DABUR INDIA LIMITED Half Yearly Financial Report A Fresh Outlook

Transcription

1 DABUR INDIA LIMITED Half Yearly Financial Report A Fresh Outlook

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3 CONTENTS Board of Directors 03 Financial Statements 16 Management Discussion and Analysis 04 Consolidated Financials Statements 28 Auditor s Report 15

4 a trusted name in natural healthcare for over 100 years, is known for providing a range of efficacious and time-tested healthcare products based on the principles of Ayurveda. a premium brand and a leader in its category, is one of the flagship brands and a popular name in the natural personal care space. a tasty fun-filled digestive available in various forms - from tablets, traditional Churnas to modern formats like centre-filled candy - appealing to all age groups. country s leading brand of packaged fruit juices, provides the largest range of refreshing and healthy fruit juices that are 100 percent natural and free of preservatives. a relative new member in the family of Dabur s key brands, provides a range of herbal and natural products across various FMCG categories with a focus on providing quality and affordability.

5 BOARD OF DIRECTORS Dr Anand Burman Mr Amit Burman Mr Pradip Burman Mr Mohit Burman Mr P D Narang Mr Sunil Duggal His Highness Maharaja Gaj Singh Mr R C Bhargava Mr P N Vijay Dr S Narayan Chairman Vice Chairman Director Director Director Director Director Director Director Director GM (Finance) & Company Secretary Mr Ashok Jain Auditors M/s G. Basu & Co. Chartered Accountants Internal Auditors Price Waterhouse Coopers Pvt. Ltd. Bankers Punjab National Bank Standard Chartered Bank HSBC Ltd. State Bank of India ABN Amro Bank NV Citibank NA United Bank of India HDFC Bank Ltd. IDBI Bank Ltd. Corporate Office, Dabur Tower, Kaushambi, Sahibabad, Ghaziabad (U.P.), India Tel: , Fax: Website: investors@dabur.com Registered Office 8/3, Asaf Ali Road, New Delhi Tel:

6 Management Discussion and Analysis Management Discussion and Analysis The Indian economy continues to grow at a rapid pace. According to the Central Statistical Organisation (CSO) real GDP growth remained buoyant at 9.3% in the first quarter of This is on the back of two consecutive years of GDP growth in excess of 9%. And, the economic boom has largely been accompanied by a steady growth in private consumption. Chart A shows that since the beginning of , quarter after quarter private consumption expenditure has grown at rates of over 6%. Chart A: Growth in Private Consumption Expendture (%) 8.0% 6.0% 4.0% 2.0% 0.0% Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q , Q1 In fact, it is only in April-June 2007 that after eight consecutive quarters of over 6% growth, private consumption expenditure growth fell to 5.6%. While the growth reduction is marginal, there are some indications that suggest a further fall in the second quarter. Data, for the supply side of the economy, which is more recent, does point at this direction. For the period April-August, production data based on the index of industrial production (IIP) show a drop in growth of consumer goods from 11.4% in to 6.2% in While, indeed, there has been a tapering of demand for consumer goods in the first half of , the impact of this on the FMCG industry has been minimal. On segregating the consumer goods category into consumer durables and consumer non durables, one finds that the relative slowdown in consumer goods has been almost entirely due to a significant slow down in the consumer durables segment. The consumer durables segment, which had grown by a whopping 16.1% in April-August 2006, has actually witnessed a reduction in production by 2.3% for the corresponding period in On the other hand, growth in the consumer non-durables segment, which comprises largely of FMCG products, has reduced only marginally from 9.8% in April-August 2006 to 9.3% in the corresponding period in Thus, market conditions remained favourable for players in the FMCG sector. This is further corroborated by retail audit data from the AC Nielsen survey. The data suggests that some of the key segments within the FMCG sector personal care products like shampoos, hair oils, toothpastes continued to grow at high rates both in terms of value and volume (see chart B). 4

7 Half Yearly Financial Report Chart B : Growth in key FMCG segments Chart C : Division-wise revenue contribution Volume Value IBD 15% 15 Foods 12% 10 5 CHD 6% CCD 67% 0 Hair Oils Shampoos Toothpastes Source: AC Nielsen Retail Audit (April-Sept. 2007) While volume growth has been impressive, it is even more heartening to see that for most segments volume growth has been eclipsed by growth in terms of value. This dual source of growth gives a fair indication of two clear facets of the demand structure within the FMCG sector. On the one hand, companies are focusing on improved distribution systems to reach out and penetrate deeper into markets across India. On the other, they continue to leverage the improved buying power of large sections of the Indian population by providing higher value products that command a price premium in the market. For Dabur, who is one of India s leading FMCG companies, it is imperative to focus its energies on both these facets. In line with market demands, Dabur continuously upgrades and optimises its distribution systems through initiatives like Project DARE to be able to push its products deeper into markets across geographies. The company continues to maintain its edge by leveraging its strong Ayurvedic lineage and regularly introducing new products, improving existing ones and providing unique value propositions for its customers based on the health and wellness platform. These initiatives are supported by a strong operational back-end and an efficient manufacturing base. All these factors have contributed positively to the financial performance for the first half of , helping the company grow profitably. The highlights of Dabur s half-yearly results on a consolidated basis are: Sales grew by 15.9% from Rs crore in H to Rs crore in the corresponding period of Operating profit (EBIDTA) increased by 21.9% per cent from Rs crore in H to Rs crore in the corresponding period of Profit after tax (PAT after extra-ordinary items and minority interest) registered a growth of 25.2 % from Rs crore in H to Rs crore in the corresponding period of Half yearly earnings per share rose from Rs.1.46 in H to Rs.1.82 in the corresponding period of On 11 July 2007, the Board of Directors of (DIL) approved the merger of its wholly owned subsidiary Dabur Foods Limited (DFL) with itself. The merger will take effect from 1 April DFL, after the proposed merger, will become one of the business divisions of DIL alongside Consumer Care Division (CCD) and Consumer Health Division (CHD). DIL owns 100% of the outstanding shares of DFL, so no new shares will be issued as a result of the merger. The merger with Dabur India would extract synergies and unlock operational efficiencies for Dabur Foods. The integration will also help Dabur sharpen focus on the high growth business of foods and beverages, and enter newer product categories in this space. Consequently, Dabur s consolidated business will be operated through two entities (DIL) and Dabur International Limited. DIL will operate through 3 divisions namely consumer-care (CCD), Consumer-Health (CHD) and Foods, while the International Business Division (IBD) will be housed in Dabur International Limited. For the purpose of this report Dabur Foods Limited continues to be a separate subsidiary and its numbers are not reflected in the stand-alone results of DIL 5

8 Management Discussion and Analysis Chart D : Category contribution to CCD revenues Chart E : Growth in CCD Categories 25 22% Health supplement 17% Oral Care 25% % 14.7% 14.1% Digestives & Candies 10% Home care 7% Baby & skin care 7% Hair care 34 % % Hair care Oral Care Health Supplement Digestives & Candies Home care 9.4% Baby & skin care during the half year ended 30 th September Chart C gives the contribution of each of these divisions to Dabur s total consolidated revenues. There is also an others segment, which primarily includes non core intermediates business, whose share has reduced to below 0.5% of total consolidated revenues. When compared to H , while CCD continues to maintain its share there has been some churn in the other businesses the share of CHD has reduced from 8% to 6%, while that of IBD has increased from 13% to 15%. This is primarily due to the differential rates of growth witnessed by these divisions in H In addition to these businesses, Dabur has announced its plan to enter the retail business. The company plans to set up a chain of over 350 stores based on the Health & Beauty format with an investment of around Rs.140 crore in a phased manner till During H , on the retail front Dabur focused on setting up its back-end and organisational structure. The company has already appointed a Chief Executive Officer (CEO) and other professionals who have rich global expertise in the field of retail. In the subsequent section we shall analyse the market performance of the different divisions in greater detail. Consumer Care Division With a share of 67% of total consolidated revenues, the Consumer Care Division (CCD), which focuses on pure FMCG products, is clearly the largest business division within Dabur. CCD revenues grew by 14.6 % from Rs.706 crore to Rs.807 crore during H While the division has been favourably impacted by the overall growth in demand for FMCG products in India, much of this growth has been fuelled by the focused initiatives on the distribution front through Project DARE and the ability of the company to differentiate itself and continuously provide value propositions to the customer through introduction of new products, strategic product positioning and effective customer communication. The consumer care business portfolio can be divided into 6 categories hair care, oral care, health supplements, digestives, skin and baby care, and home care. Chart D gives the relative contribution of these categories to CCD s net sales. While the relative contribution remains similar to , there has been a marginal increase in share of oral care and health supplements. Chart E shows that right across the spectrum of categories, Dabur s CCD business registered healthy growth in revenues. Barring hair-care, baby oils and skin care, which recorded around 9% growth, the other categories witnessed doubledigit growth. Hair Care Hair Care continues to be the largest category in the CCD portfolio. Within the category shampoo sales with a growth of 16.8% outstripped the 7.3% growth in hair oils. Dabur s performance in hair oils has been a mixed bag. Dabur Amla, 6

9 Half Yearly Financial Report which is Dabur s largest hair oil brand, grew by a healthy 10.8%. The brand was supported by a new packaging featuring Rani Mukherjee and successfully penetrated into markets in smaller towns. In fact, Dabur Amla was the fastest growing hair oil in towns with a population of less than 1 Lakh. The Anmol brand, which is positioned in the economy segment also performed well with the Anmol coconut oil growing by 14% and the Anmol mustard oil growing by 21.9%. On the other hand, Vatika hair oil performed below expectations and there was a dip in sales during H The company is in the process of relaunching Vatika hair oil the brand that involves a complete makeover of the product, packaging and communication. The shampoos category registered good growth of 16.8%. The company s shampoos are sold under the brand Vatika and in keeping with the complete transformation of the Vatika brand, the entire shampoo range is being restaged through more contemporary packaging, emphasis on product efficacies through use of new and exotic ingredients like green almonds and tea tree oil, new nomenclatures and a completely altered communications package. Oral Care With a growth of 22%, this is the fastest growing category in CCD s business portfolio. All the key brands in different toothpaste market segments registered strong double digit growth. Babool toothpaste was the fastest growing brand with growth of 44%. Dabur Red toothpaste also performed well supported by a wide spread school activation programme covering around 675 schools in the north, east and west of India. Dabur continued with its rural initiatives in promoting the concept of dental care amongst a vast up country population. These were carried out across five states including Uttar Pradesh, Bihar, West Bengal, Madhya Pradesh and Maharashtra and played a key role in promoting Dabur s flagship toothpowder brand Lal Dant Manjan (LDM). LDM sales grew by a little over 6% in H India still has a large portion of its population who are still not using either tooth powders or pastes. There is a considerable scope in converting these people into toothpowder / toothpaste users. Based on this belief, the company has decided to widen its product range in the toothpowder market and has extended the Babool franchise to tooth powders. This new white tooth powder is being test marketed in Maharashtra. Health Supplements Health supplements, the third largest group of products in CCD s portfolio registered a 17.1% growth during H This was primarily driven by a strong 46% growth in sales of Glucose. In H the market share of Dabur Glucose has gone up by a little over 3 percentage points compared to the whole of Driven by an effective communication campaign that emphasized on the consumption of honey as an alternative to sugar, Dabur Honey sales increased by 19% in H While the season for Chyawanprash consumption is poised to commence from October, it registered a 5% growth in sales during its off-season in H In this category there are several key new products, which are being launched. Some of these are: 7

10 Management Discussion and Analysis Chywanprakash, a sugar free variant for diabetic and the calorie conscious people is planned to be rolled out nationally in Q Dabur Shwaasamrit, which is meant for cold, cough and bronchitis is being test marketed further in the southern markets. Chyawan Junior, a variant of Chyawanprash in malted food drink format is being test launched in West Bengal and Maharashtra. This opens up a large window of opportunity for Dabur marking its entry into the Rs.1, 540 crore malted food drink market. Digestives and Candies This category witnessed a turnaround in H , registering an impressive 14.7% growth. All products within this category recorded double-digit growth led by Hajmola candies growing by 24%, Pudin Hara by 15%, and Hajmola tablets by 11%. While school level activation was launched for candies, Pudin Hara sales were bolstered by a new advertising campaign and increased ground level penetration. During H two new variants namely Hajmola lemon and Kacha Aam candy were launched. Initial feedback suggests that these products received good response from the consumers. Baby Oils and Skincare This is one of the smallest categories in the CCD portfolio and it registered a growth of 9.4% in H Dabur is laying much emphasis on this category s growth. Considerable energy is being spent on restructuring this category into two clear lines of business Skin care and Baby care. Given the growth of income and aspiration levels in India, one expects a boom in demand for skincare products. In skincare, Dabur s Gulabari range grew by 15%. The company has extended the Gulabari range with the test launch of Gulabari Hydrating Rose Creme and Gulabari Hydrating Rose Lotion. In baby care, Dabur s Lal Tail continued to grow at an impressive 10.8%. The entire baby care portfolio comprising Lal Tail, Janam Ghunti and Gripe Water is being grouped into a Dabur Baby Ayurvedic Range, which will be a focused product group addressing a specific segment of the market. The company will initiate a more active and aggressive promotion of this range during the second half of Home Care Home care products, the latest addition to Dabur s CCD portfolio with the Balsara acquisition couple of years back, continued to grow steadily recording a growth of 14% in H The portfolio today consists of 3 broad classes of products Air fresheners, Toilet cleaners and Mosquito repellents. Air fresheners, under the Odonil brand grew by 17%. Air freshener sales include both blocks and aerosols. In blocks, the company added more variety to its range of perfumes where there was a shift from single fragrances to more complex mixes. The toilet cleaner brand Sanifresh went through some gains 8

11 Half Yearly Financial Report and dips during H in terms of sales. The back end issues have been sorted out and the brand has revived impressively since the beginning of July, registering a growth of 13% in net sales for H Sales have also been boosted with the introduction of a 750 ml value pack. Odomos, which operates in the Mosquito repellent category, grew by 14% for the first half. The company has consciously decided to focus on more profitable formates within this category and is laying greater emphasis on developing the personal application based Odomos solutions. A new packaging of Odomos Mosquito repellent cream has been launched in August 2007, the company s focus is on developing more innovative formats related to the Odomos range. There has been a concerted effort in increasing the entire visibility of the homecare portfolio through advertisement and focused promotion in modern trade. The company is in the process of launching a unique product range in the Hard Surface Cleaner (HSC) space under an entirely new brand called Dazzl. Consumer Health Division The Consumer Healthcare Division (CHD) comprises Dabur s range of Grantha based products that provide Ayurveda based solutions for preventive as well as curative health care. Although the business is relatively small, Dabur recognises the criticality of this division in the company s future plans. For one, it is here that the foundation is laid for many offerings that become future growth drivers for the company s FMCG business. For another, given the low levels of market penetration and the growing preference for holistic health remedies without side effects, there is considerable scope of growing this business. The division is divided into Over The Counter (OTC) products and Classical products. The business was in a consolidation phase with key growth oriented initiatives being planned for execution in the 2nd half. During H sales remained stagnant and the division registered a 1.8% dip in revenues. Some of the fall in revenues was due to ground level corrections in the stocks in the distribution pipeline.on the other hand, some of the brands like Dashmularishta and Lavan Bhaskar Churna and the classical portfolio registered double digit growth rates. During H , television advertising was recommenced for building equity for the division s largest offering in women s health category Dashmularishta. The newly launched Dabur Badam Tail oil also evoked positive response from consumers. The company intends to further support this product through a usage based educative campaign during the winter season. Under the classical range of products key initiatives include programmes influencing the healthcare fraternity and local activations which create greater awarenss about our products. The company s communication strategy also focuses on raising the general awareness of Ayurvedic remedies. Going forward, initiatives are planned to develop the Asav s portfolio through packaging up-gradation and a holistic new media campaign that focuses on promoting Ayurveda. The company also plans to restage Honitus Lozenges and the 9

12 Management Discussion and Analysis Churna portfolio through new packaging and communication. A lot of work is going into developing new products that match the conusmer requirements in the area of women s health, cough and cold, Gastro intestinal problems and medicated oils, which will be launched in the future. Foods Business Dabur s foods business deals primarily in fruit and vegetable based beverages. It also offers a range of cooking additives under the Hommade brand. As has been stated earlier, this business, which was operated as a wholly owned subsidiary is being merged with w.e.f 1 ST April 2007 subject to legal clearances. Dabur Foods sales increased by 26.7% from Rs crore in H to Rs crore in H The entire fruit and vegetable based beverages market is undergoing a complete churn. While the juice market is growing at a steady rate, there has been significant growth in the fruit drinks market and in terms of communication, the share of voice from fruit drinks has outstripped juices. With Real and Real Activ, Dabur s presence is primarily in the juices segment, where too there is a considerable competition from value players. In this milieu, real fruit juices recorded an impressive growth of 32% driven largely by the 50% growth in smaller 200 ml packs. Sales of real fruit juices were also enhanced significantly by the focused push of the products in modern trade outlets. The division expanded its Real Activ juice portfolio with the introduction of its first packaged vegetable juice in two flavours carrot and mixed vegetables. Recognising the growth of the drinks segment, Dabur had introduced its fruit drink Twist in the last quarter of Twist has received a good response with Rs.7.2 crore sales in H The company realises that a lot of effort needs to be channelled in a focused manner to compete in the fruit drinks market. Consequently, it is concentrating on the Twist brand in the drinks segment. Coolers range, that was introduced two years ago, will be merged into the Twist umbrella of products. The Hommade range has done well with culinary pastes recording a 37% growth and tomato puree growing by 27%. The company has consciously decided to reduce its focus on lower margin commodity exports. Consequently the value of these exports has reduced. The focus in future would be on branded and value added exports. International Business Division Dabur has been growing its International Business in a structured way. International markets continue to be bifurcated into focus markets, potential markets and opportunistic markets, and the company has adopted different business models and product mixes for different geographies. In H , International Business was the fastest growing division within Dabur with a growth of 31% and accounting for 15% of Dabur s overall consolidated revenues. 10

13 Half Yearly Financial Report Growth in the international business was primarily driven by GCC and African markets. While sales in the GCC region increased by 42.3%, Dabur Egypt recorded an impressive growth of 47%. The growth in Egypt was fuelled considerably by the launch of the Vatika hair cream range. The company has also restructured its Nigeria operations and sales here increased by 160% in H In Pakistan, Dabur s sales increased by 28%. Amongst developed economy markets, the prime growth was in the USA where sales increased by 64% driven mainly by the oral care private label business. Operations In the business environment of a rapidly expanding market with high levels of inflation, a key challenge for FMCG companies is to maintain operating costs. Dabur s entire business is backed by an efficient back-end comprising the entire supply chain from procurement to manufacturing and distribution. While the well-structured distribution system supports the marketing initiatives by penetrating markets and providing customers spread across geographies with the appropriate mix of products, the manufacturing and procurement operations are the key to providing quality products while maintaining efficient operating margins. Manufacturing For the domestic business, Dabur has 9 production facilities organised around two main factories at Baddi (Himachal Pradesh) and Pantnagar (Uttaranchal); and six support factories at Sahibabad (Uttar Pradesh), Jammu, Alwar, Katni, Narendrapur and Silvassa. The foods business is catered to by manufacturing facilities in Nepal, Newai (Rajasthan) and Siliguri (West Bengal). The company has increased capacity considerably for production of the Odomos range of products at its plant located at Silvassa. The company is also in the process of expanding its Chyawanprash facilities at Uttaranchal while the Hajmola manufacturing capacities have already been enhanced. The food plants at Newai and Nepal have had capacity expansions especially in smaller 200 ml slim packs. In terms of product development, the company successfully developed two new Hajmola variants, Gulabari cold cream and lotion, new range of surface cleaners and a new Packaging for Asavs. The company has not only got repeat orders for contract manufacturing of toothpowders in the UK market, but also got orders for developing new products in toothpowder and toothpaste. The international business has manufacturing facilities in UAE, Egypt, Nigeria, Nepal and Bangladesh. The company decided to invest around Rs.36 crore for a new factory at Ras Al Kheima, near Dubai. Construction work has commenced on this plant and the project is on schedule. The factory, which will initially produce hair oils, shampoo and toothpastes, is expected to begin commercial production by April Given the increase in demand, the company is expanding its manufacturing 11

14 Management Discussion and Analysis facilities in Egypt mainly for hair-care products. The company is also expanding its manufacturing base in Nigeria and has set up its own oral care capacity. Procurement On the whole, the first half of has been inflationary. While the WPI based inflation has decreased from 6% levels at the beginning of the year to 4% levels in September 2007, CPI based inflation has continued to stay at levels around or above 7%. The differences in the two inflations are largely due to different product weights in computing the index. Dabur faced inflationary pressure on two critical fronts. The price of primary commodities, which comprise a large chunk of Dabur s inputs, remained high. Globally oil prices increased steadily to touch US$ 90 a barrel in the beginning of October This meant inflation for all petroleum related downstream products including packaging and transportation. In such a scenario, the procurement department at Dabur played a critical role in managing input costs. This has been done by taking well-researched positions in the futures market and hedging their raw material exposure. Efforts were also made in going down the value chain and assuring supplies by better direct negotiations with sellers. Financials The abridged financials of Dabur (consolidated) including revenue, expenditure and profits are presented in Table 1. Table 1: Abridged profit and loss account for Dabur (Consolidated) (Rs. crore) H1, H1, Sales Other Income Total Operating Expenditure: EBIDTA EBIDTA % of Sales 17.5% 16.6% Interest and Financial Charges Depreciation and Amortisation Profit Before Tax (PBT) PBT % of Sales 15.1% 13.7% Taxes (including Fringe Benefit, Current and Deferred) Profit After Tax (PAT) PAT after minority Interest PAT % of Sales 13.2% 12.2% Basic EPS (in Rs. not annualized) Diluted EPS (in Rs. not annualized) Capital Employed Return on Capital Employed (ROCE) (annualized) 46% 46% 12

15 Half Yearly Financial Report The financial position of your Company continues to remain strong. Dabur recorded a 15.9% growth in sales from Rs crore in H to Rs crores in H During the same period, total operating expenditure growth has been restricted to 15.1% from Rs crore to Rs crore. This has resulted in a healthy 21.9% growth in operating profit (EBIDTA) from Rs crore in H to Rs crore during H Profits After Tax (PAT-post minority interests) has also grown by 25.1% from Rs crore in H to Rs crore in H What is creditable is that even in an inflationary year, the company has successfully increased operating profit margin (EBIDTA as a % of sales) from 16.6% in H to 17.5% in H This has been achieved on the back of operational efficiencies and an improved positioning of products in the market. Particularly encouraging has been the growth in PAT margin (PAT as a % of sales) from 12.2% in H to 13.2% in H The paid-up share capital of the company has increased from Rs Crores to Rs Crores on 30th September 2007 due to allotment of shares to employees on exercise of stock options by employees. The capital employed has also increased from Rs crore during H to Rs.729 crore in H Table 2 gives the financials of (standalone). The numbers do not include the merger of Dabur Foods Limited with DIL as government clearances are still awaited. Table 2: Abridged profit and loss account for Dabur India (Rs. crore)-stand alone H1, H1, Sales Other Income Total Expenditure: EBIDTA EBIDTA % of Sales 19.1% 17.7% Interest and Financial Charges Depreciation and Amortisation Profit Before Tax (PBT) PBT % of Sales 17.4% 15.6% Taxes (including Fringe Benefit, Current and Deferred) Profit After Tax (PAT) (After extra ordinary item) PAT % of Sales 15.1% 13.9% Basic EPS (in Rs. not annualized) Diluted EPS (in Rs. not annualized) Capital Employed Return on Capital Employed (ROCE) (annualized) 55.7% 58.6% Highlights Sales grew by 12.6% from Rs crore in H to Rs crore in the corresponding period of

16 Management Discussion and Analysis Operating profit (EBIDTA) increased by 21.7% from Rs crore in H to Rs crore in the corresponding period of EBIDTA margins increased from 17.7% in H to 19.1% in H Profit after tax (PAT) registered a growth of 22% from Rs crore in H to Rs crore in the corresponding period of Segment-wise reporting Table 3 gives the segment-wise results of the company. Table 3: Segment-wise revenues and profit for Dabur (Consolidated) (Rs. crore) H1, H1, Segment Revenue A. Consumer Care Business B. Consumer Health Business C. Foods Business D. Others Net Sales/Income from Operations Segment Results:- Profit/ loss (-) Before Tax and Interest A. Consumer Care Business B. Consumer Health Business C. Foods Business D. Others Sub Total The figures reported in the segment wise financials differ from the figures reported in the management discussion as in the segment wise financials overseas business is included under respective segments. Cautionary Statement Statements in this management discussion and analysis describing the Company s 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 Company s 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. 14

17 Auditors Report Half Yearly Report AUDITORS REPORT To the Board of Directors,, We have audited the attached condensed Balance Sheet of as at 30 th September, 2007 and its Profit & Loss Account and the Cash Flow Statement for the half year ended on that date attached thereto. These financial statements are the responsibility of the company s 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. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of audit. ii. 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. iii. The Condensed Balance Sheet and Condensed Profit and Loss Account dealt with by this report are in agreement with the books of accounts. iv. Condensed Balance Sheet, Condensed Profit & Loss Account and Cash Flow Statement have been prepared in due compliances of accounting standards referred to in sub section (3c) of Section 211 of Companies Act v. In our opinion and according to the information and explanations given to us, the said accounts read with other notes appearing in Schedule A 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 Condensed Balance Sheet, of the State of Affairs of the company as at 30 th September, 2007; b) In the case of Condensed Profit and Loss Account, of the Profit for the half year ended on that date; and c) In the case of cash flow statement, of the cash flows for the half year ended on that date. For G Basu & Co Chartered Accountants S.LAHIRI Partner New Delhi 24 th October, 2007 Membership No

18 Half Yearly Report Balance Sheet Condensed Balance Sheet as at 30th September, 2007 Rupees in lacs Sr. Particulars Schedule As at As at No I. Sources of Funds 1. Share Capital 8,640 8, Reserves and surplus 38,408 31, Loan funds (a) Secured loans 1,533 1,928 (b) Unsecured loans Deferred tax liability 2,314 2,264 Total 51,076 44,591 II. Application of Funds 1. Fixed Assets A-2.18 (a) Tangible fixed assets 40,124 39,119 (b) Intangible fixed assets 1,682 1,682 Gross Block (a+b) 41,806 40,801 Less: Depreciation 17,761 16,897 Net Block 24,045 23, Investments 19,988 14, Deferred Tax Assets Currents assets, loans and advances A-2.19 (a) Inventories 19,340 15,737 (b) Sundry debtors 7,337 6,098 (c) Cash and bank balances 5,519 5,025 (d) Loans and advances 17,760 12,782 Sub Total (4) 49,956 39, Less: Current liabilities and provisions A-2.20 (a) Liabilities 27,412 27,769 (b) Provisions 17,504 7,838 Sub Total (5) 44,916 35,607 Net current assets (4-5) 5,040 4, Miscellaneous expenditure to the extent 1,866 1,982 not written off or adjusted Total 51,076 44,591 Accounting policies & notes to accounts A For Dabur India Ltd. Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 24th October,

19 Profit and Loss Account Half Yearly Report Condensed Profit & Loss Account for the six months period ended 30th September, 2007 Rupees in lacs Sr. Particulars Schedule For the For the For the For the No. Quarter Quarter six months six months ended ended ended ended Sales A ,333 43,688 92,864 82,456 Less: Excise Duty ,776 1,644 Net Sales Other Income , Total 48,057 43,076 92,211 81, (Increase)/Decrease in Stock in Trade A (4,094) (2,356) (7,618) 4 Consumption of Materials A ,815 16,472 34,292 29,900 5 Purchase of Finished Goods 3,530 6,702 8,131 12,613 6 Salaries, wages and other staff costs 3,382 3,040 6,539 5,960 7 Advertising & Sales Promotions 4,684 3,590 9,630 8,882 8 Other expenditure A ,845 8,994 18,250 17,402 9 Operating cash profit before interest & Tax 10,588 8,372 17,725 14, Interest Depreciation , Miscellaneous expendiutre written off Profit from ordinary activities before tax 9,826 7,538 16,122 12, Net Profit before Tax 9,826 7,538 16,122 12, Provision for Taxation: - Current 1, ,794 1,495 - Fringe Benefit Deferred Net Profit after Tax for the period 8,581 6,470 13,987 11, Extraordinary item Net Profit after Tax and Extraordinary item 8,581 6,881 13,987 11, Earning per share: 1. Basic earning per share (in Rs) Before Extraordinary item Diluted earning per share (in Rs) Before Extraordinary item Basic earning per share (in Rs) After Extraordinary item Diluted earning per share (in Rs) After Extraordinary item No of Shares ( Basic) 863,959, ,750, ,635, ,467,926 No of Shares ( Diluted) 869,097, ,780, ,063, ,740,767 Accounting policies & notes to accounts For Dabur India Ltd. A As per our report of even date attached Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 24th October,

20 Half Yearly Report Cash Flow Statement Cash Flow Statement (Pursuant to AS - 3 issued by ICAI) Rupees in lacs Particulars For the period ended For the period ended 30th September, th September, 2006 A. Cash flow from operating activities Net Profit Before Tax And Extraordinary Items 16,122 13,311 Add: Depreciation 1, Provision For Contigent Liability Loss On Sale Of Fixed Assets Miscellenous Exp. Written Off Miscellenous Exp. Written Off (Included In Director Remun Interest ,790 2,067 17,912 15,378 Less: Profit On Sale Of Investment Profit On Sale Of Assets Operating Profit Before Working Capital Changes 17,550 14,599 Working Capital Changes Increase/(Decrease) In Inventories 3,603 8,903 Increase/(Decrease) In Debtors 1,326 3,271 Decrease/(Increase) In Trade Payables 772 (3,214) Increase/(Decrease) In Working Capital 5,701 8,960 Cash Generated From Operating Activities 11,849 5,640 Interest Paid Tax Paid 1,999 1,523 Corporate Tax On Dividend ,237 2,587 Cash Used(-)/(+)Generated For Operating Activities (A) 9,612 3,052 18

21 Cash Flow Statement Half Yearly Report Rupees in lacs Particulars For the period ended For the period ended 30th September, th September, 2006 B. Cash Flow From Investing Activities Purchase Of Fixed Assets (1,336) (1,587) Sale Of Fixed Assets Purchases Of Investment Including Investment In Subsidiaries (118,104) (44,642) Sale Of Investments 113,006 46,068 Cash Used(-)/(+)Generated For Investing Activities (B) (6,357) 359 C. Cash Flow From Financing Activities Proceeds From Share Capital & Premium 11 7 Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities (270) (376) Repayment(-)/Proceeds(+) From Short Term Loans (125) (573) Repayment (-)/Proceeds(+) From Deposits (3) 1 Repayment(-)/Proceeds(+) From Other Unsecured Loans 100 1,073 Payment Of Other Advances (2,474) 2,398 Payment Of Dividend 0 (5,690) Cash Used(-)/+(Generated) In Financing Activities (C) (2,761) (3,159) Net Increase(+)/Decrease (-) In Cash And Cash Equivalents (A+B+C) Cash And Cash Equivalents Opening Balance 5,025 4,445 Cash And Cash Equivalents Closing Balance 5,519 4,697 For Dabur India Ltd. Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 24th October,

22 Half Yearly Report Schedules SCHEDULE A: Accounting Policies & Notes to Accounts 1. ACCOUNTING POLICIES 1.1 Basis of Preparation of Financial Statements Accompanying financial statements are prepared in terms of Generally Accepted Accounting Principles ( GAAP ) as practiced in India which includes, inter alia, due adherence of mandatory accounting standards issued by the Institute of Chartered Accountants of India, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. Accounting policies have been consistently applied from period to period. 1.2 Significant Accounting Policies a) The Company has applied the same accounting policies in this half yearly financial statements as have been applied in its annual financial statements for the year ended 31 st March 2007 except inventory valuation. b) Preparation of Balance Sheet, Profit & Loss Account, Cash Flow Statement including disclosures made therefore in notes to accounts and condensation of Balance Sheet and Profit and Loss Account have been made in terms of AS 25 issued by ICAI. 2. NOTES TO ACCOUNTS 2.1 All amounts in the financial statements are presented in Rupees Lacs, except for those specifically stated otherwise Contingent Liabilities: i. In respect of claims against the company not acknowledged as debts towards: a) civil suits filed against the company Rs. 261 (previous year Rs. 261). b) claims by employees Rs. 0 (previous year Rs. 0). ii. In respect of Bank Guarantees executed Rs. 177 (previous year Rs.188). iii. In respect of Sales Tax under appeal Rs. 796 (previous year Rs. 860). iv. In respect of excise duty disputes pending with various judicial authorities Rs.1867 (previous year Rs. 1767). v. In respect of Corporate Guarantees given by the Company Rs (previous year Rs ) vi. In respect of Income Tax under appeal Rs. 371 (previous year Rs. 424). vii. Estimated amount of contract remaining to be executed on Capital Account Rs (previous year Rs. 492). viii. In respect of letters of Credit Rs. 71 ( previous year Rs. 81) Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 2.2 of the above Information pursuant to AS 29 issued by ICAI i) Existing provision relates to disputed liability of Rs , Rs and Rs towards liabilities on account of VAT, Sales Tax and Entry Tax respectively carried forward from previous year in view of absence of any additional provision therefore during the period. ii) Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCT s, if mature, are expected to be in succeeding financial year. iii) Provisions are made herein for medium risk oriented issues as a measure of abundant precaution. iv) Brief particulars of provision under AS 29. Nature of liabilities Particular of dispute Amount Forum under the dispute is pending VAT Short Payment of VAT II appeal Filed Sales Tax Classification of Lal Dant Manjan Filed review application with High Court Sales Tax Classification of Gulabari 0.74 Appeal Filed before the D.C. Appeal Sales Tax Excemption Forms from Dealers 1.08 IInd Appeal filed before D. C. Appeal Entry Tax Entry Tax on Car 0.29 Appeal pending before D.C. v) Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 5 (a) above. 20

23 Schedules Half Yearly Report SCHEDULE A: Accounting Policies & Notes to Accounts 2.3 Related Party Disclosures and Transactions Related parties where control exists: Dabur Foods Ltd. H&B Stores Ltd. Dabur U.K. Ltd. Dabur Egypt Ltd. Dabur International Limited Weikfield International (UAE) LLC Asian Consumer Care Private Limited Dabur Nepal Private Limited Asian Consumer Care Pakistan Limited African Consumer Care Limited Naturelle LLC Associate/Joint Ventures: Other related parties in transaction with the company Key Management Personnel and relatives of such personnel: Director Relatives Pradip Burman P D Narang Sunil Duggal (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) (Foreign Subsidiary Company) (Foreign Subsidiary Company) Enterprises over which Key Management Personnel and their relatives are able to exercise significant influence: Welltime Housing & Finance Pvt Ltd An Enterprise owned by any Director (KMP) of : Welltime Housing & Finance Ltd Related Party Transactions: NIL SUBSIDIARY FELLOW ASSOCIATES KEY RELATIVES TOTAL OUTSTANDING SUBSIDIARY MANAGEMENT OF KEY AS ON PERSONNEL MANAGEMENT PERSONNEL Purchases of Goods , , (53.67) (3,871.72) (3,925.39) (205.10) Sale of Goods (455.07) (511.29) (966.36) (456.72) Equity Conribution (-) - Loan Given 5, , , (1,700.00) (1,700.00) (1,087.00) Repayment of Loans Given 3, , (Instl.Recd) (3,700.00) (50.00) (3,750.00) Rent Paid (-) (-) (2.00) (18.00) (20.00) Interest Recd On Loans Given (52.00) (52.00) Remuneration/Exg./Pension (197.79) (46.00) (243.79) Guarantees & collaterals given 2, , , , (6,300.00) (3,365.00) (9,665.00) (4,102.40) Employee Stock Option Scheme (15.06) (0.47) - (404.76) (420.32) (Figures in brackets from column A to F relates to previous corresponding period and that of G relate to year ended on ). 21

24 Half Yearly Report Schedules 2.5 Since external and internal sources of information do not provide for any indication for impairment of fixed assets based on cash generating unit concept, recoverable values of assets have not been determined for the period as authorized by clause 6, AS-28 issued by ICAI. 2.6 The company has provided for deferred tax liability on estimated basis Board of directors has declared interim Re.0.75 i.e., 75% (previous period Rs.1.00 i.e, 100%) for the period, the amount of interim dividend working out to Rs (previous period Rs. 6546) including incidence of tax thereon. 2.8 During the period the company has allotted 11,22,980 (previous period ) equity share of Re 1/- each to the employees upon their exercise of stock option (previous year ) equity shares of Re.1/- each are outstanding under Employees Stock Option Scheme as on 30 th September, Investment at half-year end includes Rs (previous year Rs. 7962) towards current investment carried at lower of cost and market value. Remaining investments, being long term in nature, are valued as per disclosure made in preceding annual financial statement During the period company has invested Rs in current investment and Rs. 305 in new Subsidiary H&B Stores Ltd. as long term investment During the period company has sold current investments amounting to Rs and long term investment amounting to During the period, the company has paid off Rs. 270 against PICUP trade tax loan scheme under the head secured loan During the period, the company has granted unsecured advances of the nature of loan aggregating Rs at prevailing market interest rate to two subsidiaries Information (to the extent applicable) pursuant to AS 19 issued by ICAI: - The future minimum lease payment under non-cancelable operating lease Not later than 1 year Later than 1 year not later than 5 years 9 8 Later than 5 years Nil Nil 2.16 Liabilities in respect of retirement benefits to employees, which includes gratuity, leave salary and Superannuation fund have been provided on estimated basis. Liability on account of employee related dues in terms of AS 15 (as revised) including annual accretion arising on account of additional package selectively provided during current year will be accounted for at year end Information pursuant to AS 24 on discontinued operations: Particulars Hair Oil MSY Unit Baddi Baddi 1 Discontinued since March, 04 Nov, Segment the operation of the FMCG FMCG Unit relates to in financial statement 3 Carrying amount of total assets (33) (28) 4 Carrying amount of total liabilities 4 0 (4) (0) 5 Profit from ordinary activities 0 0 (0) (0) 6 Income Tax expenses 0 0 (0) (0) 7 Gain on disposal of assets 0 0 (0) (0) 8 Cash flow from discontinued operations: Operating activities 0 0 (0) (0) Investing Activities 0 0 (0) (0) Financial Activities 0 0 (0) (0) Note: I. Figures in brackets are for previous year II. Part of fixed assets belonging to discontinued operations under reference has been used for new plants set up in relevant premises. Such assets have been left out of the purview of 3 above. 22

25 Schedules Half Yearly Report Fixed Assets Particulars Gross Block Depreciation Net Block As at Additions Adjustment As at As at for the Adjustment As at As at As at period Freehold land Leasehold land Building,roads & culvert 12, ,664 3, ,653 9,010 9,102 Plant & machinery 17, ,301 8, ,948 9,353 9,224 Vehicles 1, Furniture & off equipment 2, ,888 1, ,715 1,173 1,217 Computers 3, ,290 2, ,271 1, Patents 1, , Live stock Computer Software Capital work in progress Total 40,801 1, ,806 16,897 1, ,761 24,045 23,904 Previous year 38,157 6,377 3,733 40,801 15,161 2, ,897 23,904 22, Current Assets, Loans and Advances Particulars As at As at Current assets Inventories: 19,340 15,737 - Raw materials 4,824 4,135 - Packing materials, stores and spares 3,034 2,477 - Stock in process 1,981 2,517 - Finished goods 9,501 6,608 Sundry debtors (unsecured) -net of doubtful debtors 7,337 6,098 Cash and bank balances 5,519 5,025 Loans and advances (unsecured, considered good) 17,760 12,782 Loans & advances to subsidiaries 3,272 1,000 Security deposit with various authorities 1, Advance payment of tax 10,133 8,133 Advances to suppliers 1, Advances to employees Balance with excise authorities 1,004 1,124 Other advances recoverable in cash or in kind or for value to be received 23

26 Half Yearly Report Schedules 2.20 Current Liabilities and Provisions Particulars As at As at Current liabilities: 27,412 27,769 Acceptance 3,676 6,723 Creditors for goods 5,833 5,679 Creditors for expenses and other liabilities 17,269 14,645 Advances from customers Interest accrued but not due on loans 0 0 Deposits - others 2 4 Investor education and protection fund to be credited by: - unpaid dividend unpaid matured public deposit interest accrued on public deposit 5 5 Provisions : 17,504 7,838 For dividend 6,480 0 For corporate tax on proposed dividend- 1,101 0 For staff welfare 0 0 For leave salary 0 0 For others For taxation 9,834 7, Sales Particulars For the six For the six For the Quarter For the Quarter months months ended ended ended ended Sales 48,333 43,688 92,864 82,456 Domestic sales less returns 46,537 41,111 89,227 79,057 Export sales 1,796 2,577 3,637 3, Increase/Decrease in Stock in trade) Adjustment of stocks in process and finished goods: - Opening stock Stock in process 2,373 2,452 2, Finished products 9,321 7,979 6,608 6,070 - Closing stock Stock in process 1,980 2,065 1,980 2,065 Finished products 9,501 12,460 9,501 12,460 Increase(-)/decrease in stock in 213-4,094-2,356-7,618 process and finished goods 24

27 Schedules Half Yearly Report Particulars For the For the For the For the Quarter Quarter six months six months ended ended ended ended Consumption of Materials Raw material consumed 9,945 10,220 20,324 18,257 i) Opening stock 5,224 4,219 4,135 3,885 ii) Add: purchases 9,545 10,383 21,013 18,754 iii) Less: closing stock 4,824 4,382 4,824 4,382 Packing material consumed 6,870 6,252 13,968 11,643 i) Opening stock 2,959 2,545 2,472 2,161 ii) Add: purchases 6,938 6,898 14,523 12,673 iii) Less: closing stock 3,027 3,191 3,027 3,191 Total 16,815 16,472 34,292 29, Other Expenditure Power and fuel Stores & spares consumed Processing charges Repairs & maintenance Rent Rates and taxes Insurance Sales tax 3,857 3,376 7,592 6,995 Freight and forwarding charges 1,380 1,182 2,724 2,423 Commission, discount and rebate Travel and conveyance Legal and professional Telephone, fax expenses Security expenses General Expenses 1,034 1,294 1,872 2,003 Directors fee Auditors remuneration Donation Contribution to scientific research expenses Provision for Contingent Liability Loss on sale of Fixed Assets Bad Debts Total 8,845 8,994 18,250 17,402 25

28 Half Yearly Report Schedules 2.25 Information pursuant to AS - 17 issued by ICAI: Particulars Consumer Care Consumer Health Others Unallocated Dabur India LTD. Business Business Current Previous Current Previous Current Previous Current Previous Current Previous Period Period Period Period Period Period Period Period Period Period REVENUE External Sales 83,037 72,392 7,632 7,930 2,195 2,134 92,864 82,456 Inter-segment sales Total Revenue 83,037 2,195 2,134 92,864 82,456 RESULT Segment result 21,770 18,507 1,932 1, ,845 20,518 Unallocated corporate expenses 7,485 7,361 7,485 7,361 Operating profit 21,770 18,507 1,932 1, ,485-7,361 16,360 13,157 Interest expense (Net Of Interest Income) Income Tax(Current + Deferred) 2,135 1,846 2,135 1,846 Profit from ordinary activities 21,770 18,507 1,932 1, ,858-9,464 13,987 11,054 Exceptional item Net profit 21,770 18,507 1,932 1, ,858-9,875 13,987 10,643 OTHER INFORMATION As on As on As on As on As on As on As on As on As on As on 30/9/07 31/3/07 30/9/07 31/3/07 30/9/07 31/3/07 30/9/07 31/3/07 30/9/07 31/3/06 Segment assets 31,256 27,063 7,795 6,749 3,647 3,158 42,698 36,970 Unallocated corporate assets 6,512 5,639 6,512 5,639 Total assets 31,256 27,063 7,795 6,749 3,647 3,158 6,512 5,639 49,210 42,609 Segment liabilities 2,722 2, ,542 3,757 Unallocated corporate liabilities Total liabilities 2,722 2, ,028 4,272 Capiltal Employed 28,534 24,176 7,075 5,986 3,546 3,051 6,026 5,124 45,182 38,337 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 (82456), the export sales is of Rs ( 3399 ) and domestic sale is ( ) 2.26 a. Pension of relative of deceased director Rs (previous period 15.75). b. Pension of retired directors Rs l ( previous period 30.65) 2.27 Exchange Loss works out to Rs.138 net of gain of Rs. 170 which has been Debited to Profit & Loss account. Previous period Exchange Gain worked out to Rs net to exchange loss Quarterly figures appearing in condensed Profit & Loss Account and break-up there for in Schedule A are not based on audited figures Figures of earlier period/year have been rearranged in terms of current period grouping as and when necessary. For Dabur India Ltd. Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. New Delhi 24th October, 2007 As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner 26

29 Auditors Report to Consolidated Financials Half Yearly Report AUDITORS REPORT To the Board of Directors,, We have audited the attached condensed consolidated balance sheet of group, as at 30 th September 2007 and also the condensed consolidated profit and loss account and the consolidated cash flow statement for the half 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 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.9939 lacs as at 30 th September, 2007, the total profit of Rs lacs and cash flows amounting to Rs lacs for the half year then ended. 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 condensed 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 and AS-25 on Interim Financial reporting 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 condensed 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 condensed consolidated balance sheet, of the state of affairs of Dabur India Ltd. group as at 30 th September, b) In the case of the condensed consolidated profit and loss account, of the profit of Dabur India Ltd. group for the half 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 half year ended on that date. For G Basu & Co Chartered Accountants S.LAHIRI Partner New Delhi 24 th October, 2007 Membership No

30 Half Yearly Report Consolidated Balance Sheet Condensed Consolidated Balance Sheet as at 30th September, 2007 Rupees in lacs Sr. Particulars Schedule As at As at No I. Sources of Funds 1. Share Capital 8,640 8, Reserves and surplus 47,754 39, Minority interests Loan funds (a) Secured loans 11,033 12,038 (b) Unsecured loans 2,281 3, Deferred tax liability 2,665 2,590 Total 72,965 66,983 II. Application of Funds 1. Fixed Assets A-2.20 (a) Tangible fixed assets 63,054 60,039 (b) Intangible fixed assets 1,682 1,682 Gross Block (a+b) 64,736 61,721 Less: Depreciation 25,235 23,807 Net Block 39,501 37, Investments 13,368 8, Deferred Tax Assets Currents assets, loans and advances A-2.21 (a) Inventories 30,685 25,711 (b) Sundry debtors 15,000 14,197 (c) Cash and bank balances 6,694 6,067 (d) Loans and advances 22,484 18,071 Sub Total (4) 74,863 64, Less: Current liabilities and provisions A-2.22 (a) Liabilities 38,128 36,152 (b) Provisions 18,657 9,023 Sub Total (5) 56,785 45,174 Net current assets (4-5) 18,078 18, Miscellaneous expenditure to the extent 1,873 1,982 not written off or adjusted Total 72,965 66,983 Accounting policies & notes to accounts A For Dabur India Ltd. Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. New Delhi 24th October, 2007 As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner 28

31 Consolidated Profit and Loss Account Half Yearly Report Condensed Consolidated Profit & Loss Account for the six months period ended 30th September, 2007 Rupees in lacs Sr. Particulars Schedule For the For the No. six months six months ended ended Sales A , ,964 Less: Excise Duty 1,813 1,658 Net Sales 118, ,306 2 Other Income 1,533 1,144 Total 120, , (Increase)/Decrease in Stock in Trade A-2.24 (3,674) (9,516) 4 Consumption of Materials A ,805 41,248 5 Purchase of Finished Goods 7,770 12,262 6 Salaries, wages and other staff costs 9,366 8,347 7 Advertising & Sales Promotions 13,564 11,777 8 Other expenditure A ,353 22,063 9 Operating cash profit before interest & Tax 21,056 17, Interest Depreciation 1,734 1, Miscellaneous expendiutre written off Profit from ordinary activities before tax 18,174 14, Net Profit before Tax 18,174 14, Provision for Taxation: - Current 1,983 1,649 - Fringe Benefit Deferred Net Profit after Tax 15,784 12, Extraordinary item Net Profit after Tax and Extraordinary item 15,784 12, Minority Interest (96) (29) 20 Net Profit for the period 15,880 12, Earning per share: 1. Basic earning per share (in Rs) Before Extraordinary item Diluted earning per share (in Rs) Before Extraordinary item Basic earning per share (in Rs) After Extraordinary item Diluted earning per share (in Rs) After Extraordinary item No of Shares ( Basic) 863,635, ,467, No of Shares ( Diluted) 869,063, ,740, Accounting policies & notes to accounts A For Dabur India Ltd. Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. New Delhi 24th October, 2007 As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner 29

32 Half Yearly Report Consolidated Cash Flow Statement Statement of Consolidated Cash Flow (Pursuant to AS - 3 issued by ICAI) Rupees in lacs Particulars For the period ended For the period ended 30th Sept., th Sept., 2006 A. Cash Flow From Operating Activities Net Profit Before Tax And Extraordinary Items 18,174 14,696 Add: Depreciation 1,734 1,612 Loss On Sale Of Fixed Assets Provision For Contongent Liabilty Miscellenous Exp. Written Off Miscellenous Exp. Written Off( Included In Director Remun Interest ,075 3,341 21,249 18,037 Less: Dividend Received 0 0 Interest Received 1 0 Profit On Sale Of Investment Profit On Sale Of Assets Operating Profit Before Working Capital Changes 20,886 17,257 Working Capital Changes Increase/(Decrease) In Inventories 4,975 12,107 Increase/(Decrease) In Debtors 703 7,048 Decrease/(Increase) In Trade Payables ,655 Increase/(Decrease) In Working Capital 4,963 12,500 Cash Generated From Operating Activities 15,923 4,757 Interest Paid Tax Paid 2,091 1,435 Corporate Tax On Dividend 804 2,959 3,179 Cash Used(-)/(+)Generated For Operating Activities (A) 12,964 1,578 B. Cash Flow From Investing Activities Purchase Of Fixed Assets -3,416-2,184 Sale Of Fixed Assets Purchases Of Investment -118,304-44,642 Sale Of Investments 113,361 46,085 Dividend Received 0 0 Cash Used(-)/(+)Generated For Investing Activities (B) -8, C. Cash Flow From Financing Activities Proceeds From Share Capital & Premium 11 8 Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities Repayment(-)/Proceeds(+) From Short Term Loans ,484 Repayment (-)/Proceeds(+) From Deposits 0 46 Repayment(-)/Proceeds(+) From Other Unsecured Loans -1, Payment Of Other Advances -1, Payment Of Dividend 0-5,776 Cash Used(-)/+(Generated) In Financing Activities (C) -4,169-1,185 Net Increase(+)/Decrease (-) In Cash And Cash Equivalents (A+B+C) Cash And Cash Equivalents Opening Balance 6,067 5,117 Cash And Cash Equivalents Closing Balance 6,694 5,330 For Dabur India Ltd. Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. New Delhi 24th October, 2007 As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner 30

33 Consolidated Cash Flow Statement Half Yearly Report Schedule A: Accounting Policies & Notes to Accounts 1. ACCOUNTING POLICIES 1.1 Body Corporate under Consolidation The Consolidated Financial Statement (CFS) relates to (the parent company) and Dabur Foods Ltd. and H&B Stores Ltd (both wholly owned subsidiary company incorporated in India), Dabur International Ltd., (wholly owned body corporate incorporated in Isle of MAN), Dabur (UK) Ltd. (a wholly owned subsidiary body corporate incorporated in British Virgin Island 100% stake wherein is held by Dabur International Ltd.), Dabur Nepal Pvt. Ltd. (a subsidiary body corporate incorporated in Nepal, 97.5% stake wherein is held by Dabur International Ltd.), Dabur Egypt Ltd. (a wholly owned subsidiary body corporate incorporated in Egypt, 76% & 24% of stake wherein are held by Dabur (U.K.) Ltd. and Dabur International Ltd. respectively), Asian Consumercare Pvt. Ltd. (a subsidiary body corporate incorporated in Bangladesh, 76% stake wherein is held by Dabur International Ltd.), Weikfield International (UAE) (a subsidiary body corporate incorporated in UAE, 38.41% stake wherein is held by Dabur International Ltd. which has control of composition of board of directors of the former being raison d etre of subsidiary status) African Consumer Care Ltd. (a subsidiary body corporate incorporated in Nigeria, 90% stake wherein is held by Dabur International Ltd & 10% stake held by Dabur (UK) Ltd, Asian Consumer Care Pakistan Ltd (a wholly owned subsidiary body corporate incorporated in Pakistan, 100% stake where in is held by Dabur International Ltd) and Naturelle LLC (a subsidiary body corporate incorporated in Emirate of RAS AI Khaimah 49% stake wherein is held by Dabur International Ltd, which has control the composition of board of directors of the former being raison d etre of subsidiary status. 1.2 Significant Accounting Policies a) Accounting policies and principles of consolidation followed herein remain in terms of same applied in consolidated financial statements for the year ended 31 st March b) Preparation of CFS including disclosure made therefore and condensation of Balance Sheet and Profit and Loss Account have been made in terms of requirement of AS 25 issued by ICAI. 2. NOTES TO ACCOUNTS 2.1. All amounts in the financial statements are presented in Rupees Lacs, except for those specifically stated otherwise. 2.2 Contingent Liabilities: I. In respect of claims not acknowledged as debts towards: a) civil suits filed by others Rs. 261 (previous year Rs. 262) b) claims by employees Rs..01 (previous year Rs..01). II. In respect of letters of credit Rs (previous year Rs. 1963). III. In respect of Bank Guarantees executed Rs (previous year Rs. 2116). IV. In respect of Sales Tax under appeal Rs.1012 (previous year Rs. 1077). V. In respect of excise duty disputes pending with various judicial authorities Rs (previous year Rs. 1767). VI. In respect of Corporate Guarantees furnished Rs (previous year Rs ). VII. In respect of Income Tax under appeal Rs. 409 (previous year Rs. 462). VIII. Estimated amount of contract remaining to be executed on Capital Account (net of advances) Rs (previous year Rs. 612). Considering the remote possibility of outflow in respect of above no provision is deemed necessary as envisaged in AS 29 issued by ICAI. Information pursuant to AS 29 issued by ICAI Existing provision relates to disputed liability of Rs , Rs and Rs towards liabilities on account of VAT, Sales Tax and Entry Tax respectively carried forward from previous year in view of absence of any additional provision therefore during the period. ii) Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCT s, if mature, are expected to be in succeeding financial year. 31

34 Half Yearly Report Schedules to Consolidated Financials iii) Provisions are made herein for medium risk oriented issues as a measure of abundant precaution. iv) Brief particulars of provision under AS 29 Nature of liabilities Particular of dispute Amount Forum under the dispute is pending VAT Short Payment of VAT II appeal Filed Sales Tax Classification of Lal Dant Manjan Filed review application with High Court Sales Tax Classification of Gulabari 0.74 Appeal Filed before the D.C. Appeal Sales Tax Excemption Forms from Dealers 1.08 IInd Appeal filed before D.C. Appeal Entry Tax Entry Tax on Car 0.29 Appeal pending before D.C. v) Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 5 (a) above. 2.3 Related Party Disclosures: Related parties where control exists: Associate/Joint Ventures: ACI Ltd. Bangladesh Weikfield Product Co. Pvt. Ltd Mr. Rukma Rana, joint venture partner in Dabur Nepal Pvt. Ltd RAK Investment Authority Other related parties in transaction with the body Corporates under Consolidation Key Management Personnel and relatives of such personnel: Director Relatives Pradip Burman Amit Burman Asha Burman P D Narang - Sunil Duggal - Siddharth Burman Saket Burman Rukma Rana - Mohit Burman - Chetan Burman Enterprises over which Key Management Personnel and their relatives are able to exercise significant influence: Welltime Housing & Finance Ltd. 2.4 Related Party transactions Related Party Transactions as on Associates Key Relatives of Total Outstanding Management Key Mgt. as on Personnel Personnel Sale of Goods (298) (-) (-) (298) (-) Rent Paid (9) (18) (-) (27) (-) Interest Paid (4) (-) - (4) - Repayment of Loans Given(Instl.Recd) (-) (-) (-) Remuneration/Exg./Pension (-) (482) (46) (528) (-) Royalty Paid (6) - - (6) (-) Management Fees (-) (-) (-) (-) - Other Services (-) (-) (-) (-) (-) 32

35 Schedules to Consolidated Financials Half Yearly Report Since external and internal sources of information do not provide for any indication for impairment of fixed assets for parent company based on cash generating unit concept, recoverable values of assets have not been determined for the period as authorized by clause 6, AS-28 issued by ICAI. Regarding other companies/body corporate under consolidation, the exercise of test of impairment conducted by management revealed absence of any provisioning exigency in this connections. 2.6 Deferred tax liability has been provided on estimated basis. 2.7 Liabilities in respect of retirement benefits to employees, which includes gratuity, leave salary and superannuation fund, have been provided for on estimated basis by body corporate. 2.8 Liability on account of employee related dues in terms of AS 15 (as revised) including annual accretion arising on account of additional package selectively provided during current year will be accounted for at year end. 2.9 Board of Directors of parent company has declared interim Re i.e. 75% (previous period Rs i.e. 100%) for the period, the amount of interim dividend working out to Rs (previous period Rs. 6546) including incidence of tax thereon During the period the parent company has allotted 11,22,980 (previous period ) equity share of Re. 1/- each to the employees upon their exercise of stock option (previous year ) equity shares of Re. 1/- each are outstanding under Employees Stock Option Scheme as on 30 th September, Investment at half-year end includes Rs (previous year Rs. 7962) towards current investment carried at lower of cost and market value. Remaining investments, being long term in nature, are valued as per disclosure made in preceding annual financial statement 2.13 During the period, Rs has been invested in current investment During the period, sale of current investments amounted to Rs and long term investment amounted to During the period, commercial paper amounting to Rs has been availed Information (to the extent applicable) pursuant to AS 19 issued by ICAI:- The future minimum lease payment under non-cancelable operating lease Not later than 1 year Later than 1 year not later than 5 years 9 8 Later than 5 years Nil Nil 33

36 Half Yearly Report Consolidated Balance Sheet Schedule A: Accounting Policies & Notes to Accounts 2.17 Information pursuant to AS 24 on discontinued operations: Particulars Hair Oil Baddi MSY Unit Baddi 1 2 Discontinued since Segment the operation of the March, 04 FMCG Nov, 2000 FMCG Unit relates to in financial statement 3 Carrying amount of total assets Carrying amount of total liabilities (33.37) 4.21 (28.35) 0.01 (4.21) (0.01) 5 Profit from ordinary activities (0.00) (0.00) 6 Income Tax expenses 0.00 (0.00) 0.00 (0.00) 7 Gain on disposal of assets (0.00) (0.00) 8 Cash flow from discontinued operations: Operating activities (0.00) (0.00) Investing Activities (0.00) (0.00) Financial Activities 0.00 (0.00) 0.00 (0.00) Note: 1. Figures in brackets are for previous year 2. Part of fixed assets belonging to discontinued operations under reference has been used for new plants set up in relevant premises. Such assets have been left out of the purview of 3 above Repayment of debt during the period Loan from Amount of repayment PICKUP (Secured) 270 GE Caps (Secured) 195 EXIM Bank (Unsecured) 1500 Canara Bank (Unsecured) 1000 Deferred payment credit (Unsecured) 49 North South Investment (Unsecured) Information purusant to As - 17 issued by ICAI. Particulars Consumer Care Consumer Health Foods Others Unallocated Total Consolidated Business Business Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Period Period Period Period Period Period Period Period Period Period Period Period REVENUE External Sales Inter-segment sales Total Revenue Segment result Unallocated corporate expenses Operating profit (8037) (7728) Interest expense (Net Of Interest Income) Income Tax(Current+Deferred) Profit from ordinary activities (11318) (10722) Exceptional item Minority Interest Net profit (11222) (11104)

37 Consolidated Profit and Loss Account Half Yearly Report OTHER INFORMATION As on As on As on As on As on As on As on As on As on As on As on As on 30/09/07 31/03/07 30/09/07 31/03/07 30/09/07 31/03/07 30/09/07 31/03/07 30/09/07 31/03/07 30/09/07 31/03/07 Segment assets 40,360 37,278 7,795 6,749 11,474 11,405 3,183 2,910 62,812 58,342 Unallocated corporate assets 8,280 6,660 8,280 6,660 Total assets 40,360 37,278 7,795 6,749 11,474 11,405 3,183 2,910 8,280 6,660 71,092 65,002 Segment liabilities 7,935 9, ,313 6, ,105 16,191 Unallocated corporate liabilities 2,466 2,836 2,466 2,836 Total liabilities 7,935 9, ,313 6, ,466 2,836 16,571 19,027 Capiltal Employed 32,425 28,106 7,075 5,986 6,161 5,306 3,046 2,753 5,814 3,824 54,521 45,975 Depreciation ,734 1,612 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 (103964)., the export sales is of Rs ( 10690) and domestic sale is ( 93274) 2.20 Fixed Assets Particulars Gross Block Depreciation Net Block As at Additions Adjustment As at As at for the Adjustment As at As at As at period Freehold land Leasehold land Building,roads & culvert Plant & machinery Vehicles Furniture & off equipment Computers Patents * Live stock Capital work in progress Goodwill * Software* Total Previous Year * Intangible Assets 2.21 Current Assets, Loans and Advances Particulars As at As at Current assets Inventories: Raw materials Packing materials, stores and spares Recoverable value from impaired fixed assets Stock in process Finished goods Sundry debtors (unsecured) Cash and bank balances Loans and advances (unsecured, considered good, unless stated otherwise) 35

38 Half Yearly Report Consolidated Balance Sheet 2.21 Current Assets, Loans and Advances (Contd.) Particulars As at As at Loans & advances to subsidiaries 0 0 Loans & advances to others 0 0 Security deposit with various authorities Advance payment of tax Advances to suppliers Advances to employees Balance with excise authorities Other advances recoverable in cash or in kind or for value to be received 2.22 Current Liabilities and Provisions Current liabilities: Acceptance Amount due to SSI units (goods) 0 0 Creditors for goods Creditors for expenses and other liabilities Advances from customers Interest accrued but not due on loans Deposits - others 2 4 Investor education and protection fund to be credited by: - unpaid dividend unpaid matured public deposit interest accrued on public deposit 5 5 Provisions : For dividend For corporate tax on proposed dividend For Housing, Bonus & Gratuity and Other Welfares For Others For leave salary For taxation Sales Rupees in lacs Particulars For the six months For the six months ended ended Sales Domestic sales less returns Export sales

39 Consolidated Profit and Loss Account Half Yearly Report Rupees in lacs Particulars For the For the six months six months ended ended (Increase)/decrease in stock in trade 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 and finished goods Consumption of Materials Raw material consumed i) Opening stock ii) Add: purchases iii) Less: closing stock Packing material consumed i) Opening stock ii) Add: purchases iii) Less: closing stock Total Other expenditure Power and fuel Stores & spares consumed Repairs & maintenance Processing charges Rent Rates and taxes Insurance Sales tax Freight and forwarding charges Commission, discount and rebate Travel and conveyance Legal and professional Telephone, fax expenses Security expenses General Expenses Directors fee 6 5 Auditors remuneration Donation Contribution to scientific research expenses Bad debts Provision for Contingent Liabilwity Loss on sale of Investment 0 1 Loss on sale of Fixed Assets Total

40 Half Yearly Report Consolidated Balance Sheet 2.27 Figures of earlier period/year have been rearranged in terms of current period grouping as and when necessary. For Dabur India Ltd. Dr. Anand C. Burman, Chairman P.D. Narang, Director Sunil Duggal, Director A.K. Jain, GM (Fin.) & Co. Secy. As per our report of even date attached For G. Basu & Co. Chartered Accountants S. Lahiri Partner New Delhi 24th October,

41 Half Yearly Report NOTES 39

42 Half Yearly Report NOTES 40

43 Half Yearly Financial Report