472 838 1203 1568 5-Nov-07 29-Apr-06 29-Apr-08 30-Jul-06 30-Jul-07 31-Jul-07 22-Jul-06 22-Jul-07 22-Jul-09 30-Apr-06 6-Nov-07 30-Apr-08 27-Apr-06 27-Apr-06 27-Oct-09 26-Jul-06 26-Jul-10 26-Jul-06 26-Jul-10 1-Apr-08 26-Jul-06 26-Jul-10 26-Jul-06 26-Jul-10 26-Jul-06 1-Apr-08 31-Jul-06 31-Jul-07 31-Jul-06 31-Jul-07 31-Oct-06 23-Oct-10 1-Apr-08 23-Oct-10 31-Oct-06 1-Apr-08 14-May-07 14-May-08 14-May-09 14-May-10 14-May-07 14-May-08 14-May-09 14-May-10 14-May-07 14-May-08 14-May-09 14-May-10 14-May-07 14-May-08 14-May-09 14-May-10 14-May-08 14-May-09 14-May-10 26-Jan-07 14-May-07 14-May-08 14-May-09 14-May-10 Granted Excercised Cancelled Outstanding at the end of the year 1534740 5388423 231679 0 6691484 31st Mar 05 1320658 384743 170661 0 1534740

Dabur Nepal Ltd

Nabil Bank Ltd

- Do -

Standard Chartered Bank Nepal Ltd Nepal SBI Bank Ltd

533.80 546.30 479.27

11.00% 11.00% 8.50%

Up to March 31,2006 the options granted are summarized as follows:

Date of grant Number of options granted Vesting period in Days Vesting Date Exercise price (INR per share) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Market price as on date of grant (INR per share) 45.10 37.00 37.00 60.55 60.55 79.70 69.95 69.95 69.95 73.35 73.35 73.35 116.85 116.85 116.85 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 151.45 142.65 142.65 142.65 142.65 142.65 142.65 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 170.55 107.05 107.05 107.05 107.05 107.05 Amount INR amortized in 2005-06

Dabur foods ltd

Hongkong sanghai banking corporation GE Capital service Standard Chartered Bank & ABN Amro Bank

Dabur foods ltd Asian consumercare

1000.03 417.04

10.50% 12.00%

Weikfield

(Standard Chartered Bank & ABN Amro Bank ) Bank Overdraft (Standard Chartered Bank & ABN Amro Bank ) Bank Overdraft Banque Du cairo barklays Standard Chartered Bank HDFC Bank HSBC

78.21

5%

Dabur International Limited Dabur Egypt Ltd Balsara Home Ltd

380.28

5%

122.76 253.29 222.32 200.36

14.50%

8.75% 8.00%

Book Debt Stock / Book Debt

Short term loan Dabur India Ltd Consortium of IDBI Bank, SBC,SBI,ABN AMRO,UBI, UTI Bank,HDFC & Standard Chartered Depopsits of Directors / Companies 1293.36 8.00% Stock & book debts

Dabur International Limited

1070.05

8.50%

15) Trade accounts payable Trade accounts payable of INR 16482.32 lac (PY 17301.92) comprise trade creditors for goods & services which include notes payable of INR 8050.56 lac (PY INR 12206.55 lac). 16 Accrued expenses & other current liabilities Accrued expenses & other current liabilities comprise the following INR in Lac 2006 Proposed dividend Corporate tax on proposed dividend Bonus Creditor for expenses Advance from customers Interest accrued but not due on loan Total 5733.03 804.06 55.05 13224.12 273.63 62.66 20152.55 2005 4296.30 602.56 117.62 12578.32 325.78 39.08 17959.66

17) Long term debt, excluding current portion Name of entity Pasadensa Food Ltd. Asian Consumer Care DNPL DIL DIL DIL Bank / Inst. GE Capital service Standard Chartered Bank Standard Chartered Bank Deffered payment Credit Investor Protection Fund Security Deposits from Dealers Total Amount in INR Lac 1822.72 23.27 253.41 755.22 137.88 9.58 3002.08 Rate of interest 10.50% 12% 11% Int.free Int.free Int.free Nature of security Movable & immovable assets Plant & Machinery Movable & immovable assets Fixed assets of 5/1 Shahibabad Nil Nil Repayment Terms Quarterly Quarterly Quarterly Yearly

92820 868216 993958 1675434 12762716 959056 129846 1055602 1089211 859456 68523 775766 7785324 5449772 154890 2868935 332227 5548847 1212767 379834 249340 74761 207783 41534 136341 50780 1008737 2877530 504422 1438738 195792 45863 81837 41283 48146 20124 95865 175526 124920 849020 175753 104359 74272 595721 95865 175526 124920 849020 1054518 1812136 1289680 8815195 948723 675197 4192760 152290 670197 350910 244441 1971064

CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP 35

Annual Report 2005-06 Dabur India Limited

21) Other Income : Other income comprises rent realization, dividend earning, miscellaneous receipts and capital profit. 22) Related party transaction a) b) Service of INR 180 lac received from Jetways Travels Private Limited and Associates in which one key management personnel exercises significant influence. Rent paid INR 6 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. Remuneration to key management personnel INR 811.34 lac. Post retirement benefits to relative of key management personnel INR 125.98 lac. Repayment of Loan INR 3.50 lac received from Welltime housing & Finance private limited and associates in which a key management personnel exercises significant influence.

c)

Breakup of current guarantees furnished along with other particulars INR in Lac Guaranteed party Name of party on whose behalf guarantee issued Dabur Nepal Pvt.Ltd Dabur Nepal Pvt.Ltd A.K.Jain D.K.Upadhyaya J.P.Sharma Naseem Ahmed R.S.Saini Dabur Egypt Ltd Dabur Foods Ltd Dabur Foods Ltd Dabur Oncology Plc Dabur Oncology Plc Pasadensa Foods Ltd Pasadensa Foods Ltd Dabur Egypt Ltd Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Dabur India Limited Carrying amount 31-3-06 188.00 125.00 10.00 3.00 8.00 5.00 9.00 291.00 1200.00 2550.00 1945.00 5666.00 400.00 950.00 211.00 811.00 117806.00 1232.00 5361.00 57528.00 420.00 27307.00 1900.00 195.00 505.00 48588.00 Fair value 31-3-06 188.00 125.00 10.00 3.00 8.00 5.00 9.00 291.00 1200.00 2550.00 1945.00 5666.00 400.00 950.00 211.00 811.00 117806.00 1232.00 5361.00 57528.00 420.00 27307.00 1900.00 195.00 505.00 48588.00

Nepal Arab Bank Ltd Nepal Arab Bank Ltd HDFC Ltd HDFC Ltd HDFC Ltd HDFC Ltd HDFC Ltd HSBC Ltd,New Delhi Canara Bank HSBC Ltd. ABNAmro Bank

c) d) e) Note: i)

Key management personnel include Mr. Pradeep Burman, Dr. Anand Burman, Mr. Amit Burman, Mr. Mohit Burman, Mr. Chetan Burman, Mr. P. D Narang, Mr. Sunil Duggal, Mr. Sanjay Sharma, Mr. T. K gupta, Mr. Arvind Kumar and Mr. S Ramakrishan all wholetime directors of group companies. Relatives of key management personnel include Mr. R. C Burman, Mr. A. C Burman and Ms Asha Burman.

ABNAmro Bank ICICI Bank Ltd G.E.Capital Services India HSBC Ltd. Hongkong Bank Nepal Arab Bank Ltd Canara Bank ICICI Bank Ltd ACCL Standard Chartered Bank,Dubai HSBC Bank,Egypt Standard Chartered Bank HSBC HSBC Standard Chartered Bank,Dubai

ii)

23) Income Taxes Provision for Income Taxes includes foreign income tax provision of INR 105.5 lac for Dabur Nepal Pvt. Ltd. The break-up of deferred tax liability / benefit : INR in Lac 2006 A Deffered tax liability (Non-Current) Depreciation of Plant & equipment Long term investment Total Deffered Tax liability (Non Current) B Deffered Tax assets (Non Current) VRS Payment Long term investment Technical know how fees Total Deffered Tax assets (Non Current) C D Deffered Tax liability (A - B) Deffered tax liability (current) Current investment Total Deffered tax liability (current) E Deffered Tax assets (Current) VRS Payment Disallowance U/S 43B of Income Tax Act,1961 F G Total deffered tax Assets (Current) Total deffered tax liability (C -F) 0.00 131.73 129.80 1171.45 2.00 131.74 133.34 470.39 1.93 1.93 0.40 0.40 0.00 0.00 15.56 15.56 1301.25 4.01 496.44 24.02 524.47 603.73 ii) 1228.53 88.28 1316.81 1041.98 86.22 1128.20 2005

None of the parties favouring whom guarantee have been furnished is related party. 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 Hon'ble 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 Hon'ble 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 Hon'ble 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 Hon'ble Supreme Court in this regard. Necessary adjustments in respect of recovery / refund will be made as per the arbitration proceedings.

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 shortterm maturity (up to months) of such instruments. Accounts receivable - The carrying amount approximates fair value due to their short them 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 Company's financial instruments are as follows :

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. 27) Revenue INR in Lac 2006 Domestic sales less returns Export sales Subsidy Sale of scrap Total 152729.01 18816.48 172.37 278.78 171996.64 2005 117246.00 19271.69 44.65 276.60 136838.94

28) Cost of revenues INR in Lac INR in Lac 2006 Cash & cash equivalent Accounts receivable Investments for which: Practicable to estimate fair value Non-practicable to estimate fair value Accounts payable Long term debt 4355.46 105.00 16482.32 3002.08 4630.77 105.00 17301.91 2311.21 29) Selling, general and administrative expenses 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. 2006 Rent Rates & Taxes Insurance Freight & forwarding charges INR in Lac 2006 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 9378.86 1200.00 2396.58 4443.98 450.89 14937.10 1200.00 3807.34 1665.72 1064.15 338.62 2005 277.32 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 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 Pasedensa Foods Limited against term loan facility obtained by latter from the former. Provision for contingent liability Loss on sale of fixed assets Total 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 INR in Lac 2005 738.89 119.00 304.40 4339.22 801.74 20375.91 1891.14 876.31 404.17 141.51 3645.47 6.80 51.55 257.90 597.97 44.08 89.08 0.00 34685.14 4892.75 7435.01 2005 1387.94 7589.28 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 2006 38758.41 25891.75 15385.77 736.39 5711.25 18.95 7972.67 94475.19 2005 30992.17 17331.74 19784.12 -2165.78 4050.37 -13.52 6014.51 75993.61

List of contingencies are as follows:

36 CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP Dabur India Limited Annual Report 2005-06

30) Personnel expenses INR in Lac 2006 Directors' remuneration Salaries & benefits ESOP Employees Total 31) Financial expenses INR in Lac 2006 Interest paid on Fixed period loan Others Bank charges Total 389.30 735.70 513.70 1638.70 402.33 419.36 421.90 1243.59 2005 895.29 5537.11 498.00 6930.40 2005 824.15 4009.68 130.58 4964.41

32) Other income INR in Lac 2006 Rent Realised Dividend Misc Receipt Profit on sale of investment Royalty Profit / loss on sale of fixed assets Total 17.30 0.48 540.88 151.84 18.54 146.06 875.10 2005 21.10 0.50 127.10 407.38 0.00 -108.87 447.21

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; FMCG 05-06 REVENUE External Sales Inter-segment sales Total Revenue RESULT Segment result Unallocated corporate expenses Operating profit Interest expense (Net) Interest income Income Tax(Current + Deferred) Profit from ordinary activities Other Income Net profit OTHER INFORMATION Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure Depreciation 46680 22504 3000 44290 7876 2378 9872 0 302 9749 0 319 0 0 (7968) (2762) 1083 0 116 1159 0 133 98823 46680 82271 44290 14572 9872 11615 9749 (19412) (7968) (7152) (2762) 2693 1083 3106 1159 98823 82271 14572 11615 (19412) (7152) 2693 3106 22393 16219 1274 307 0 0 577 595 22393 16219 1274 307 0 0 577 595 23447 1054 16939 720 1793 519 753 446 0 0 643 66 673 78 23447 16939 1793 753 643 673 148938 118649 18628 12656 0 0 4431 5534 148938 118649 18628 12656 4431 5534 04-05 05-06 FOODS 04-05 ELIMINATIONS 05-06 04-05 05-06 OTHERS 04-05

INR in lac (Rounded off) Total Consolidated 05-06 04-05

171997 0 171997

136839 0 136839

25883 0 25883 1639 0 3248 20996 875 21871

18365 0 18365 1244 0 1311 15809 447 16257

96676 7366 104042 49667 5548 55215 22504 3418

89840 4476 94316 52436 3092 55528 7876 2831

34) Employees post retirement benefit : a) (i) Gratuity : Dabur India Ltd., Dabur Food Ltd. And Pasedensa 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 Food Ltd, Pasedensa Foods Ltd. to LIC in this connection amount to INR 277.53 lac. Dabur International Ltd. and Weikfield International (UAE) 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 14.75 lac and INR 3.11 lac respectively. Leave Salary : Dabur India Ltd. and Dabur Foods Limited and Pasedensa Foods Ltd. 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 20.53 lac, INR 2.08 lac and INR 1.57 lac by DIL , Dabur Foods Limited and Pasedensa Foods Ltd. respectively. Dabur International Pvt. Ltd., Weikfield International (UAE) 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 21.83 lac INR 11.97 lac

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 215.75 lac.

35) Reconciliation between India GAAP & US GAAP. There are considerable differences between two, the note worthy of them being enunciated below: i. ii. iii. 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. The Company sold long-term investment in Dabon International Private limited for which it booked a loss of INR 1301.04 lac in Indian GAAP. These investment had already been derecognised under US GAAP in 2003-04 accounts confirming to principles of US GAAP. Above resulted in difference of profit of DIL Group between Indian GAAP and US GAAP by INR 485.80 lac, the latter being higher.

(ii)

b) i)

iv.

36) Comprehensive income has been accounted for in respect of income / loss on earned or sustained subsequent to 1st April 2004. Prior period income / loss predominantly arising out of translation adjustments forms part of retained earning. 37) Prior period adjustment: An income of INR 96.70 lac relating to past years tax provision written back.

ii)

38) Difference between Indian GAAP vis a vis US GAAP, if not material, for any head of accounts, has been ignored.

As per our report of even date attached For G.Basu & Co. Chartered Accountants S.Lahiri Partner New Delhi 25th April 2006

For Dabur India Ltd. V.C.Burman P.D.Narang Sunil Duggal A.K.Jain Chairman Director Director Addl.General Manager (Finance) & Company Secretary