DABUR INDIA LIMITED

ANNUAL REPORT
w w w . d a b u r. c o m

Report on Corporate Governance 06 Auditors’ Report 17 Consolidated Financial Statements 25

Directors’ Report 13 Financial Statements 18 Statements as per US GAAP 31

CHAIRMAN’S MESSAGE BOARD OF DIRECTORS

Dear Shareholders, Dabur's traditional ayurvedic business is under-
taken by the Consumer Healthcare Division. This busi-
Mr V C Burman Chairman
oday India is at the forefront of global economic ness consistently recorded high growths throughout
Dr Anand Burman Vice Chairman
T activity and investments on account of its strong the year. With sales of Rs.148.6 crore, it has registered
economic growth and stellar corporate perfor- 38.7 per cent growth. This growth has been led by a
mance. The GDP in India has grown at 8.5 per cent, number of initiatives like reaching out to the con-
Mr Pradip Burman Director
7.2 per cent and 8.1 per cent in the last three years. sumers directly through Dabur Ayurvedic centers, or-
The consensus among analysts is that India has gone ganising health camps, vaidmeets, collaborating with
Mr Amit Burman Director
beyond the point of inflexion and is poised for a peri- the academicia, etc. We identify our healthcare busi-
od of sustained high growth. ness as one of the growth drivers in future. Increasing Mr P D Narang Director
However, the FMCG industry had not kept pace preference for natural remedies is likely to ensure a
with this overall economic growth. The period 2000- sustained demand for our ayurvedic products. Mr Sunil Duggal Director
2004 saw low rates of growth in demand for FMCG The group's foods business under Dabur Foods
products leading to intense competition between com- Limited, a wholly owned subsidiary of your Compa- HH Maharaja Gaj Singh Director
panies and severe pricing pressures. It has often been ny grew by over 46 per cent to reach sales of Rs.190
postulated that a few consecutive years of sustained crore. Today, many of its products, especially its juices Mr R C Bhargava Director
high growth is necessary for overall economic pros- under the brands Real, Real Activ and Coolers are
perity to translate into benefits for the FMCG sector. found in every household and account for almost 57 Mr P N Vijay Director
In 2005-06, on the back of 3 consecutive years of strong per cent of India's juice market. During the year, the
economic growth, the fortunes of the FMCG industry business more than doubled its profit due to scale and Mr Stuart Edward Purdy Director
as a whole have started to look much better. operational excellence and has become a significant
The FMCG sector will continue to gain from the driver of growth of your Company. Changing lifestyles Dr S Narayan Director
fact that domestic consumption is growing both on and modern retail formats are expected to benefit the
the urban as well as the rural front. Successful busi- foods business in future.
nesses of the future will have to reach out to the vast I would also like to share with you your Compa-
semi-urban and rural markets in India. The low lev- ny's overseas business performance. Overseas busi-
els of FMCG market penetration in rural and semi-ur- ness grew at 19% with markets such as GCC growing
ban India coupled with improved economic condi- at 27% and Egypt at 49%There is a lot of potential for PERFORMANCE HIGHLIGHTS
tions provide considerable scope of growth in these Dabur products in the international market. During
areas. Your company with its product mix and sales the year, your company has reorganised its interna-
and distribution network is well positioned to lever- tional business around the focus, potential and op-
age its strengths and consistently deliver high quali- portunistic markets to be able to tap its potential to the
ty products at affordable prices in these markets. In fullest. A subsidiary has been established for Pakistan
addition the consumer spends in urban areas are in- market to leverage on Dabur's equity there.
creasing with rising affluence, changing lifestyles and On the operational front, the company's manu-
a seeming up-gradation to premium / higher end prod- facturing unit at Uttaranchal crossed Rs 500 crore pro-
ucts. Your company has a good portfolio of brands and duction in a span of just 18 months. Your company is
products catering to this market as well. the first company in Uttaranchal to achieve this mile-
In 2005-06, your Company has successfully lever- stone. It has become the largest employer in the re-
aged the revival in the FMCG sector and combined it gion and has added to the region's economic pros-
with laudable improvements in costs, productivity, ef- perity. Going ahead further capacity expansion has
ficiency and supply chain management to deliver su- been planned for this unit. Also, the Silvassa unit that
perior growth in revenues and even more so in profits. came with the acquisition of Balsara is being up-
graded/transformed into an EOU to cater to the export
Some key achievements are- requirements. During the year, the company spent its
• Consolidated net sales from operations increased time and resources to migrate to an improved ERP
by 23.6 per cent from Rs.1,537 crore in 2004-05 to platform- SAP to ensure best business practices. The
Rs.1,900 crore in 2005-06. target of going live on 1st April 2006 on SAP was suc-
• Consolidated profits after tax (PAT) after accounting cessfully met.
for minority interests and exceptional items grew The Institute of Companies Secretaries of India
by 37.5 per cent from Rs.155.8 crore to Rs.214.2 crore. conferred upon Dabur the 'National Award for Excel-
• Return on capital employed (ROCE) increased from lence in Corporate Governance' for the year2005. The
31.5 per cent to 39 per cent. company's CFO was recognised as one among the best
• Return on net worth (RONW) increased from three CFOs of the country for the year 2005 by Busi-
MANAGEMENT
43.5 per cent to 46.1 per cent. ness India. Your company has always made concert-
• Fully diluted earnings per share (EPS-diluted) rose ed efforts to ensure highest levels of disclosures, trans-
from Rs.2.71 to Rs.3.71. parency and corporate governance. Such recognition
DISCUSSION & ANALYSIS
further motivates the Company towards continuing
I would like to touch upon some of the key devel- its efforts in this direction. our years ago, Dabur India Limit- • Revenue from operations increased
opments that occurred during the year 2005-06. A major survey conducted by two reputed HR con-
As you know, we had acquired the Balsara busi- sulting firms and published in the Business World list-
ness in the current year. Integration is the key to any ed your Company as one of the top ten 'Great Places To
successful acquisition. I am delighted to inform you Work. This is a creditable achievement for your com-
that due to the focussed efforts of your Company and pany and recognizes its efforts to empower its employ-
F ed (“Dabur”, ‘DIL” or “the compa-
ny”) had laid down its long-term
plan of transforming to focused
and transformed FMCG player. The
blueprint involved developing and im-
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
the Balsara team, the integration was successfully com- ees and keep them fully motivated and aligned with the plementing marketing initiatives based • Profit after tax (PAT) increased by
pleted within the first six months of acquisition. Bal- Company's goals. on a clear strategic plan with a restruc- 27.7 per cent
sara's home care and oral care products have been well During the year your Company made a bonus is- tured brand architecture, continuous- from Rs.148
positioned in the overall Dabur portfolio and have sue of one share for every share held thereby reward- ly introducing a stream of newproducts crore in
demonstrated good potential for growth. Also we have ing the shareholders for its outstanding growth in the and creating a niche for the company in 2004-05 to
turned a loss making business into a profit making one. past few years. The Company also declared a dividend the FMCG segment basedonthe “herbal Rs.189 crore
Operational integration completed, the process of merg- of 350% on pre-bonus capital, the highest till date. and natural” products platform. In 2005- in 2005-06
ing the three Balsara entities with Dabur is underway I would like to take this opportunity to thank all 06, Dabur has surpassed all the key mile- • Return on
and will further contribute to shareholders' value. the employees, vendors and distributors for their com- stones set out in this plan. Today, these capital
Dabur's Consumer Care Division, which comprises mitment and hard work leading to the Company's suc- drivers are firmly entrenched in Dabur
of the core FMCG business has performed well dur- cess. Also I would like to thank the shareholders for and continue to foster development of
ing the year, driven by new product launches, inno- their continuing faith and support. Your company its business strategies and operations,
vation and marketing initiatives. During the year your has performed well in the past and I can assure you as is evident in its stand-alone and con-
company forayed into the soap category by launch- that it will continue to aim for higher achievements solidated results for 2005-06.
ing a herbal soap under the Vatika brand. While Dabur in future too.
Chyawanprash further consolidated its market share Stand-alone performance
and continued to be the market leader, its variant Yours sincerely, of DIL
Chyawanshakti was also launched during the year.
Toothpastes emerged as major drivers in the oral care The highlights of
segment. Focus on South India market added mo- V.C. Burman Dabur India Limited’s
mentum to CCD growth. Chairman (DILs) stand-alone re-
sults for 2005-06 are:

05-06
2 MANAGEMENT DISCUSSION & ANALYSIS
Dabur India Limited
employed (ROCE) increased from 38.7 per cent in 2004-05 to 43.1 per cent in 2005-06
PERFORMANCE HIGHLIGHTS • Return on net worth (RONW) increased from 44.5 per cent in 2004-05 to 45.5 per cent
in 2005-06
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 anoth-
er subsidiary called Dabur International Limited (DIntL), which, in turn, has its sub-
sidiaries 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 DIL’s subsidiaries. Con-
sequently, the full picture of Dabur’s overall performance can be best seen when viewed
as a consolidated entity.
The salient features of Dabur’s 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 Hy-
giene Products Limited and Besta Cosmetics Limited. Balsara’s oral care products com-
plemented Dabur’s oral care range and its homecare products added a new segment to
Dabur’s 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 Dabur’s overall revenues, is an important part of the company’s portfolio, as
it is the foundation of its Ayurvedic and herbal positioning and offers multiple growth avenues
for Dabur’s 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 fo-
cus on operations including investments in backward integration, the business has record-
ed 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 Dabur’s 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.
Chart A: Value growth in key FMCG segments (%)
DIL stand alone financials
Source:AC Nielson Retail Audit Report (Apr-Mar 2006)
From a strategic perspective, 2005-06 can be considered a positive inflexion point in
Dabur’s 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 contin-
uing 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, fo-
cusing on three key elements — expansion, innovation and acquisition.
Expansion entails expanding the company’s 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 Dabur’s 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-organis-
ing the distribution set up, reformulating marketing strategies and customising products
to that region’s prevailing market needs.
Innovation is about regularly introducing new products that can cater to the changing
COMPANY INFORMATION 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 differ-
ent segments in the last five years. The new product portfolio is expected to contribute to
AUDITORS over 5 per cent of sales every year.
M/s G. Basu & Co. The company’s first major acquisition — Balsara — has come on line as planned dur-
ing 2005-06. While Balsara had an impressive product portfolio, the business itself was
Charted Accountants 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.
Internal Auditors Both these tasks were successfully achieved during 2005-06. Today, there is total opera-
Price Waterhouse Coopers Pvt.Ltd. tional and business integration of the two companies; and on the financial front, the erst-
while 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
Addl. GM (Finance) & Company Secretary ability to develop inorganic growth. With improvements in profitability leading to strong
Mr A K Jain 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 valu-
ations and strategic synergies with Dabur. The approach would be to leverage the exist-
BANKERS ing 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
Punjab National Bank valuation, it cannot be built into the business plans and the growth of the Company at
Standard Charted Bank the moment is largely planned in organic terms.
HSBC Ltd. In the following sections we look at the developments in Dabur’s different businesses
in India and abroad. This is presented in terms of markets and operations across the three
State bank of India entities — Dabur India Limited (this includes the Balsara companies), Dabur Foods Lim-
ABN Amro Bank ited and Dabur International limited. This is followed by the financials of DIL on a stand-
alone basis and as a consolidated entity.
Citibank NA
United Bank of India MARKETS
HDFC Bank Ltd.
DOMESTIC BUSINESS
IDBI Bank Ltd.
Dabur India’s domestic business has been divided into three separate Strategic Business
Units (SBUs): Consumer Care Division (CCD) and Consumer Healthcare Division (CHD),
CORPORATE OFFICE both of which are directly under DIL, and the foods business, which is undertaken by Dabur
Dabur India Limited Foods Limited (DFL). In terms of sales in 2005-06, CCD contributed 79 per cent of Dabur’s
consolidated domestic revenues, while DFL contributed 11 per cent and CHD 9 per cent.
Dabur Tower, Kaushambi,
Sahibabad, Ghaziabad-201010, CONSUMER CARE DIVISION (CCD)
(U.P), India 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
Annual Report 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 CCD’s sales.
CCD’s 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 in-
cluded Amitabh Bachchan for Dabur Chyawanprash and Rani Mukherji for Dabur An-
mol 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 Dabur’s 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 Dabur’s
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.
Dabur’s 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 company’s 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 val-
ue 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 sig-
nificant increase from the 5 per cent growth in the first half of the year.
ORAL CARE
With the Balsara acquisition, the company’s oral care offerings now provide a wider choice
to consumers across different price points. The brands are positioned as Dabur Red Tooth-
paste in the popular segment, Babool in the economy segment and Meswak in the pre-
mium 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. Babool’s 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 con-
tinue 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 2005-
06. 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 re-
sult, Dabur’s 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 supple-
ment 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 heart-
ening 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. Ha-
jmola candy’s 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, Dabur’s 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 Dabur’s 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 target-
ed 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 cate-
gory 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 Dabur’s fold after the Balsara acquisition. Its contribu-
tion 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. Dabur’s 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.
 MANAGEMENT DISCUSSION & ANALYSIS 3
Dabur India Limited Annual Report 2005-06

Odomos sales increased by 70 per cent in 2005-06. Odomos has been identified as a tries were below expectations.
strong brand with significant latent equity and various products will be offered under this Dabur has also made a foray into the Pakistan market through its subsidiary Asia Con-
brand with different delivery mechanisms like gels, mats, coils, lotions and liquid va- sumer Care (Pak) Ltd. The initial response has been good, and the company is optimistic
porisers. The Odomos mosquito repellent cream, which is the original product under this about its prospects there. A team has been put in place headed by a Pakistani national who
brand, has been re-furbished and is displaying good growth potential in the market. has extensive experience in the local FMCG market.
Likewise, the Odonil brand is well recognised in the air-fresheners category, and the During the year, the company revamped the organisational structure of its interna-
company plans to expand the product portfolio under this brand by introducing aerosols tional business and re-organisedit to suit the emergingbusiness requirements. Going for-
and other contemporary formats. In 2005-06, Odonil sales increased by a healthy 80 per ward, the international business will be split into two portfolios:
cent. Sales of Sani Fresh were above expectations as well, with the brand showing good Portfolio One: Comprises Asian markets including Pakistan, Bangladesh, Nepal, Sri
potential for growth. We believe that with low penetration in most of these categories and Lanka Bangladesh and Malaysia, the developed markets including USA and UK; the
the increasing usage of home care products, there is significant scope of growth in this healthcare business in CIS countries and the opportunistic markets in Asia Pacific. This
segment. portfolio will be supported by the manufacturing facility at Silvassa, which will be re-
modelled into a state-of-the art export oriented facility.
CONSUMER HEALTHCARE BUSINESS
Table 1: Dabur's Sales, Domestic and Overseas (Rs. crore)
In last year's annual report, we had noted that the company was renewing its focus on the
consumer health care business. The business comprises pure granthabased products on Domestic Overseas
the Ayurveda platform, whichcanbe classified into OTC products, branded ethicals, and
2005-2006 2004-2005 2005-2006 2004-2005
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 busi- Sales 1683.5 1355.7 216.1 181.2
ness achieved a milestone by registering 3 7.8 per cent growth in sales— from Rs. 107.8
crore in 2004-05 to Rs. 148.6 crore in 2005-06, versus a CAGRof8 per cent over the previ- % oftotal 88.6% 88.2% 11.4% 11.8%
ous five years. Net Profit* 208.0 148.5 18.6 8.5
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 % oftotal 91.8% 94.6% 8.2% 5.4%
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, Shankha- * Before exceptional itemsand minority interest.
pushpi Syrup, Ring Ring, Nature Care and Shilajit.
The Honitus brand, which includes Honitus cough drops, syrup and the recently Portfolio Two includes the markets in the GCC countries, the African markets includ-
launched cough lozenges, was actively promoted through television advertisements. Our ing Egypt, Nigeria, Sudan and Morocco, other Middle-Eastern countries like Iran and Iraq,
Asavs —Ashokarishta and Dashmularishta—were also advertised through various me- the personal care business in the CIS and other opportunistic markets. This business will
dia channels in order to reach the target consumer. Dabur Churna and other OTC prod- be supported by the manufacturing facilities in the Middle East and Africa.
ucts were promoted through print and outdoor advertisements through dealer boards and The structure of the international business was further streamlined during the year by
hoardings and bus panels. Our new product launches for the year — including Dabur transferring Dabur India Limited's shareholding in Dabur Nepal Private Limited and Dabur
Mensta, aproductforwomen'shealthcare, and Rheumatil, a product to prevent arthritis Overseas Limited to Dabur International Limited. With this, all international subsidiaries
— were well received in the market. are now consolidated under a single entity, namely, Dabur International Limited.
Dabur believes that this business is a key growth driver and constitutes a critical ele- The strategy for growing the international business has the following elements:
ment of its long-term strategy. With a movement towards holistic Ayurveda-based health • Making geographical expansions. Going forward, the expansion markets will be
remedies, the industry is expected to enjoy sustained levels of high growth. We believe clearly identified based on strategic choice. The company will commit major invest-
that Dabur will be able to fully leverage its Ayurvedic knowledge and equity in the health- ments and human resources in focus markets.
care space by developing this business. The plan is to re-define the Ayurvedic space and • Leveraging the "natural" platform. This will make full use of the growing global de-
develop strong OTC capabilities through health care promotion activities, pharmacy sell- mand for natural products by occupying differentiated competitive niches in the
ing, media campaigns and trade promotion. The aim is to take Ayurveda to the patient. To health care and the personal care segments.
give an example, in order to promote Ayurveda directly with patients, the company or- • Acquiring international brands/businesses andforming strategic alliances. The
ganised 1,500 health camps, developed 160 Dabur Ayurvedic Centres where Ayurvedic company will also actively explore overseas acquisitions and alliances.
doctors provide free consultation, conducted 150 vaid meetings, apart from organising With this reorganisation and strategic focus, the international business is expected to con-
several seminars, exhibitions and events promoting Ayurveda among academia, doctors, rib ute over 15 per cent of the consolidated sales of Dabur in the course of the next four years.
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 produc-
tivity The strategy includes building a strong relationship with retail pharmacists, pro-
moting merchandising and displays, creating in-shop promotion through Dabur Con-
sumer Health Corners (DCHC) and stressing on pharmacist education.

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 un-
der the Nature's Best brand.
DFLs sales grew by 46.3 per cent in 2005-06 to reach Rs. 190 crore. New product launch-
es and institutional channel constituted 24 per cent of this growth. The top-line growth
has been accompaniedby 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 brand-
ed juice market, DFL was the leader with a 5 7 per cent market share, with the nearest com-
petitor being at 24.5 per cent. Chart C gives Dabur's share in the juice market.

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

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

DFLs portfolio of fruit juices canbe classified into the sweetened range under the Re-
al 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 in-
cludes 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 en-
joy market leadership and intend to introduce newer variants under Real Activ.
The economy segment of the portfolio consists of "Coolers" range of fruitbeverage es-
pecially 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, co-
conut 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 re-
ceived 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 con-
centrates (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 reor-
ganised its sales and distribution teams to focus separately on retail and institutional mar-
keting and sales. The company has also laid stress on investing to improve its manufac-
turing 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 process-
es fruit pulp, and Jaipur plant is attending and packaging plant acquired during 2005-06.

INTERNATIONAL BUSINESS

International business recorded a sales growth of 19per cent from Rs. 181.2 crore in 2004-
05 to Rs.216.1crore in 2005-06. This includes the exports of Balsara's portfolio of prod-
ucts in the oral care and private label segments.
Middle East and Egypt performed very well with growth of 2 7 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-
4 MANAGEMENT DISCUSSION & ANALYSIS
Dabur India Limited
MASTER BRANDS
Dabur
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.
Vatika
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.
Hajmola
a tasty fun-filled digestive available in various
forms-from tablets, traditional churans to
modern formats like centre-filled candy-
appealing to all age groups.
Anmol
a relatively 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.
Réal
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.
BALSARA
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.
RECOGNITION
OPERATIONS
Robust manufacturing and supply chain practices support Dabur’s 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 en-
hancing 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 operat-
ing 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), hu-
man resources (HR) and research and development (R&D) backbone.
MANUFACTURING
The manufacturing strategy has revolved around re-organising the company’s produc-
tion 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 Dabur’s products were out-sourced; today, only 8 per cent
is outsourced, while 92 per cent of the company’s requirements are manufactured in-
house. 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 (Hi-
machal 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 company’s 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 prod-
ucts, Silvassa caters exclusively to exports. A totally integrated plant has been set up in
Jammu to produce the erstwhile Balsara’s home-care line of products. All the processes
of these plants have been streamlined with Dabur’s production systems and procedures.
The company believes in cost and quality leadership through technology and inno-
vation and being the best in the operations domain. These translate into focus on adopt-
ing best quality practices, enhancing productivity and improving asset utilisation. Pro-
ductivity 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.
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 is-
sue 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 company’s 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 imple-
mented in three units, in addition to preserving and utilising artesian wells 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 pur-
chase 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 strate-
gic 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 val-
ue 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 “supplier’s supplier”.
SUPPLY CHAIN
The supply chain function at Dabur comprises production planning, despatch, ware-
housing 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 Garu-
da 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 Dabur’s 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. Dabur’s ability to continuously ser-
vice diverse markets while maintaining negative working capital bears testament to the
efficiency of its supply chain management.
HUMAN RESOURCES
Recognizing that people are key constituents of Dabur and represent the DNA of the or-
ganisation, we have been constantly raising our own standards of being an employee-
friendly organisation. The year under review witnessed a significant achievement: of be-
ing 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 de-
ployment. This tool ensures balanced performance by managers across multiple dimen-
sions — financial performance, customer management, internal business processes and
innovation and learning — and helps in sharper alignment of overall business strategy
Annual Report 2005-06
with each individual’s goals and performance. This year, the scorecard covered 325 man-
agers. Using the Balanced Scorecard, the company has modified key performance indi-
cators (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 in-
stitutes. In 2005-06 we recruited 17 such Management Trainees. They are undergoing rig-
orous training under the Young Managers’ Development Programme (YMDP), where each
is put through a year’s 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 employ-
ees 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. Approximate-
ly 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 cohe-
sive system that would give us maximum value for money in terms of information pro-
cessing. 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 imple-
mentation. 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 manufac-
turing 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 interna-
tional 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) soft-
ware, 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 individual’s information on the system. Each employee’s life cycle with
the company, performance appraisal and other information would be available on this sys-
tem. This would also enable us to leverage technology for training our employees, as the sys-
tem 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
Dabur’s Kaushambi office is also stored in at a location in Mumbai.
RESEARCH AND DEVELOPMENT
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 prod-
ucts; 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. Dur-
ing 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
company’s 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 preserv-
ing 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 scien-
tific 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.
FINANCIALS
The abridged financials of Dabur India Limited (DIL) for the year 2005-06 including rev-
enue, expenditure and profits, are presented in Table 2.
Table 2: DIL’s profit and loss account (Rs. crore)
2005-06 2004-05 Growth
1 Net Sales 1,369.7 1,268.7 8.0%
2 Other Income 5.4 11.5 -53.5%
3 Total Revenue 1,375.0 1,280.2 7.4%
4 Total Expenditure 1,131.7 1,092.3 3.6%
5 EBIDTA 243.3 187.9 29.5%
6 Depreciation 19.1 17.1 11.4%
7 Amortisation 4.3 1.5 185.9%
8 Interest 5.7 4.3 31.6%
9 PBIT 220.0 169.3 29.9%
10 PBT 214.4 165.0 29.9%
11 Current Tax & FBT 21.8 13.0 67.7%
12 Deffered Tax 4.0 4.0 0%
13 PAT(before exceptional item) 188.6 148.0 27.4%
14 Exceptional item 0.51 0.0
15 PAT 189.1 148.0 27.7%
16 EPS 3.3 2.58 27.9%
17 EPS (Diluted) 3.27 2.57 27.2%
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, fis-
cal incentives or economies of scale. Second, procurement led initiatives that have resulted
 MANAGEMENT DISCUSSION & ANALYSIS 5
Dabur India Limited Annual Report 2005-06

Table 3: DIL's Profitability Ratios RISK MANAGEMENT

2005-06 2004-05 Dabur has a robust and well-structured risk management system in place. The entire sys-
EBDITA/sales 17.8% 14.8% tem is driven by its people and the process goes deep down into lower layers of manage-
ment. The Chief Risk Officer (CRO) of the company, who is responsible for and ensures
PBT/sales 15.6% 13% Effective Risk Management — both risk identification and mitigation, champions the risk
PAT/sales 13.8% 11.7% 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
ROCE 43.1% 38.7% in turn reports it to the CRO.
RONW 45.5% 44.5% 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 cov-
ering its various functions like marketing, operations, regulatory affairs, finance and hu-
in decline in material costs as per cent of sales in spite of an inflationary environment. man resource development. The risks are further mapped in terms of mitigation action to
During the year, DIL extended loans to Dabur International Ltd and Dabur Foods Ltd., be taken and the people responsible for taking the actions. The Risk Register is reviewed
which were, in turn, utilised to repay debt. While this has reduced the group’s overall ex- periodically by senior management and is presented to the Audit Committee on a quar-
posure to outside debt, it has increased the working capital for DIL on a stand-alone busi- terly basis.
ness although the oveall working capital remains in the negative domain. While we have a systematic risk identification and mitigation framework in place, there
With its focus on core businesses, the company has sold its investment in Dabon In- are certain business risks, which are external and intrinsic to the company. Over these risks
ternational Private Limited, a non-core investment that was not yielding any returns. This the company has very little control. Some of these include a general downturn in market
has impacted the consolidated financials by Rs.12.7 crore, as an exceptional item. DIL’s demand conditions, loss of value to the “ayurveda” equity due to false claims about the
investments in Dabur Nepal Pvt Limited and Dabur Overseas Limited have been trans- product constitution or efficacy, look-alike products in the market, escalation in raw ma-
ferred to Dabur International Limited for consolidating international operations under terial prices and changes in regulatory frameworks pertaining to health related issues.
one entity. While this makes no difference to the consolidated financials, it re-states the In the past, all our transactional data was stored in a central server at our corporate office
subsidiary holdings along business and operational lines making it more efficient to man- in Ghaziabad, U P. One of the important risk reduction initiatives taken during the year was
age them. setting up of a disaster recovery site in Mumbai where all the data is stored as a back up.

Consolidated Financials INTERNAL CONTROLS AND THEIR ADEQUACY

Table 4 gives the abridged financials of Dabur on a consolidated basis.
Dabur has a robust internal audit and control system which is a process overseen by
Table 4: Consolidated, abridged profit and loss account (Rs. crore) the Board of Directors, management and other personnel, and provides reasonable as-
surance regarding the effectiveness and efficiency of operations, reliability of financial
2005-06 2004-05 Growth
reporting, and compliance with applicable laws and regulations.
1 Net Sales 1,899.6 1,537.0 23.6% Price Waterhouse Coopers is the internal auditor for the company and its subsidiaries.
The Company’s Internal Audit function is staffed with qualified and experienced peo-
2 Other Income 13.4 9.2 45.6%
ple. The Standard Operating Procedures (SOPs) put in place by the company are in line
3 Total Revenue 1,913.0 1,546.2 23.7% 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
4 Total Expenditure 1,608.8 1,328.1 21.1% for internal controls and adequacy of internal audit. Under this framework, various risks
5 EBIDTA 304.2 218.0 39.5% 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.
6 Depreciation 26.9 28.0 (4.0)%

7 Amortisation 4.3 1.5 186.6% CAUTIONARY STATEMENT

8 Interest 16.4 12.4 32.2% Statements in this management discussion and analysis describing the company’s ob-
9 PBIT 273.0 188.5 44.8% jectives, projections, estimates and expectations may be ‘forward looking statements’
within the meaning of applicable laws and regulations. Actual results may differ sub-
10 PBT 256.6 176.1 45.7% stantially or materially from those expressed or implied. Important developments that
11 Current Tax & FBT 26.5 15.1 75.5% could affect the company’s operations include a downward trend in the domestic FM-
CG industry, rise in input costs, exchange rate fluctuations, and significant changes in
12 Deferred Tax 3.5 4.0 (12.5)% political and economic environment in India, environment standards, tax laws, liti-
13 PAT 226.6 157 44.3% gation and labour relations.

14 Exceptional Item (12.7) 0.00

15 Minority Interest 0.3 (1.2)

16 PAT after minority interest & exceptional items 214.2 155.8 37.5%
17 EPS 3.74 2.72 37.5%

18 EPS (Diluted) 3.71 2.71 36.9%

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 prof-
it (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 2004-05

EBDITA/ sales 16% 14.2%

PBT/ sales 13.5% 11.5%

PAT/sales 11.3% 10.1%

ROCE 39% 31.5%

RONW 46.1% 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 31.03.2006 31.03.2005

Revenue* 1720.0 1368.4

Cost of Revenue 944.8 759.9

Gross Profit 775.2 608.5

Net Income 219.0 161.2

Earning Per Share

Basic 3.8 2.8
Diluted 3.8 2.8
Total Assets 1040.4 943.8
Cash and cash equivalents 48.9 13.9

Liquid mutual funds 41.0 43.8

*Revenues as per US GAAP are net of VAT/Sales tax and excise duty

Audited for the year ended on

Particulars 31.03.2006 31.03.2005

Consolidated net profit as per Indian GAAP 214.2 155.8

Loss on sale of long term investment net of deferred tax 8.6

Additional depreciation on property,plant & equipments (7.3) (0.3)

Deferred taxes adjustments 2.5 6.0

Others 1.0 (0.3)
Consolidated net profit as per US GAAP 219.0 161.2
6 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 re- • Statutory audit firm or the internal audit firm that is associated with the company;

A quirements. The Company’s 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 Company’s efforts, The Institute of Company Secretaries of India (ICSI) has honoured Dabur with
its most prestigious “National a w a r d for excellence in Corporate Governance” for the year 2005. This award recog-
• 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 in-
dependence 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.

nizes our commitment in adopting best practices towards Board’s independence & Governance; Transparency and Dis-
closure 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 Infor-
mation, reports Dabur’s compliance with the revised Clause 49 and highlights the additional initiatives taken in line
with international best practices.
COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE
Dabur’s philosophy of corporate governance is based on preserving core values and ethical business conduct. Com-
mitment to maximising shareholder value on a sustained basis, while looking after the welfare of multiple stakehold-
ers is a fundamental shared value of Dabur’s Board of Directors, management and employees and critical to the compa-
ny’s 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 Dabur’s Board consists of 11 members. Apart from the Chairman, who is a non-executive pro-
moter 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 Di-
rectors, 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 Jan-
uary, 2006. The maximum gap between any two meetings was less than 3/4 months as stipulated under clause 49.
Directors’ a t t e n d a n c e record a n d Directorship held
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 ap-
pointment 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 judge-
ment or order which, may have passed strictures on the conduct of the Company or taken an adverse view re-
garding 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 h u m a n 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 non-
payment 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.

As mandated by the Clause 49, none of the Directors are members of more than ten Board level committees nor are they The Board has established procedures to enable the Board to periodically review compliance reports of all laws ap-
Chairman of more than five committees in which they are members. plicable to the company, prepared by the company as well as steps taken by the company to rectify instances of non-
Table 1 gives the details of the Board as on 31st March 2006. compliances.

RESPONSIBILITIES OF THE CHAIRMAN AND CEO

Table 1: Composition of the Board of Directors of Dabur India Ltd. 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.
Name of the Directors Category # Attendance Particulars No. of other Directorships and Committee
• The Chairman is responsible for mentoring the core management team and in transforming the company into a world
Memberships/Chairmanships class, next generation organization that is dedicated to the well being of each and every household not only within In-
Number of Last Other Committee Committee dia but also across the globe. Also as the chairman of the board he is responsible for all the board matters. He is also re-
Board Meetings AGM Directorships Memberships Chairmanships sponsible for formulating the corporate strategy along with the BOD.
• The CEO is responsible for implementation of corporate strategy brand equity planning, external contacts, and oth-
Held Attended
er management matters. He is also responsible for achieving the annual business plan.
V C Burman PD / NED 4 4 Yes 2 0 0
BOARD MEMBERSHIP CRITERIA
Pradip Burman PD / ED 4 4 No 5 1 0
Dr.Anand Burman PD / NED 4 3 Yes 5 1 1 The nominations committee works with the entire board to determine the appropriate characteristics, skills and expe-
rience for the board as a whole as well as its individual members. The selection of board members is based on recom-
Amit Burman* PD / NED 4 3 Yes 9 3 1
mendations of the nomination committee .
P D Narang ED 4 4 Yes 12 1 4 The skill profile of independent board members will be driven by the key tasks defined by the board, which are broad-
Sunil Duggal ED 4 4 Yes 5 2 0 ly based on:
• Independent Corporate Governance.
HH Gaj Singh ID 4 1 No 6 0 0 • Guiding strategy and Enhancing Shareholders Value.
P N Vijay ID 4 4 Yes 3 2 2 • Monitoring Performance, Management Development & Compensation
• Control & Compliance.
S.Narayan** ID 2 1 No 2 1 0
R C Bhargava ID 4 4 No 12 5 4 The constitution of the board will be as follows:
Non Executive Chairman
Stuart E Purdy ID 4 2 Yes 1 0 0 Family Nominee Director/s
Executive Member/s
# PD - Promoter Director
NED - Non-Executive Director Independent Directors and Non Executive Members – Constituting 50% of the board.
ID - Independent Non-Executive Director
ED - Executive Director The viz matrix gives the detailed skill set required for becoming a board member as specified by the BOD.
*Ceased to be an Executive Director from 1st May,2005
**Appointed as a member from 26th July,2005

Key Skill Area Essential Desirable

Shareholding of Non Executive Directors
Name of Director Status No of shares held Strategy/Business Leadership 2-3 years experience as a CEO, preferably of an MNC in India FMCG experience

V C Burman PD / NED 10000 Corporate Strategy Consultant /Academician with experience in FMCG Basic understanding of Finance
Consultant Industry and business strategy.
Dr Anand Burman PD / NED 74000
Sales and Marketing experience At least 10 years experience in sales and marketing Experience with FMCG or other
Amit Burman PD / NED 0
Good understanding of commercial processes consumer products
Maharaja HH Gaj Singh ID 4000 2-3 years as head of sales or marketing
R C Bhargava ID 0 Corporate law Expert knowledge of corporate Law Experience in trade/consumer
Stuart E Purdy ID 0 related laws

P N Vijay ID 0 Finance At least 5 years as a CFO or as held of a merchant banking FMCG experience
operation
S.Narayan ID 0
Trade Policy & Economics Expert Knowledge of Trade & Economic Policies FMCG experience
Details of Other Board Directorships is separately mentioned in Annexure 1 Administration & Government Retired Beaurocrat Basic understanding of
Relations Finance and Business.
As mandated by the revised Clause 49, the independent Directors on Dabur’s Board: Ayurvedic specialist Ayurvedic doctor with a minimum Basic understanding of
of 20 years experience finance and business
• Apart from receiving Director’s remuneration, do not have any material pecuniary relationships or transactions with as a practitioner/researcher
the company, its promoters, its Directors, its senior management or its holding company, its subsidiaries and asso-
ciates 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 Other directors could be based on company’s priority at a particular time viz:
the board. • Knowledge of export markets that Dabur is focusing on.
• Have not been an executive of the company in the immediately preceding three financial years. • Commodity procurement expert.
• Are not partners or executives or were not partners or executives during the preceding three years of the:

Remuneration paid to Directors

Table 2 gives details of remuneration paid to Directors for the year 2005-06

Name of the Director Sitting Fees Salary & Perquisites Superannuation Stock Option Commission Total
V C Burman 165000 0 0 0 8864000 9029000
Pradip Burman 0 8513489 704999 0 0 9218488
Dr.Anand Burman 60000 0 0 0 0 60000
Amit Burman* 30000 282651 22500 0 0 335151
P D Narang 0 11415483 900423 14344656 0 26660562
Sunil Duggal 0 11453494 748796 13505098 0 25707388
HH Gaj Singh 15000 0 0 0 0 15000
P N Vijay 300000 0 0 0 0 300000
S Narayan** 45000 0 0 0 0 45000
R C Bhargava 150000 0 0 0 0 150000
Stuart E Purdy 135000 0 0 0 0 135000
Total 900000 31665117 2376718 27849754 8864000 71655589
* Ceased to be Executive Director from 1st May,2005.
** Appointed as a member from 26th July,2005
 REPORT ON CORPORATE GOVERNANCE 7
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 hav-
ing vesting period spread from 1 to 5 years and exercisable over a period of 3 years after vesting. The Options are exer-
cisable at par.
Pursuant to the approval of shareholders in the Annual General Meeting held on 9th September, 1998 and subse-
quently 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.
Tw o 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 Compa-
ny 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.
CODE OF CONDUCT
Dabur’s 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 period-
ically. 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 as-
sessed, controls are designed, put in place and enforced through the process owner and a fixed timeline is set for achiev-
ing 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.
Audit Committee report for the year e n d e d 3 1 s t March, 2 0 0 6
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 Company’s internal controls and financial reporting process. The indepen-
dent auditors are responsible for performing an independent audit of the Company’s financial statements in accordance
with the Indian GAAP (generally accepted accounting principles) and for issuing a report thereon. The committee is re-
sponsible for overseeing the processes related to the financial reporting and information dissemination.
In this regard the Committee discussed with the company’s internal auditors and independent auditors the overall
scope and plan for their respective audits. The Committee also discussed the results of their examinations, their evalu-
ation of the Company’s internal controls and the overall quality of financial reporting. The Management also present-
ed to the committee, the companies financial statements and also represented that the company’s 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 com-
mittee believes that the Company’s financial statements are fairly presented in conformity with Indian GAAP in all ma-
terial 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 Ac-
countants 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 Committee’s responsibility statement.
Signed
New Delhi P N Vijay
April 25, 2006 Chairman, Audit Committee

COMMITTEES OF THE BOARD

Dabur has four Board level committees – Audit Committee, Remuneration cum Compensation Committee, Nomina-
tion 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, in-
cluding the number of meetings held during the financial year and the related attendance, are provided below:
a) Audit Committee
b ) Remuneration c u m Compensation Committee
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.

As on 31st March 2006, the Audit Committee comprises of four independent Directors. They are Mr. P N Vijay (Chair-
man), Mr. Stuart E Purdy, Mr. R. C. Bhargava and Dr. S. Narayan. The Audit Committee held seven meetings during 2005- Table 4: Attendance details of Dabur's Remuneration cum Compensation Committee
06 on 27th April 2005, 26th July, 2005, 25th August, 2005, 24th October, 2005, 10th November, 2005, 27th January, 2006
Name of Members (Category) Status No. of Meetings
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: Held Attended
Mr P N Vijay (ID) Chairman 6 6
Mr Stuart E Purdy (ID) Member 6 3
Name of Members (Category) Status No. of Meetings Mr V C Burman (PD/NED)* Member 5 4
Held Attended *appointed as a member w.e.f. 28/4/2005.

Mr. P N Vijay (ID) Chairman 7 6

Mr.Stuart E Purdy (ID) Member 7 4
Mr.R C Bhargava (ID) Member 7 6
Dr.S Narayan)(ID)* Member 3 2

* Appointed as a member from 24th October,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 company’s 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 Director’s Responsibility Statement to be included in the Board’s re-
port 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 post-
audit discussion to ascertain any area of concern.
• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders
(in case of non payment of declared dividends) and creditors.
• To review the functioning of the Whistle Blower mechanism, in case the same is existing.
• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
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 ex-
perience 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 manage-
ment.
• 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 (cap-
ital 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 is-
sues, 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 arm’s length basis along
with management’s justification for the same.
8 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 • Any allied matter(s) out of and incidental to these functions and not herein above specifically provided for.
terms of executive Directors, approves and evaluates the executive Directors and senior management compensation Details of queries and grievances received and attended by the Company during the year 2005-06 is given in Table 6.
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 pol- Table 6: Nature of complaints received and attended to during 2005-2006
icy 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 ex- Nature of Pending Received Answered Pending
ecutive Directors. Complaint as on 1st during during as on 31st
• Ensuring that remuneration policy is good enough to attract, retain and motivate the Directors. April,2005 the year the year March,2006
• 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 1. Transfer / Transmission / Duplicate Nil 38 38 Nil
the Scheme approved by the Shareholders. 2. Non-receipt of Dividend Nil 2 2 Nil
• 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 3. Dematerialisation / Nil 30 30 Nil
Scheme (ESOS) which inter-alia include the following: - Rematerialisation of shares
4. Others (Non receipt of bonus shares/ Nil 23 23 Nil
• Quantum of options to be granted under the Scheme per employee and in aggregate; POA/ change of signatures/ etc.)
• Vesting Period;
• Conditions under which option vested in employees may lapse in case of termination of employment for mis- 5. Complaints received from:
conduct; — Securities and Exchange Board of India Nil 54 54 Nil
• Exercise period within which the employee should exercise the option and that option would lapse on fail- — Stock Exchanges Nil 6 6 Nil
ure to exercise the option within the exercise period; — Registrar of Companies/ Nil Nil Nil Nil
• Specified time period within which the employee shall exercise the vested options in the event of termina- Department of Company Affairs
tion or resignation of an employee; 6. Others Nil Nil Nil Nil
• 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; Total Nil 153 153 Nil
• 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; There were no complaints which were pending as on 31st March’06.
• Procedure for cashless exercise of options; In order to provide efficient services to investors and for speedy redressal of the complaints, the Board of Directors
• Forfeiture/cancellation of Options granted; has delegated the power of approving transfer and transmission of shares and other matters like split up / sub-division,
• All other issues incidental to the implementation of ESOS. 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,
• To issue grant/award letters. and Mr. R B Sachan, Asst. Manager – Secretarial, subject to a maximum of 5000 shares per case.
• To allot shares upon exercise of vested options.
Shareholders/Investor Grievance a n d Share Transfer Committee Report for the year e n d e d 3 1 s t March,
Remuneration policy 2006

The remuneration paid to the non-executive Directors of the Company is decided by the Board of Directors on the rec-
ommendations of the Remuneration cum Compensation Committee.The existing remuneration policy of the Compa-
ny is directed towards rewarding performance, based on review of achievements on a periodical basis. The remunera-
tion policy is in consonance with the existing industry practice. As per the shareholders’ approval obtained at the An-
nual 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 ap-
proved 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 com-
mittees thereof within the prescribed limits.
To the Shareholders of Dabur India Limited:
The Shareholders/Investor Grievance and Share Transfer Committee comprises of 3 members. The main responsibili-
ty of the Committee is to ensure cordial investor relations and supervise the mechanism for redressal of investor griev-
ances 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 P N Vijay
April 25, 2006 Chairman, Shareholders/Investor Grievance and Share Transfer Committee

3. Executive Directors
Remuneration of the executive Directors consists of a fixed component and a variable performance incentive. The Re-
muneration 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 ap-
proved by the shareholders, to the Board for their approval.
Remuneration c u m Compensation Committee Report for the year e n d e d 3 1 s t March, 2 0 0 6
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 ex-
ecutive 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 lim-
its 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 remu-
neration 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 pro-
grams, compensation policies for employees and the information to decide on grant of options to various employees.
Signed
New Delhi P N Vijay
April 25, 2006 Chairman,Remuneration cum Compensation Committee
c) Nomination Committee
Dabur’s Nomination Committee consists of Mr. V C Burman, non-executive promoter Director, Mr. Pradip Burman, ex-
ecutive promoter Director, Mr. Stuart E. Purdy, independent Director and HH Maharaja Gaj Singh, independent Direc-
tor. 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.
d) Shareholders/Investor Grievance a n d Share Transfer Committee
The Committee consists of three members, Mr. P N Vijay (Chairman), Mr. V C Burman and Mr. P D Narang. The Com-
mittee met four times in the year under review on 27th April, 2005, 26th July 2005, 24th October, 2005 and 27th Jan-
uary 2006. Table 5 gives the details.
Table 5: Attendance Details of Dabur's Shareholders/Investor Grievance and Share Transfer Committee
Name of Members (Category) Status No. of Meetings
Held Attended
Mr P N Vijay (ID) Chairman 4 4
Investor Relations – Boosting Investor Confidence
The role of investor relations at public companies continues to expand, due in part to increased disclosure and report-
ing requirements, more IROs (Investor relations Officer) providing more input to the Board of Directors and becoming
members of their Company’s 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 company’s 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 company’s performance and also highlight
the company’s forward looking strategy.
2. Webcasting - Dabur’s 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 out-
side India for the benefit of FIIs (Foreign Institutional Investors) to enable them understand the operations at Dabur
better.
Subsidiary Companies
The revised Clause 49 defines a “material non-listed Indian subsidiary” as an unlisted subsidiary, incorporated in In-
dia, 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
M a n a g e m e n t Discussion a n d Analysis
Annual Report has a detailed Chapter on Management Discussion and Analysis which forms part of this report.
Disclosures
Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with its
promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the in-
terests of the Company at large.
Dealings in Company’s 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 man-
agement 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.
Related Party T r a n s a c t i o n s -
Significant related party transactions are summarised herein below:-

Mr V C Burman (PD / NED) Member 4 4 1. Subsidiaries:

Mr P D Narang (ED) Member 4 4
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 an-
nual 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.
- 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 a n d 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 a n d 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.
 REPORT ON CORPORATE GOVERNANCE 9
Annual Report 2005-06 Dabur India Limited

3. Associates: General Body Meetings

- Services for an a m o u n t of Rs.1.80 crores by Jetways Travels Pvt. Ltd. (Travel Agency) were received by the
company. Such services were rendered at market rates. Table 8 gives the details of the last five General Meetings.

4. Key Management Personnel and their Relatives:

Table 8: Location and time of the last 5 General Meetings.
- 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 Financial Year Category * Location of the meeting Date Time
Rs.1 crore or more during the year. 2001-2002 AGM Air Force Auditorium
The detailed related party transactions can be referred to in Note in Schedule P to Annual Accounts. Subroto Park,New Delhi - 110010 5th September,2002 11.00 AM

Disclosure of a c c o u n t i n g treatment in preparation of financial s t a t e m e n t s 2002-2003 AGM Same as above 2nd August, 2003 9.30 AM
2003-2004 EGM Same as above 2nd August, 2003 2.00 PM
Dabur has followed the guidelines of accounting standards laid down by the Institute of Chartered Accountants of In-
dia (ICAI) in preparation of its financial statements. 2003-2004 AGM Same as above 6th July, 2004 11.00 AM
2004-2005 AGM Same as above 15th July, 2005 11.00 AM
Details of non-compliance by the Company
*AGM - Annual General Meeting,EGM - Extraordinary General Meeting

Dabur has complied with all the requirements of regulatory authorities. No penalties/strictures were imposed on the
Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last
three years.
Code for prevention of insider-trading practices
In compliance with the SEBI regulation on prevention of insider trading, the Company has instituted a comprehensive
code of conduct for its management and staff. The code lays down guidelines, which advises them on procedures to be
followed and disclosures to be made, while dealing with shares of Dabur and cautioning them of the consequences of
violations.
Code of Ethics and Conduct
Dabur has a well-defined policy framework, which lays down procedures to be followed by employees for ethical pro-
fessional 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 Company’s 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.
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 pro-
tection policy aims to:
• Allow and encourage employees and business associates to bring to the management notice concerns about sus-
pected unethical behavior, malpractice, wrongful conduct, fraud, violation of policies.
• Ensure timely and consistent organizational response.
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 company’s 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.
Postal Ballot
During the year under review, in pursuance to section 192A of the Companies Act, 1956 and Companies (Passing of the
Resolution by Postal Ballot) Rules, 2001, postal ballot 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 sharehold-
ers 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 re-
ported the vote count on 21st December, 2005. The results of the ballot are given below:

• Build and strengthen a culture of transparency and trust. Table 9 A: Result of the Postal Ballot ( Special resolution 1)
Particulars No. of Votes %
• Provide protection against victimization.
Number of Postal Ballot Forms received 1992
The above mechanism has been appropriately communicated within the Company across all levels and has been In Favour 222942103 99.98%
displayed on the Company’s intranet as well as on company’s website www.dabur.com. The Audit Committee period-
ically reviews the existence and functioning of the mechanism. Against 0 0.00%
Invalid Ballots 52340 0.02%
Dividend Policy
Total Receipts 222994443 100.00%
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 Company’s 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 accor-
dance 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 chairman’s 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 Ex-
ecutive 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, b o r n in 1943 a n d h a s d o n e M.Sc. Physics, Master in Business M a n a g e m e n t (Finance),
M.Phil in Development Economics from Cambridge University- UK a n d Ph.d from IIT Delhi. He has been in
p u b l i c service in t h e State a n d Central Government for nearly four d e c a d e s . During 2003-04 he w a s
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 N a d u . Besides the above he is visiting faculty at several academic I n s t i t u t i o n s . 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 Date
Unaudited Financial Results for the quarter ended on 30th June, 2005 28th July, 2005
Audited Financial Results for the quarter / half year ended on 30th September, 2005 26th October, 2005
Unaudited Financial Results for the quarter / Nine months ended on 31st December, 2005 29th January, 2006

The quarterly, half yearly and annual financial statements are promptly and prominently displayed on the Com-
pany’s 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 reg-
ulations for filing of its financial results under the EDIFAR system. These are available on the SEBI web-site www.se-
biedifar.nic.in.
10 REPORT ON CORPORATE GOVERNANCE
Dabur India Limited Annual Report 2005-06

• 26th July, 2005: First Quarter

• 24th October, 2005: Half Yearly
Table 9 B: Result of the Postal Ballot ( Special resolution 2)
• 27th January, 2006: Third Quarter
Particulars No. of Votes % • 25th April, 2006: Fourth Quarter and Annual
Number of Postal Ballot Forms received 1992
For the year ending 31st March, 2007, results will be announced in:
In Favour 221977628 99.55% • End July, 2006 First Quarter
Against 964275 0.43% • End October, 2006: Half Yearly
• End January, 2007: Third Quarter
Invalid Ballots 52605 0.02% • End April, 2007: Fourth Quarter and Annual
Total Receipts 222994508 100.00%
Book Closure

Table 9 C: Result of the Postal Ballot ( Special resolution 3) The dates of book closure are from 23rd June, 2006 to 8th July, 2006 inclusive of both days.
Particulars No. of Votes %
Dividend Payment
Number of Postal Ballot Forms received 1992
In Favour 221977473 99.55%
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.
Against 964375 0.43%
Invalid Ballots 52660 0.02% Listing

Total Receipts 222994508 100.00% 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 No. of Votes % Table A: Dabur’s Stock Exchange codes
Number of Postal Ballot Forms received 1992 ISIN No: INE016A01026

In Favour 221976563 99.55% Mumbai Stock Code: 500096

Against 964375 0.43% National Stock Code: DABUR

Invalid Ballots 53570 0.02% Bloomberg Code: DABUR IB

Total Receipts 222994508 100.00% Reuters Code: DABU.BO

The Chairman after receiving the Scrutinizer’s Report announced that the Special Resolutions at Item No.1 to 4 of Stock Market Data
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. Table B and Chart A gives details

Compliance
Table B: High, low and volume of Dabur’s shares for 2005-06 at BSE and NSE
Mandatory requirements
MUMBAI STOCK EXCHANGE NATIONAL STOCK EXCHANGE
Dabur is fully compliant with the applicable mandatory requirements of the revised Clause 49.
Date High (Rs.) Low (Rs.) Volume High (Rs.) Low (Rs.) Volume
Apr-05 60.75 54.50 2,700,658 60.47 54.50 6,169,601
Table 10: Compliance report May-05 65.22 55.50 2,110,625 65.50 58.15 5,563,490
Particulars Clause of listing agreement Compliance status
Jun-05 68.50 62.57 5,728,947 69.90 60.00 6,624,221
I. Board of Directors 49 (I) Yes
Jul-05 78.12 63.00 5,681,302 81.00 63.32 14,549,406
(A) Composition of Board 49(IA) Yes Aug-05 79.85 71.30 2,382,438 80.00 69.05 9,998,422
(B) Non-executive Directors Compensation & Disclosures 49 (IB) Yes
Sep-05 84.85 71.37 2,497,428 84.75 74.62 7,778,446
(C) Other provisions as to Board and Committees 49 (IC) Yes Oct-05 93.20 77.50 6,103,536 94.70 79.00 18,637,984
(D) Code of Conduct 49 (ID) Yes
Nov-05 90.77 81.20 3,380,733 91.00 81.15 10,882,802
II. Audit Committee 49 (II) Yes Dec-05 105.90 85.12 4,558,362 106.05 85.25 14,792,191
(A) Qualified & Independent Audit Committee 49 (IIA) Yes Jan-06 119.00 102.27 6,696,522 119.90 102.32 23,707,112
(B) Meeting of Audit Committee 49 (IIB) Yes
Feb-06 120.00 107.00 7,710,303 120.10 101.65 22,009,984
(C) Powers of Audit Committee 49 (IIC) Yes Mar-06 125.95 109.25 25,697,384 125.90 109.85 30,236,000
(D) Role of Audit Committee 49 II(D) Yes
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.
(E) Review of Information by Audit Committee 49 (IIE) Yes
III. Subsidiary Companies 49 (III) Yes Chart A: Dabur’s Share Performance versus BSE Sensex
IV. Disclosures 49 (IV) Yes
(A) Basis of related party transactions 49 (IV A) Yes
(B) Board Disclosures 49 (IV B) Yes
(C) Proceeds from public, rights, preference issues, etc. 49 (IV C) Not Applicable
(D) Remuneration of Directors 49 (IV D) Yes
(E) Management 49 (IV E) Yes
(F) Shareholders 49 (IV F) Yes
V. CEO/CFO Certification 49 (V) Yes
VI. Report on Corporate Governance 49 (VI) Yes
VII. Compliance 49 (VII) Yes

Adoption of non-mandatory requirements

a) Maintenance of the Chairman’s office Note:Dabur’s adjusted closing price and BSE Sensex indexed to 100 as on 1st April 2005.

The company maintains the office of the non-executive Chairman and provides for reimbursement of expenses incurred
in performance of his duties. Distribution of Shareholding

b) Tenure of Independent Directors Table C and D lists the distribution of the shareholding of the equity shares of the Company by size and by ownership
No specific tenure has been specified for the Independent Directors. class as on 31st March, 2006.

c) Remuneration Committee
Dabur has a Remuneration cum Compensation Committee that comprises of three members, two members being inde- Table C : Shareholding pattern by size
pendent directors and one being non executive director. The Chairman of the Committee is an independent director.
Number Physical form Dematerialisation form Total % of Total % of
d) Half-yearly Declaration of equity No.of No.of No.of No.of number share number share
Dabur prepared a half-yearly report of financial performance in the year under review including a section on Manage- shares share shares share shares of share holders of shares holding
ment Discussion and Analysis. The half-yearly report was sent to all shareholders. held holders holders holders
up to 5000 5834 6991316 76878 28728819 82712 98.99% 35720135 6.23%
e) Audit Qualifications
5001 – 10000 26 194000 403 3056844 429 0.51% 3250844 0.57%
The Auditors have raised no qualification for the Financial Statements of the Company. 10001 and above 4 97000 415 534234805 419 0.50% 534331805 93.20%

f) Mechanism for evaluating performance of non-executive Directors Total 5864 7282316 77696 566020468 83560 100.00% 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 namely—guid- Table D: Shareholding Pattern by ownership
ing strategy, monitoring management performance and development /compensation and statutory compliance & Cor-
porate Governance. Particulars As on 31st March,2006 As on 31st March, 2005
No. of % of No.of % of No. of % of No.of % of
g) Whistle Blower Policy share share shares share share share shares share
Dabur has whistle-blower policy in place. The details with regard to the functioning of the whistle-blower policy have Holders Holders held Holding holders holders held holding
been mentioned earlier in this report.
Directors,promoters 34 0.04% 426004818 74.31% 31 0.07% 224174178 78.27%
Additional Shareholder Information and family members
FIIs 51 0.06% 55620603 9.70% 32 0.07% 17740997 6.19%
Annual General Meeting
Mutual Funds 44 0.05% 8354761 1.46% 37 0.08% 3011414 1.05%
Date: 8th July, 2006 Financial Institutions/Banks 29 0.03% 27529700 4.80% 9 0.02% 11995874 4.19%
Time: 9:30 am
NRIs 2418 2.89% 4064240 0.71% 1959 4.18% 2819833 0.98%
Venue: Air Force Auditorium, Subroto Park, New Delhi - 110010
Corporates 1675 2.00% 9170725 1.60% 957 2.04% 4524985 1.58%
Financial Calendar Individuals 79309 94.91% 42557937 7.42% 43836 93.54% 22152432 7.73%

Financial year: 1st April to 31st March Total 83560 100.00% 573302784 100.00% 46861 100.00% 286419713 100.00%

For the year ended 31st March, 2006, results were announced on:
 REPORT ON CORPORATE GOVERNANCE 11
Annual Report 2005-06 Dabur India Limited

Dematerlisation of Shares and Liquidity ANNEXURE 1 - DETAILS OF OTHER DIRECTORSHIPS HELD

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 Cen- Name Status Directorship Committee Committee
tral Depository Services (India) Limited (CDSL). Dabur has entered into agreement with both these depositories. Share- of the Membership Chairmanship
holders can open their accounts with any of the Depository Participant registered with these depositories. Director
• 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. V C Burman PD/NED Dabur India Limited Shareholders/Investors
Grievance Committee
Outstanding GDRs/ADRs/Warrants/Options Remuneration cum
The Company has 66,91,484 outstanding Options as on 31st March, 2006 with vesting period from 1 to 5 years from the Compensation Committee
date of grant.
Dabur Ayurvedic
Details of Public Funding Obtained in t h e last three years Specialities Limited
Dabur has not obtained any public funding in the last three years.
Burmans Finvest Limited

Registrar and Transfer Agent Dr Anand Burman PD/NED Dabur India Limited
Securities and Exchange Board of India (SEBI), through its circular No.DandCC/FITTC/CIR-5/2002 dated 27th Decem- Dabur Pharma Limited Audit Committee Shareholders/Investors
ber, 2002, has made it mandatory for all work related to share registry, both in physical and electronic form, to be han-
Grievance Committee
dled 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 man- Dabur Pharmaceuticals
dated by SEBI. Details of the registrar and transfer agent are given below- Limited
MCS Limited
Dabur Overseas Limited
Unit: Dabur India Limited
Sri Venkatesh Bhawan, Dabur Oncology Plc
W-40 Okhla Industrial Area Phase – II
Hindustan Motors
New Delhi – 110020
Limited
Phone: 011-41406149/51/52, 41609386, 41709885
Fax: 011-41709881 PradipBurman PD/ED Dabur India Limited
Ayurvet Limited
Share Transfer System
All share transfer and other communications regarding share certificates, change of address, dividends, etc should be Sanat Products Limited Audit Committee
addressed to Registrar and Transfer Agents.
Dabur Exports Limited
S h a r e h o l d e r s / I n v e s t o r G r i e v a n c e a n d S h a r e Transfer C o m m i t t e e is a u t h o r i s e d to a p p r o v e transfer of
s h a r e s in t h e p h y s i c a l s e g m e n t . With effect from January 2 0 0 4 . Mr. A K Jain a n d Mr. R B S a c h a n , h a s b e e n Burmans Finvest Limited
d e l e g a t e d t h e r e s p o n s i b i l i t y of a p p r o v i n g transfer a n d t r a n s m i s s i o n of s h a r e s a n d o t h e r r e l a t e d m a t t e r s .
CNS Infotech Ltd.
S u c h transfers n o w take p l a c e on fortnightly b a s i s . All s h a r e transfers are c o m p l e t e d w i t h i n statutory t i m e
limit from t h e d a t e of receipt, p r o v i d e d d o c u m e n t s meet t h e s t i p u l a t e d r e q u i r e m e n t of statutory p r o v i s i o n s Amit Burman PD/NED Dabur India Limited
in all r e s p e c t s .
Dabur Pharma Limited

Company’s Registered Office Address: Dabur Foods Limited Audit Committee

8/3, Asaf Ali Road, Apollo Health Street
New Delhi-110002
Limited
Ph: 011-23253488
E-medlife.com Limited
PLANT LOCATIONS Pasadensa Foods Remuneration Committee Audit Committee
Limited
Sahibabad Unit I & II
22, Site IV, Industrial Area, Sahibabad, Ghaziabad (U.P.) Tel: 0120 – 3982000, 3001000: Fax: 0120 – 2779048 Q H Talbros Limited Remuneration Committee

Unit III Radico Khaitan Limited

Plot No. 5/1, Site – IV, Sahibabad – 201 010, Ghaziabad (U.P.) Tel: 0120 – 3982000, 3001000: Fax: 0120 – 2779048 Burmans Finvest Limited
Baddi Chyawanprash Unit PVR Ltd.
220-221, HPSIDC Industrial Area, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax : 01795-244090 P D Narang ED Dabur India Limited Shareholders/Investors
Hajmola Unit Grievance Committee
109, HPSIDC Industrial Area, Baddi 173 205, Distt Solan, HP, Tel: 01795-245273 Fax : 01795-244090
Dabur Egypt Limited
Red Toothpaste Unit
Sanat Products Ltd.
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 9,Netaji Subhash Chandra Bose Road,Narendrapur 743 508
Distt. 24 Parganas,West Bengal , Tel: 033-24772324 Fax : 033-24772621
Alwar S-PC 162, Matsya Industrial Area, Alwar 301 030, Rajasthan, Tel: 0144-2881217 Fax : 0144-2881302
Katni 10.4,Mile Stone,Village Padia,Katni,Madhya Pradesh,Tel:07622-262317 Fax :07622-262297
Jammu Lane No. 3, Phase II, SIDCO Ind. Complex, Bari Brahmna, Jammu, Tel: 01923-220123 Fax : 01923-220123
Uttaranchal 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 MCS Limited,

of shares, payment of dividend and Sri Venkatesh Bhawan
any other query relating to the shares W-40 Okhla Industrial Area, Phase – II, New Delhi – 110020
Phone: 011-41406149/51/52, 41609386, 41709885, Fax: 011-41709881
For queries of Analysts, FIIs, Mrs Gagan Ahluwalia / Mr Sharad Goel
Institutions, Mutual Funds, Dabur India Limited,
Banks, Media and others Punjabi Bhawan 10 Rouse Avenue, New Delhi – 110002
Tel: 011-42786000; Fax: 011-23222051
For investors assistance 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 u n t r u e 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 company’s 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 company’s code of conduct.
4. The company’s 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 company’s
internal controls and procedures pertaining to financial reporting.
5. The company’s other certifying officers and we have disclosed, based on our most recent evaluation, wherever
applicable, to the company’s auditors and thru them to the audit committee of the company’s 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 w h o have a
significant role in the company’s internal control systems over financial reporting;
d. Significant changes in accounting policies during the year.
We further declare that all board m e m b e r s a n d senior management have affirmed compliance with the code
of conduct for the current year.

Signed Signed
New Delhi Sunil Duggal Rajan Varma
April 25, 2006 CEO, Dabur India Limited CFO, Dabur India Limited
12 REPORT ON CORPORATE GOVERNANCE
Dabur India Limited Annual Report 2005-06

Name Status Directorship Committee Committee Name Status Directorship Committee Committee
of the Membership Chairmanship of the Membership Chairmanship
Director Director

Dabur Finance Limited Audit Committee Remuneration cum

compensation
Dabur Ayurvedic
committee
Specialities Ltd.
Audit Committee
Dabur Foods Limited Audit Committee
Eicher Limited Shareholders/Investors Audit Committee
Remuneration
Grievance Committee
Committee
Reed Relay & Electronics
Dabur Pharma Limited Shareholders Audit Committee
Limited
Grievance Committee
Eicher Motors Limited Shareholders/Investors Audit Committee
Dabur International Ltd.
Grievance Committee
Balsara Hygiene
Stuart Edward Purdy ID Dabur India Limited Audit Committee
Products Limited
Remuneration cum
Balsara Home
Compensation
Products Limited
Committee
Besta Cosmetics Limited
Eagle Insurance
African Consumer Care Ltd. Company Ltd.
Punjab Tractors Limited Dr. S Narayan * ID Dabur India Limited Audit Committee
Sunil Duggal ED Dabur India Limited Apollo Tyres Ltd. Audit Committee
Dabur Foods Limited Remuneration Committee Multi Commodity
Audit Committee Exchange of India Ltd.

Balsara Hygiene Products R C Bhargava ID Dabur India Limited Audit Committee

Limited ILFS Limited Audit Committee
Balsara Home Products Polaris Software Lab Ltd. Audit Committee
Limited
Taj Asia Ltd.
Besta Cosmetics Limited
Roulunds Codan India Ltd.
Dabur International Limited
Grasim Industries Limited Audit Committee
HH Mah.Gaj Singh ID Dabur India Limited
Lord Krishna Bank Ltd.
Jodhna Medical &
Optimus Outsourcing Audit Committee
Research Centre Limited
Co. Ltd.
Maharaja Heritage
Maruti Udyog Limited Shareholders/Investors
Resorts Limited
Grievance Committee
Shankar Packagings Limited
Maruti Suzuki Audit Committee
Tourism Finance
Automobiles India Ltd.
Corporation of India Limited
Omax Auto Ltd.
Fortune Park Hotels Limited
Thomson Press Ltd. Audit committee
Birla Sunlife Insurance
Company Limited UltraTech Cement Co.Ltd. Shareholders/Investors Audit Committee
Grievance Committee
P N Vijay ID Dabur India Limited Shareholders/Investors
Grievance Committee * appointed as director w.e.f. 26th July, 2005
 DIRECTORS’ REPORT 13
Annual Report 2005-06 Dabur India Limited

To , Fixed Deposits
The Members, 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
Your Directors have pleasure in presenting the 31st Annual Report on the business and operations of the Company to- lacs is outstanding as unclaimed towards interest accrued and d u e to 524 depositors. During the year, the Compa-
gether with the Audited Accounts for the year ended 31st March, 2006. ny has deposited a s u m of Rs.1,23,768/- towards unclaimed deposits and interest in the Investors Education & Pro-
tection Fund.
Financial Results
Nature of business
Financial results are presented in Table 1. With the acquisition of Balsara Group of companies, the Company has entered in the Home Care business. Detailed dis-
cussion on the Company's nature of business is covered under the chapter Management Discussion and Analysis which
forms part of this report.
Table 1: Financial results
Dabur Foods Limited, a wholly owned subsidiary, has during the year extended its activities into manufacturing of
(Rs.crore) fruit juices/pulps in addition to its existing business of trading in these products. There has been no change in the na-
ture of business of other subsidiary companies during the year.
2005-06 2004-05
Turnover (including other income) 1375.03 1280.22 Subsidiaries
During the year Balsara Hygiene Products Limited, Balsara Home Products Limited and Besta Cosmetics Limited be
Profit before Tax 214.36 165.02
came subsidiary companies of the Company. During the year in view of the restructuring in the investment portfoli
Add: — Provisions of earlier years written back 0.29 — Dabur Nepal Private Limited, Dabur Overseas Limited have ceased to be direct subsidiaries and have now become in
214.65 165.02
direct subsidiaries through Dabur International Limited.
As required under the provisions of Section 212 of the Companies Act, 1956, a statement of the holding company'
Less — Provision for Taxation - Current 18.08 13.00 interest in the subsidiary companies is attached as 'Annexure 2' and form part of this report.
— Provision for Taxation - Deferred 4.00 4.00 In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy o
Balance Sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors of the subsidiar
— Provision for taxation - Fringe Benefit 3.70 — companies have not been attached with the Balance Sheet of the Company.
Profit after Tax 188.87 147.97 The Company will make available these documents/details upon request by any Shareholder of the Company o
Subsidiary interested in obtaining the same. The Annual accounts of the Subsidiary Companies are also available fo
Add: — Balance in Profit & Loss Account brought
Inspection by the Shareholders at the Head Office of the Company and also that of its Subsidiaries. However, pursuan
forward from the previous year 125.23 81.12 to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial State
ments presented by the Company includes the financial Information of its Subsidiaries. The following information i
— Transferred from Investment Allowance Reserve — 0.83
aggregate for each Subsidiary are also being disclosed (a) capital (b) reserves (c) total assets (d) total liabilities (e) de
— Transferred from Investment Deposit Reserve — 1.82 tails of investment (except in case of investment in subsidiaries) (f) turnover (g) profit before taxation (h) provision fo
taxation (i) profit after taxation (j) proposed dividend. The said information is given in 'Annexure 3' and form part o
— Transferred from Capital Redemption Reserve 0.57 —
this report.
Profit available for appropriation 314.67 231.74
Appropriation to: Auditors' Report
The observations of Auditors in their report read with the relevant notes to accounts in Schedule P are self-explanatory
General Reserve 25.20 25.15 and do not require further explanation.
Interim Dividend - Paid 42.99 28.63
Employees Stock Option Plan
Final Dividend - Proposed 57.33 42.96 During the year 54,14,927 options in 8 trenches were granted to eligible employees of the Company in terms of Em-
Corporate tax on Dividend 14.07 9.77 ployees 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
Balance carried over to Balance Sheet 175.00 125.23 30th May, 2005, 1,36,989 equity shares on 5th August, 2005 and 32,190 equity shares on 7th November, 2005 against
Total 314.67 231.74 the options exercised by the employees.
The particulars of options issued under the said Plan as required by SEBI (Employee Stock Option Scheme and Em-
ployee 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 Particulars of Employees
recommended a final dividend of Re.1 per share (i.e.100%) to the members for their approval. The final dividend, if ap- Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with Companies (Partic-
proved, will be paid to members within the period stipulated by the Companies Act, 1956. The Dividend Payout Ratio ulars of Employees) Rules, 1975 as amended are given in 'Annexure 5 and form part of this report.
for the current year (inclusive of corporate tax on dividend distribution) will be 60.57%.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo
Operations a n d B u s i n e s s Performance
Kindly refer to Management Discussion & Analysis covered under Corporate Governance which forms part of this A. Conservation of energy:
Report.
a) Energy conservation measures taken:-
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 • Various energy conservation techniques were initiated at large scale and successfully implemented.
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 • Auto modulation system installed in Boiler feed system at Baddi.
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. • Maintained / controlled the mixing of Fuel & Air ratio resulting into maximization of boiler efficiency.

Corporate Governance • Online monitoring of Boiler Efficiency through LAN resulting into improvement of Efficiency by 3%.
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 Com- • Auto Power Factor correction system installed.
pany 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 • Power Capacitor Bank of 100 KVAR installed at Alwar to maintain the Power Factor.
compliance of Corporate Governance Code embodied in Clause 49 of the Listing Agreement is attached as Annexure 1
and form part of this Report. • Strict control of Power Factor in range of 0.99 to 0.997.

Directors
During the period Dr Anand Burman and Mr Amit Burman have resigned from the executive directorship of the Com-
pany, 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 Arti-
cles of Association of the Company.
The brief resume/details relating to directors who are to be appointed/re-appointed are furnished in the explanato-
ry statement to the notice of the ensuing annual general meeting.
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsi-
bility Statement, the Directors confirm:
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 effi-
ciency. Commissioning is expected by May'06. This system works by controlling the ratio of fuel and air.
c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the
cost of production of goods:-
The energy conservation measures taken during the year have resulted into yearly saving of approx-
imately 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 condi-
tion and consistency in quality and improved productivity.
d) Total energy consumption and energy consumption per unit of production as per Form A

i) That in the preparation of the annual accounts, the applicable accounting standards have been followed and no
material departures have been made from the same;
ii) That they had selected such accounting policies and applied them consistently and made judgements and esti-
mates 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;
iii) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance
with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
iv) That they had prepared the annual accounts on a going concern basis.
Change in Capital Structure and Listing of shares
The Company's shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) and are ac-
tively traded. In the year under review, the following shares were admitted for trading to NSE and BSE against the op-
tions 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 en-
suing Annual General Meeting and being eligible offer themselves for reappointment as statutory auditors & branch au-
ditors respectively.
Cost Auditor
M/s Ramanath Iyer & Company, Cost Accountants were reappointed as Cost Auditors to conduct cost audit of the ac-
counts 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 in-
cludes 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 supple-
mented 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 transac-
tions in value terms. Independence of the audit and compliance is ensured by the direct reporting of Internal Audit Di-
vision and Internal Auditors to the Audit Committee of the Board.
• Attached herewith as Annexure 6
B. Technology Absorption:
Efforts made in technology absorption as per Form B is attached herewith as Annexure 7.
C Foreign Exchange earnings and outgo:
i) Activities and initiatives relating to exports:
The impetus on international business continued to gain momentum. This was done through sharper strate-
gic 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 busi-
ness 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 Rus-
sia, 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 op-
portunities.
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.
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.
Operations Review
For detailed operational review kindly refer to Management Discussion and Analysis covered under Corporate Gov-
ernance, 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 organi-
zation. 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 require-
ment. 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 har-
monious 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 un-
stinting 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.
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 condi-
tions 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 effi-
ciency or effectiveness with which the management has conducted the affairs of the Company.
For G Basu & Co
Chartered Accountants

For and on behalf of the Board S.LAHIRI

Partner
V C Burman Membership No. 51717
Chairman
New Delhi
New Delhi 25th April 2006
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 *Dabur Dabur Dabur *Dabur *Asian *Pasadensa *Weikfield *African Balsara Balsara *Besta
Nepal Overseas Foods International Egypt Consumer Foods International Consumer Home Hygiene Cosmetics
Pvt.Ltd. Ltd. Ltd. Ltd. Ltd. Care Pvt.Ltd. Ltd. (UAE) Ltd. Care Ltd. Products Ltd. Products Ltd. Ltd.

2 Holding Company's Interest — — 20,000,000 Equity 1,000,000 Equity — — — — — 12,290,711 3,862,100 —

Shares of Rs. 10 Shares of Pens equity shares of equity shares of
Each fully Sterling 1 Each Rs 10 each fully Rs 10 each fully
Paid Up fully Paid Up paid up paid up

3 Extent of Holding — — 100% 100% — — — — — 94.18% 99.52% —

4 Subsidiary Financial Year 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006 31/03/2006
ended on

5 Net aggregate amount of

subsidiaries Profit/(Loss) not
dealt within the holding
company's accounts :

(i) For the financial Year — — Rs.12,10,18,111 Rs 5,75,60,758 — — — — — Rs.13,88,61,289 (Rs.32,77,374) —

of the subsidiaries AED 47,38,681

(ii) For the previous financial — — (Rs.14,81,28,846) Rs.5,83,99,567 — — — — — — — —

year of the subsidiaries AED 48,86,993
since they become the holding
company's subsidiaries.

6 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 Dabur Nepal Dabur Foods Pasadensa Dabur Inter- Weikfield Inter- Asian Consumer- African Consu- Dabur Egypt Dabur Over- Balsara Home Balsara Hygeine Besta Cosmetics
Pvt. Ltd. Ltd. Foods Ltd. national Ltd. national (UAE) Ltd. care Pvt. Ltd. mercare Ltd. Ltd. seas Ltd. Products Ltd Products Ltd Ltd

1.Capital 499.08 2,000.00 500.00 2,906.82 194.47 95.85 159.10 234.67 223.08 1,305.00 388.08 90.00
NR 798.52 AED 239.30 AED 16.01 BDT 149.77 ND 440.49 USD 5.26 USD 5

2 Reserves 5,980.85 -271.12 -298.65 1,508.04 424.69 -93.31 -136.93 30.27 -10.60 -32.24 1,163.98 26.92
NR 9569.36 AED 124.15 AED 34.96 BDT -145.80 ND -379.11 USD 0.68 USD -0.24

3. Total Assets 15,961.56 5,970.71 2,221.90 9,376.02 1,644.94 617.45 302.27 820.30 234.50 8,945.47 1,976.15 186.74
NR 25538.50 AED 771.88 AED 135.42 BDT 964.76 ND 836.88 USD 18.39 USD 5.26

4. Total Liabilities 15,961.56 5,970.71 2,221.90 9,376.02 1,644.94 617.45 302.27 820.30 234.50 8,945.47 1,976.15 186.74
NR 25538.50 AED 771.88 AED 135.42 BDT 964.76 ND 836.88 USD 18.39 USD 5.26

5. Details of Investments 12.49 500.21 — 3,194.28 — — — — 195.06 80.29 731.94 —

NR 19.98 AED 262.97 — — — — USD 4.37

6. Turnover 19,481.76 19,253.41 727.03 7,713.93 3,341.43 1,443.36 802.07 1,324.96 — 19,156.53 171.39 121.83
NR 31170.82 AED 635.05 AED 275.08 BDT 2255.25 ND 2220.63 USD 29.70 —

7.Profit before Taxation 604.03 1,370.37 1.32 570.43 -31.82 -56.31 -105.43 85.91 -4.21 1,514.56 7.56 115.35
NR 966.45 AED 46.96 AED - 2.62 BDT -87.98 ND -291.90 USD 1.93 USD -0.09

8. Provision for Taxation 105.54 160.21 -1.32 — — 5.50 — — — 125.95 40.33 28.86
NR 168.86 — — 8.59 — — —

9. Profit after Taxation 498.49 1,210.16 — 570.43 -31.82 -61.80 -105.43 85.91 -4.21 1,388.61 -32.77 86.48
NR 797.58 AED 46.96 AED - 2.62 BDT -96.56 ND -291.9 USD 1.93 USD -0.09

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)
 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 Cumulative iii. Employees who None

received the options
1. Number of Options granted: 54,14,927 79,75,537 during the year equal
to or exceeding 1% of
the issued capital of the
2. Pricing formula: Each option carries the right to the holder
Company at the time
to apply for equity shares of the Company at par. of grant:

3. Options vested: 2,31,679 9,52,303

11 Diluted earning per Rs.3.27
share (EPS) pursuant
4. Options exercised: 2,31,679 9,34,803 to issuance of options
under ESOP:

5. Total number of shares arising as a result of exercise of option: 2,31,679 14,36,562

12. The Company had been using intrinsic value method of accounting ESOP expenses as prescribed by SEBI (Employees Stock Option
Scheme and Employees Stock Purchase Scheme) Guide Lines 1999,to account for stock options issued under Dabur ESOS 2000,the
6. Options lapsed/Cancelled: 17,504 3,49,250
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.
7. Variation in terms of options: None None As allowed by the above referred SEBI Guidelines the company has decided to continue to apply the intrinsic value method of ac-
counting and the disclosure required as per para 12 (l) of the Guidelines are given herein below:-
8. Money realized by exercise of options: Rs.2,31,679/- Rs.14,36,562/-
(Rs. in lacs)
9. Total number of options in force: 66,91,484 66,91,484 Net profit after tax,as reported in audited accounts 18908.37
Add: Stock Option compensation expenses charged in above reported profit 685.99
10 Employee-wise details of options granted during the year to:
Deduct:Stock option compensation expenses determined under 678.99
fair value method (black scholes model)
i. Senior managerial : Mr P D Narang Group Director - Corp.Affairs 781973
Net profit after tax,as adjusted 18915.37
personnel Mr Sunil Duggal Chief Executive Officer 773559
Impact on profit (i.e.profit would have been lower by)
Mr Charanjit Mohan Executive Director-Operations 370498
Earning per share (Rs.) Basic Diluted
Mr V S Sitaram Executive Director-CCD 260416
— As reported 3.30 3.27
Mr Nitin Ghadiyar Executive Director-CHD 324718
— As adjusted 3.30 3.27
Mr N Venkatakrishnan Executive VP - Commercial 221112
— Impact on EPS 0.0001 0.0001
Mr Jude Magima Executive VP - CPPD 286887
Mr A Sudhakar Executive VP - Human Resources 221112
13. Weighted average exercise price (per option) Re.1
Mr S Raghunandan Executive VP - Sales (CCD) 280438
Weighted average fair value of per option:
Mr Devender Garg Executive VP - Marketing (CCD) 280438
(per intrinsic value method) Rs.110.73
Mr Rajan Varma Chief Financial Officer 190436
(per black scholes model) Rs.110.47

ii. Employees who Mr P D Narang Group Director - Corp.Affairs 781973

14. The fair value of each option is estimated using the Black Scholes model after applying the following weighted average assump-
received the options Mr Sunil Duggal Chief Executive Officer 773559 tions:-
amounting to 5% or Mr Charanjit Mohan Executive Director-Operations 370498 — Risk free interest rate 5.84
more of options Mr Nitin Ghadiyar Executive Director-CHD 324718 — Expected life 1 to 5 years
granted during Mr Jude Magima Executive VP - CPPD 286887 — Expected volatility (%) 2.04
that year: Mr S Raghunandan Executive VP - Sales (CCD) 280438 — Expected Dividend (%) 250
Mr Devender Garg Executive VP - Marketing (CCD) 280438 — Price of underlying shares in the market at the time of option grant Rs.111.73

Annexure '5'

Statement of particulars of employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read w i t h Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors' Report for the year
ended 31st March, 2006

Name Designation/ Qualifications Expe- Remu- Date of Age Particulars of Last

Nature of Duties rience neration Appoint- (in yrs) employment
(in yrs) ment

1 Ananthanarayan S. Business Head - UK and Europe M Sc,MMS 23 6,722,650 11/01/2004 47 General Manager ,Dabur International Limited

2 Bhaumik Asim (*) Unit Head - Uttranchal M Sc,M Phil. 18 2,250,728 04/25/2005 44 Factory Manager, Britannia Industries Limited

3 Bhujbal Dilip Senior General Manager - S&M (Consumer Health Division) B Sc,MBA 29 2,827,177 04/01/2002 52 General Manager, Weikfield International (UAE) Ltd

4 Burman Amit (*) Director Graduate in Business Admn.(USA) 13 335,151 12/09/1997 37 Project Manager,Dabur Nepal Private Limited

5 Burman Chetan (*) Dy.General Manager - Sales & Mktg. BBA 10 233,867 01/02/1996 34 --
6 Burman Mohit (*) General Manager - Sales & Mktg. Graduate in Business Admn.(USA) 13 269,667 12/09/1997 37 Executive Director,Dabur Finance Limited

7 Burman Pradip Director B.Sc. (Mech.Engg.), MIT (USA) 39 9,218,488 11/02/2002 63 Director,The Printers House Private Limited

8 Burman Vivek Chand Chairman B.Sc. in Business Admn. (USA) 42 8,864,000 01/07/1963 69 Managing Director, Dabur (Dr. S.K. Burman) Private Limited

9 Das Arabind (*) Additional General Manager - Operations B Tech,M Tech 22 2,361,992 05/16/2002 45 Factory Manager, Hindustan Lever Limited

10 Deshpande S.W. Head of Manufacturing BE,PGDM 34 4,556,596 04/01/2005 56 Executive Director - Production and Operations,Balsara Home Products Limited

11 Duggal Sunil Chief Executive Officer BE(H),PGDBM 25 12,202,290 05/20/1995 49 All India Sales Operations Manager, Pepsi Foods Limited

12 Garg Devendra Executive Vice President - Marketing (Consumer Care Division) B Sc,PGDM 18 4,113,661 12/03/1993 41 Sales Operation Manager,Pepsi Foods Limited

13 Garg Rajiv Senior General Manager - Projects B Sc.- Engg. 33 2,950,196 07/31/1993 57 Dy General Manager (Engg),Vam Organics Chemicals Limited

14 Ghadiyar Nitin Executive Director - Consumer Health Division BA (Eco & Stats),MMS 27 6,360,843 26/10/2004 48 President and CEO , Morepen Laboratories Limited

15 Ghosh P.C.(*) General Manager - Operations B Sc.- Engg. 34 1,234,295 10/01/2002 54 Factory Manager, Hindustan Lever Limited

16 Governor Rusi (*) Head - Corporate QA B Tech,ME 33 1,103,627 18/12/2002 56 Head Development - Regional Innovation Center, Hindustan Lever Limited

17 Guha Sujit (*) General Manager - Supply Chain B Tech,PGDM 18 1,473,708 09/01/2005 40 Head - Supply Chain,Apollo Tyres Limited

18 Gunawant Deepika Manager - Regulatory BAMS ,MD (Ayurveda) 21 4,033,590 07/01/2004 45 ACGB

19 Krishnan V. Head - Talent Management B Sc.- Engg.,MBA 20 3,119,367 04/22/2004 42 Director - Corporate HR, Whirlpool of India Limited

20 Magima Jude Executive Vice President - Supply Management MA (Eco) 21 4,166,154 02/25/2002 42 General Manager - Materials, Marico Industries Limited

21 Mahmood Naeem Sales Manager -UK BBA 11 2,392,750 03/08/2004 34 Regional Sales Manager , Harwin Plc

22 Mohan Charanjit Executive Director - Operations BE 32 7,887,426 07/26/1999 52 General Manager - Technical, Hindustan Lever Limited

23 Narang P.D. Group Director - Corporate Affairs B Com,CA,MIIA,CS 30 12,315,906 07/01/1983 52 Management Accountant, Dabur (Dr S K Burman) Private Limited

24 Raghunandan S. Executive Vice President - Sales (Consumer Care Division) BE,PGDM 17 4,301,846 06/05/2002 41 Vice President - Sales & Distribution,Home Trade

25 Sitaram V.S.(*) Executive Director - Consumer Care Division B Tech,PGDM 25 1,558,705 01/18/2006 48 Vice President - Strategy,Unilever UK

26 Sudhakar A. Executive Vice President - Human Resources MSc.,MA (Social Work),LLB,PGDPM 30 3,999,977 09/17/2001 55 Vice President - HR, Owens Brockway

27 Varma Rajan Chief Financial Officer B Com (Hons),CA 33 5,063,025 11/01/2000 56 Vice President & CFO, Carrier Aircon Limited

28 Venkatakrishnan N. Executive Vice President - Commercial B Com (Hons), CS, ICWA, CA 20 4,134,924 02/06/2003 45 Manager - Special Projects, Hindustan Lever Limited

Notes:
1 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.
2 All the employees have adequate experience to discharge the responsibilities assigned to them.
3 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.
4 Asterisk against a name indicates that the employee was in service for part of the year.
5 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' New Technology introduced in manufacturing & utilities

• Odomos Coils at Jammu • Consistency in Quality of Products.
FORM - A • Dust free LDM facility at Nepal • Better working condition.
(See Rule 2) • Thermic Fluid Heater for Guar Food grade
• Pilot Plant for Soap making in R&D • Better R&D controls.
Form of Disclosure of particulars with respect to Conservation of Energy • Ultra tack filtration in Real Juices. • Improved Hygiene condition and Safety.
• Water Harvesting commence. • Improve water levels quality in ground water
A. Power and Fuel Consumption • Atomic A. Spectrophotometer • To Detect & Control heavy metals in product.
installed at DRF(FMCG).
2005-06 2004-05
1. Electricity Innovative Packaging Concept
a) Purchased • LDM -Container Shape & Pkg. Change • Different appearance/Aesthetic appeal/
• Vatika Soap Trend setting / Environmental friendly and
Units 21641998 15724186 • Gulabari 60 ml - in PET bottle. better self-life of Products.
Total amount (Rs) 89451865 63388569 • Anmol Cold Cream
• Chyawanshakti
Rate per unit 4.13 4.03
• Fit N Activ
b) Own Generation:
i) Through diesel generator 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:
Units 4158856 4754389
Not applicable
Unit per litre of diesel oil 2.79 3.13
Cost per unit 8.23 6.96
Total cost (Rs.) 34226465 33112705
Annexure '8'
ii) Through Steam Turbine/Generator Group for interse transfer of shares under clause 3(e) of Securities & Exchange Board of India (Substantial Acquisition
Units Nil Nil of Shares and Takeovers) Regulations, 1997

Unitper litre of Fuel Oil

1. Mr Ashok Chand Burman 28. Milky Investment & Trading Co. 55. Dabur Foundation
Cost/Unit (Rs.)
2. Mrs Sudha Burman 29. Poonmudi 56. Chunilal Medical Trust
2. Coal (specify quality and where used)
3. AC Burman HUF 30. Chowdry Associates 57. Mateshwari Dham Trust
Quantity (tonnes) Nil Nil
Total cost 4. Mr Ratan Chand Burman 31. VIC Enterprise Private Limited 58. Estate of Durga Prasad Makkar Trust

Average rate per tonne (Rs) 5. MrVivek Chand Burman 32. Acee Enterprises 59. Amit Laboratories Private Limited
3. Furnace Oil 6. Ms Sujata Burman 33. Gyan Enterprises Private Limited 60. Angel Softech Private Limited
Quantity (tonnes) 5561 5645 7. Mrs Asha Burman 34. Puran Associates Private Limited 61. Barcelona Investment & Trading Co.
Total cost 106950230 75822911 8. Mr Amit Burman 35. Ratna Commercial Ent.Pvt. Ltd. 62. Burmans Finvest Limited
Average rate per tonne (Rs) 19230.82 13431.39 9. Mrs Gauri Tandon 36. Ms Anisha Burman 63. Cavendish Constructions Private Ltd.
4. Others/internal generation
10. G C Burman HUF 37. Mrs Meera Burman 64. Miracle Commercial Private Ltd.
HSD
11. Mr Pradip Burman 38. Mrs Pooja Burman 65. Prayag Commercial Private Limited
Quantity (Kilo Itr) 239 761
12. Mr Chetan Burman 39. Ms Devika Burman 66. Pasadansa Foods Limited
Total cost 5305338 16874078
13. Pradip Burman HUF 40. Mrs Divya Burman 67. Wakarusa Laboratories Private Ltd.
Average rate per Kilo Itr (Rs) 22176.45 22176.15
14. Mr Sidharth Burman 41. Master Adhiraj Burman 68. Welltime Gold & Investment Pvt. Ltd.
LDO
Quantity (Kilo Itr) 211 356 15. Mrs Indira Burman 42. Ms Diya Burman 69. Dabur Ayurvedic Specialities Ltd.

Total cost 4822504 7910683 16. Dr Anand Burman 43. Mr Sandeep Tandon 70. B R Bee Products Pvt Ltd.
Average rate per Kilo Itr (Rs) 22820.86 22191.41 17. Mrs Minnie Burman 44. Hotels Private Limited 71. Dabur Research Foundation
18. Mr Aditya Burman 45. Dabur Exports Limited 72. Vansh Holdings Pvt Ltd.
B. Consumption per unit of production 19. V C Burman HUF 46. Dabur Securities Private Limited 73. Dabur Finance Ltd.
The Company is engaged in production of variety of products, hence the figures of consumption per unit of production
20. Mrs Monica Burman 47. Flagship Trading Company 74. Dabur Pharmaceuticals Ltd.
are not ascertainable.
21. Mr Mohit Burman 48. Interx Laboratories Private Limited 75. Excellent (India) Private Limited
22. Mr Gaurav Burman 49. KBC India Private Limited 76. Malhotra Trading Company Pvt. Ltd.

Annexure '7' 23. Mr Sidharth Burman (HUF) 50. Margdarshak Dabur Invest Corp 77. Moonlight Ranch Private Ltd.
FORM - B 24. Mr Saket Burman 51. Southern Enterprises 78. Shree Investments Limited
(See Rule 2)
25. Upvan Farms & Services Pvt. Ltd. 52. Western Enterprises 79. Adbur Pvt Ltd.
Form of Disclosure of particulars with respect to Technology Absorption 26. Sahiwal Inv. & Trading Company 53. Eastern Enterprises 80. New age Capital Services Pvt Ltd.

Research & Development 27. Maneswari Trading Company 54. Dr S K Burman Charitable Trust

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. Theareas of expertise cover herbal prod-
ucts, Ayurvedic products, personal care products, fruit juices and other food products, tissue culture, agro-technological research, prod-
uct 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 ef-
fective 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 Os-
teoarthritic 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 Arthir-
its.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 prac-
Celebrate the goodness of nature.
tioners of Ayurveda. Celebrate a new spirt.
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 ensurethatall the herbal medicines rolling out should be com- Celebrate a new beginning.
plying to the standards of Govt, of India as well as of the respective countries where these drugs are being exported. Three AAS equip-
ments 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 Rs.Nil
b) Recurring Rs. 663 lacs
c) Total Rs. 663 lacs
d) Total R&D expenditure as a percentage of Total Turnover 0.48%

Technology Absorption, Adoption and Innovation

1. Efforts, in brief, made towards technology 2. Benefits derived as a result of the above efforts
absorption, adoption and innovation e.g. product improvement, cost reduction,
product development, import substitution etc.

Up gradation of manufacturing
• Amla Pisthi Mfg. process through • Savingof Rs3.35Lacs/Annumfrom2 Kettles.
Hamilton Kettles at Katni.
• Guar Gum Flakers with latest Technology. • Improved Hygiene condition.
• Consistency in quality and improved
productivity.
 SECTION II 17

Dabur India Limited

ANNUAL REPORT 2005-06
DABUR INDIA FINANCIALS 18 CONSOLIDATED FINANCIALS 25 FINANCIALS AS PER US GAAP 31
Auditors’ Report
To the Members of Dabur India Limited,
Rs. in lacs
We have audited the attached Balance Sheet of Dabur India Limited as at 31st March, 2006 and its Profit & Loss Name of Nature of the dues Amount Period to Forum where
Account and the Cash Flow Statement for the year ended on that date attached thereto. These financial statements Statute which the the dispute is
are the responsibility of the company’s management. Our responsibility is to express an opinion on these finan- amount pending
cial statements based on our audit. relates

We conducted our audit in accordance with auditing standards generally accepted in India. These standards Sales Tax Classification of Hajmola Candy 4.88 2002-03 Dy.Commissioner (Appeal)
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
-do- Non Submission Of CST Form 9.63 2002-03 -do-
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 -do- Sales Tax on Stock Transfer 28.60 1991-2002 Sales Tax Tribunal
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. -do- Classification of L.D.M. 89.00 1990-93 High Court

i. As required by the Companies (Auditors’Report) Order 2003 issued by the Central Government in terms of sec- -do- Classification of L.D.M. 1.44 1993-94 High Court
tion 227 (4A) of the Companies Act, 1956, we enclose herewith in the annexure a statement of the matter spec-
ified therein. -do- Classification of Gulabari 0.74 1999-00 Dy.Commissioner (Appeals)

ii. We hereby report that the report on the accounts of Alwar and London branches audited by the branch audi- -do- Classification of LDM 0.03 2000-01 Dy.Commissioner (Appeals)
tors were received and properly dealt with by us while preparing our report.
-do- Short payment of VAT 117.63 2001-02 Dy. Commissioner
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. -do- Short payment of VAT 120.09 2002-03 Dy. Commissioner

iv. In our opinion, proper books of accounts, as required by law have been kept by the Company so far as appears -do- Short payment of Entry tax 0.57 2002-03 Dy. Commissioner (Appeals)
from our examination of books of accounts.
-do- Intt. On TOT & Surcharge 2.84 2001-02 Dy. Commissioner (Appeals)
v. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of
accounts. -do- Intt. On TOT & Surcharge 3.70 2002-03 Dy. Commissioner (Appeals)
vi. Balance Sheet and Profit & Loss Account have been prepared in due compliances of Accounting Standards -do- Rejection of branch transfer 0.49 1986-87 High Court
referred to in sub section (3C) of section 211 of Companies Act, 1956.
-do- Check Post Matter 0.45 1997-98 Dy. Commissioner (Appeals)
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 -do- Rejection of branch transfer 7.20 1991-92 Dy. Commissioner (Appeals)
the director within the meaning of section 274 (1) (g) of the Companies Act, 1956.
-do- Demand on Excise matter u/s 21 0.43 1998-99 Dy. Commissioner Assessment
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 -do- C.S.D. claim rejected. 31.90 2000-01 Tribunal
manner so required and give a true and fair view in conformity with the accounting principles generally
accepted in India. -do- CSD claim rejected 9.86 2001-02 Tribunal

a) In the case of Balance Sheet, of the State of Affairs of the company as at 31st March, 2006, and, -do- Check Post 0.14 2004-05 Dy.Commissioner Assessment

b) In the case of Profit and Loss Account, of the Profit for the year ended on that date; and -do- Check Post 0.37 2004-05 Tribunal
c) In the case of cash flow statement, of the cash flows for the year ended on that date. -do- Check Post 0.42 2004-05 Dy.Commissioner Assessment

For G Basu & Co S.LAHIRI New Delhi -do- Check Post 0.60 2004-05 Dy. Commissiner Assessment
Chartered Accountants Partner, Membership No. 51717 25th April 2006
-do- Excise Information dispute 40.00 2000-01 High Court

-do- Form 18A disputed 0.45 1999-00 Dy. Commissioner

Annexure to the auditors' report as referred to in para i of the said report of even date.
-do- Non-filing of Form-F 0.60 1998-99 Dy. Commissioner
1 a) The Company has maintained proper records showing full particulars including quantitative details and
situation of fixed assets. -do- Dispute on Taxability of Coconut Oil 4.47 2001-02

b) The fixed assets have been physically verified by the Management at reasonable intervals. No material dis-
crepancies between book records and the physical inventories have been noticed on such verification.
Income Tax :-
c) Fixed assets disposed of during the year were not material enough to affect the going concern identity of
the company. Income Tax Demand u/s 263/143(3) 34.80 1998-99 ITAT
2 a) The inventories have been physically verified at reasonable intervals by the management. -do- Demand u/s 263/143 (3) 138.87 2002-03 CIT (A) (III)
b) The procedures of physical verification of inventories followed by the management are reasonable and ade-
quate 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 main- Excise Duty :-
taining proper records of inventory. The discrepancies noticed on verification between the physical stocks Excise Duty Classification of Anmol Coco-nut Oil 514.60 1993-2001 Dy.Commissioner
and book records were not material and have been properly dealt with in the books of accounts.
-do- Classification of Saunf Ka Ark/ Clove Oil 23.44 1998-2004 Commissioner- Appeals
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 -do- Modvat on Cap-ital goods 0.82 1996 Dy.Commissioner
at any point of time during the year was three involving maximum due of Rs. 3500 lacs.
-do- Modvat on in-puts (57H) 2.42 1998 Tribunal
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. -do- Hajmola Candy 113.07 2004-05 Commissioner Appeals/High Court

d) The company has not taken any loan, secured or unsecured from companies, firms and other parties cov- -do- Classification on Animal Feed supplement 174.75 1994-2003 Commissioner-Appeals
ered in register under section 301 of the Act maintained by the company.
-do- Post manufactu-ring expenses 0.30 2002-2003 Tribunal
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 -do- Post manufacuuring expenses 0.38 2004-05 Commissioner
inventory and fixed assets and on the sale of goods. During the course of our audit no major weakness has
-do- Classification of Janma Ghunti 388.96 1994-2000 Commissioner
been noticed in the internal controls. We have not observed any failure on the part of the company to cor-
rect major weakness in internal control system. -do- Import of Honey 1.78 2000 Commissioner - Appeals
5 a) Based on audit procedures applied by us and according to the information and explanations provided by -do- Removal of Input 5.91 2000-01 Commissioner-Appeals
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. -do- MOT charges 0.23 2003 Tribunal
b) According to information and explanations given to us, the transactions of purchase and sale of goods/ser- -do- Post Manufacturing expenses 67.55 2000-03 Commissioner-Appeals
vices 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. -do- Post manufacturing expenses 42.02 2000-03 Commissioner-Appeals

6 In our opinion and according to information and explanations given to us, the company has complied -do- Valuation of Paclitaxel 963.99 1995-2000 Settlement Commission
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 -do- Valuation of Docetaxel/Paclitaxel 498.34 1997-2003 Tribunal
Tribunal/court has passed any adverse order against company.
7 In our opinion the c o m p a n y has an internal audit system c o m m e n s u r a t e with it’s size and n a t u r e
10 Based on the audit procedures and on the information and explanations given by the management, we are
of its b u s i n e s s .
of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank
8 On the basis of records produced we are of the opinion that prima facie cost records and accounts pre- or debenture holder.
scribed by the Central Government under section 209 (i) (d) of the Companies Act, 1956 in respect of
11 The company has not granted any loan or advance secured by pledge of share, debenture or other security.
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 12 Based on our examination of the records and evaluations of the related internal controls, we are of the opin-
records. ion that proper records have been maintained of the transactions and contracts relating to shares, securi-
ties, debentures and other investments dealt in by the company and timely entries have been made in the
9 a) According to information and explanations given to us, the company is depositing with appropriate author-
records. We also report that the company has held the shares, securities, debentures and other investments
ities undisputed statutory dues including provident fund, investor education and protection fund, employ-
in its own name except for those pending transfer in Company’s name.
ees 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. 13 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.
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-à-vis forums where such dis- 14 The term loans taken by the company have been applied for the purpose for which they were raised.
putes are pending are mentioned below.
15 No fund raised on short term basis has been used by the company for long term investment.
Rs. in lacs
16 The company has made preferential allotment of shares under their ESOP scheme to the parties covered in
Name of Nature of the dues Amount Period to Forum where the register maintained under section 301 of the Companies Act, 1956 during the year. The price at which
Statute which the the dispute is these shares were issued are not prima-facie prejudicial to the interest of the company.
amount pending
relates 17 The Company has not issued any secured debenture during the year.
Sales Tax :- 18 The Company has not raised any fund through public issue during the year
Sales Tax Demand on Hajmola Candy 27.78 1996-97 Sales Tax Tribunal 19 Based upon the audit procedures performed and information and explanations given by the management,
we report that no fraud on or by the company has been noticed or reported during the course of our audit.
-do- -do- 25.88 1997-98 Dy. Commissioner (Appeal)
20 Other clauses of the order are not applicable to the Company.
-do- -do- 27.05 1998-99 -do-

-do- -do- 70.35 1999-2000 -do- For G Basu & Co S.LAHIRI New Delhi
Chartered Accountants Partner, Membership No. 51717 25th April 2006
-do- Classification of Hajmola Candy 12.36 2000-01 Dy. Commissioner (Appeal)
 18 FINANCIAL STATEMENTS
Dabur India Limited Annual Report 2005-06

Balance Sheet as at 31st March, 2006 Profit and Loss Account for the year ended 31st March, 2006
Schedule As at 31st As at 31st Schedule For the year ended For the year ended
March, 2006 March, 2005 31st March,2006 31st March,2005
(Rs.in lacs) (Rs. in lacs) (Rs.in lacs) (Rs.in lacs)
Income : J
Sources of funds :
Sales Less Returns 136,968.29 126,871.51
Shareholders' funds:
Other Income 535.02 1,150.32
A) Share Capital A 5,733.03 2,864.20 Total Income 137,503.31 128,021.83

B) Reserves and Surplus B 39,053.84 44,786.87 30,943.15 33,807.35

Expenditure :
Cost of Materials K 57,511.22 54,365.36
Loan Funds:
Excise Duty 2,689.48 4,248.86
A) Secured Loans C 1,923.23 1,570.38 Manufacturing Expenses L 3,745.55 2,919.46

B) Unsecured Loans D 134.29 3,292.60 Payments to and Provisions for Employees M 9,830.78 8,208.56
Selling and Administrative Expenses N 39,394.05 39,488.95
2,057.52 4,862.98
Financial Expenses O 565.87 429.57
Deferred Tax Liability EB 1,671.50 1,277.51 Miscellaneous Expenditure Written Off IB 426.24 149.33

Total 48,515.89 39,947.84 Depreciation 1,904.59 1,709.92

Total Expenditure 116,067.78 111,520.01
Application of Funds :
Balance Being Operating Net Profit before Taxation 21,435.53 16,501.82
Fixed Assets : Provision For Taxation Current 1,808.11 1,300.00
(a) Gross Block F 34,129.37 32,672.44 Deferred 400.00 399.83
Fringe Benefit 370.25 0.00
(b) Less : Depreciation 14,245.69 13,511.83
Net Profit after Taxation & before Extraordinary Items 18,857.17 14,801.99
(c) Net Block 19,883.68 19,160.61
Extraordinary Item (Profit/(Loss) on Long Term Tarde Investments 51.20 0.00
Investments G 27,507.77 27,094.25 Net Profit after Taxation and Extraordinary Item 18,908.37 14,801.99
Balance Brought Forward 12,522.97 8,112.18
Deferred Tax Assets EB 131.74 137.75
Provision for Taxation of earlier years written back 28.61 0.00
Current Assets,Loans & Advances: H
Provision for Taxation for earlier year 7.62 (5.30)
Transferred from Capital Redemption Reserve 56.93 0.00
(a) Inventories 11,560.90 12,802.57
Transferred from Investment Allowance Reserve 0.00 82.58
(b) Sundry Debtors 2,694.25 4,928.27 Transferred from Investment Deposit Reserve 0.00 182.50
31,509.26 23,173.94
(c) Cash & Bank Balances 3,804.41 1,065.38
Appropriations
(d) Loans & Advances 10,376.66 6,400.96
Interim Dividend 4,299.29 2,862.89
28,436.22 25,197.18 Proposed Final Dividend 5,733.03 4,296.30

Less: Current Liabilities & Provisions EA Corporate Tax on Interim Dividend 602.97 374.14
Corporate Tax on Proposed Dividend 804.06 602.56
Transferred to Capital Reserve 19.27 0.00
(a) Liabilities 19,342.06 23,838.05 Transferred to General Reserve 2,550.00 2,515.08

(b) Provisions 11,388.94 8,384.94 Balance Carried over to Balance Sheet 17,500.64 12,522.97
31,509.26 23,173.94
30,731.00 32,222.99
Earning per share ( In Rs.) ( Face Value Re 1 / - each)
Net Current Assets (2,294.78) (7,025.81) Basic 3.30 2.58

Miscellaneous Expenditure IA 3,287.48 581.04 Diluted 3.27 2.57

No of Shares
(To the extent not written off or adjusted)
Basic 573,149,195 572,839,426
Notes to Accounts P
Diluted 577,524,999 575,809,845
Total 48,515.89 39,947.84 Notes to Accounts P

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

Rs. Lacs Rs.Lacs

For the year ended For the year ended For the year ended For the year ended
31st March,2006 31st March,2005 31st March,2006 31st March,2005

A.Cash Flow from Operating Activities Corporate Tax On Dividend 1,205.54 887.60

Net Profit Before Tax And 21,435.53 16,501.82 3,955.31 2,604.03

Extraordinary Items Cash Used(-)/(+)Generated for Operating Activities (A) 19,434.49 20,698.77

Add: B.Cash Flow from Investing Activities

Depreciation 1,904.59 1,709.92 Purchase Of Fixed Assets (3,324.80) (5,607.94)

Loss on Sale of Fixed Assets (69.33) 4.18 Sale Of Fixed Assets 785.73 227.56

Miscellenous Expenditure written off 426.24 149.34 Purchases of Investment Including (6,279.88) (152,824.68)
Investment in Subsidiaries
Miscellenous Expenditure written off 369.67 195.91
( Included In Director Remuneration) Sale of Investments 6,067.63 143,260.48

Interest 565.87 429.57 Dividend Received 0.48 160.13

3,197.03 2,488.92 Cash Used(-)/(+)Generated for Investing Activities (B) (2,750.83) (14,784.45)

24,632.57 18,990.74 C.Cash Flow from Financing Activities

Less: Proceeds from Share Capital & Premium 2.31 1.71

Dividend Received 0.48 160.13 Repayment(-)/Proceeds (+) of Long Term Secured Liabilities (253.87) (330.49)

Profit On Sale of Investment 96.09 407.38 Repayment(-)/Proceeds(+) From Short Term Loans 606.72 (8.50)

Profit on Sale of Assets 69.33 0.00 Repayment (-)/Proceeds(+) from Deposits (44.97) 25.93

165.90 567.51 Repayment(-)/Proceeds(+) from Other Unsecured Loans (3,151.40) 1,215.10

Operating Profit Before Working Capital Changes 24,466.67 18,423.23 Payment of other Advances (2,532.61) (86.01)

Working Capital Changes: Payment Of Dividend (8,570.82) (6,855.40)

Increase/(Decrease) in Inventories (1,241.67) 1,850.64 Cash Used(-)/+(Generated) in Financing Activities (C) (13,944.63) (6,037.66)

Increase/(Decrease) in Debtors (2,234.83) 768.42 Net Increase(+)/Decrease (-) in Cash and 2,740.39 (123.34)
Cash Equivalents (A+B+C)
Decrease/(Increase) in Trade Payables 4,552.00 (7,498.63)
Cash And Cash Equivalents Opening Balance 1,065.38 1,188.72
Increase/(Decrease) in Working Capital 1,075.51 (4,879.57)
Cash And Cash Equivalents Closing Balance 3,804.41 1,065.38
Cash Generated from Operating Activities 23,391.16 23,302.80
Interest Paid 563.68 439.34
Tax Paid 2,186.09 1,277.09

As per our report of even date attached For Dabur India Ltd.

For G.Basu & Co. V.C.Burman Chairman

Chartered Accountants P.D.Narang Director
Sunil Duggal Director
S.Lahiri A.K.Jain Addl.General Manager (Finance)
Partner & Company Secretary

New Delhi
25th April 2006
 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 As at 31st As at 31st As at 31st

March, 2006 March, 2005 March,2006 March,2005
(Rs.in lacs) (Rs.in lacs) (Rs.in lacs) (Rs.in lacs)

Schedule A - Share Capital Short Term Loans - from Banks : 1,168.01 561.29

Authorised : Secured By :
1250000000 Equity Shares of Re.1 Each 12,500.00 5,000.00
Hypothecation of inventories and book debts ranking pari-passu
(Previous year 500000000 equity shares of Re. 1 ) 12,500.00 5,000.00 among Punjab National Bank , Standard Chartered Bank Ltd,
Hongkong & Shanghai Banking Corporation Ltd., State Bank of
Issued and subscribed:
India,ABN Amro Bank, IDBI Bank Ltd, United Bank Of India,
573302784 Equity shares of Re.1 each fully called up 5,733.03 2,864.20 Citi Bank NA and HDFC Bank Ltd

(Previous year-286419713 equity shares of Re.1) 5,733.03 2,864.20

Total 1,923.23 1,570.38
Notes :
1. Authorized share capital during the year increased by Rs. 7500 lacs.
Schedule D - Unsecured Loans
2. Equity shares issued & subscribed includes following issues for consideration Security deposit from dealers and others 9.00 15.92
other than cash :-
A) 4548000 equity shares of Rs.10 each fully paid up were issued pursuant Other Loans :
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 Book overdraft of current account with banks 125.29 470.75
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. Commercial papers - 2,000.00
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
External commercial borrowings -ABN Amro Bank NV - 805.93
share held by a shareholder.
Total 134.29 3,292.60
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
Notes:
10 shares against each share formerly held by a shareholder.
1. Maximum amount of commercial papers outstanding during the period
4 231679 ( previous year170661) equity shares of Re.1 each were issued during
Rs.5000 (previous year Rs.2000)
the year 2005-06 under employees stock option scheme".
2. External commercial borrowings repayble within a year Rs nil
5. 6691484 ( previous year 1534740) equity shares of Re.1 each are outstanding
(previous year Rs.805.93)
under "employee stock option scheme" as on 31st March 2006

Schedule B- Reserves and Surplus Schedule EA - Current Liabilities & Provisions

A. Current Liabilities :
Capital Reserve :
Acceptance 4,933.26 9388.39
As per last account 1,628.36 1,628.36
Amount due to SSI units (goods) 1,037.21 873.87
Add : Transferred from profit & loss account 19.27 1,647.63 - 1,628.36
Creditors for goods 2,574.26 2731.76
Share Premium Account 5,758.08 5,665.90
Creditors for expenses and other liabilities 10,594.82 10627.95
Less :Allotment of bonus shares 2,866.51 -
Advances from customers 51.24 53.71
2,891.57 5,665.90
Interest accrued but not due on loans 4.33 2.14
Add: Premium on issue of shares 159.88 3,051.45 92.18 5,758.08
Deposits - others 12.65 47.24
Capital Redemption Reserve :
Investor Education & Protection Fund to be credited by :
As per last account 56.93 56.93
Unpaid dividend 121.19 96.42
Less : Transferred to profit & loss account 56.93 0.00
Unpaid matured public deposit 7.53 10.69
General Reserve :
Interest accured on public deposit 5.57 5.88
As per last account 10,061.14 7,546.06
19,342.06 23,838.05
Add : Transferred from profit & loss account 2,550.00 12,611.14 2,515.08 10,061.14
B. Provisions :
Profit and Loss Account 17,500.64 12,522.98
For dividend (proposed) - final 5,733.03 4,296.30
Employee Stock Option Scheme Outstanding:
For corporate tax on proposed final dividend 804.06 602.56
As per last account 915.66 728.81
For staff welfare 480.00 360.00
Add:Addition during the year 3,503.78 279.03
For leave salary 18.50 208.09
4,419.44 1,007.84
For taxation :
Less:Deletion during the year 176.46 4,242.98 92.18 915.66
Brought forward 2,917.99 2,171.59
Total 39,053.84 30,943.15
Provision for the year 2,178.36 1,300.00

5,096.35 3,471.59
Schedule C - Secured Loans
Adjusted during year 743.00 553.60
Term Loans :
4,353.35 11,388.94 2,917.99 8,384.94
PICUP under trade tax loan scheme 755.22 1,009.09
Total 30,731.00 32,222.99

Secured by:

A) Loan amounting to Rs. 1338.72 ( in term of original agreement) Schedule EB - Deferred Tax Liabilites (Net)
First charge on the movable and immovable assets inlcuding plant
and machinery of the Company ( present and future) situated at Deferred tax liaibility :
plot no. 5/1 and 5/13, site IV, industrial area, Sahibabad, Ghaziabad Depreciation 1671.50 1277.51

B) Loan amounting to Rs. 125.00 ( in term of original agreement) Less: Deferred tax assets :
First charge on immovable assets ( present and future) of the VRS Payment 74.55 6.01
Company situated at plot No.5/1 and 5/13,site IV,
industrial area, Sahibabad, Ghaziabad Other disallowances under section 43B of income tax act 1961 57.19 131.74 131.74 137.75

Total 1539.76 1139.76

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 F-Fixed Assets

Gross Block Depreciation Block Net Block

As At Additions Transfer/ As at Upto For the period Adjustment Upto As at As at

01.04.2005 2005-2006 Adjustment 31.03.2006 01.04.2005 2005-2006 2005-2006 31.03.2006 31.03.2006 31.03.2005
2005-2006
Leasehold Land 748.33 6.70 - 755.03 35.80 8.79 - 44.59 710.44 712.53
Freehold Land 291.38 3.64 60.73 234.29 - - - - 234.29 291.38
Building,Roads & Culverts 9,495.14 557.72 - 10,052.86 2,624.41 288.15 - 2,912.56 7,140.30 6,870.73
Plant & Machinery 14,318.11 1,527.33 1,304.59 14,540.85 7,231.48 933.31 772.67 7,392.12 7,148.73 7,086.63
Computer 2,406.56 508.14 279.77 2,634.93 1,701.87 246.16 268.82 1,679.21 955.72 704.69
Vehicles 772.07 189.22 185.93 775.36 347.72 134.05 107.43 374.34 401.02 424.35
Furniture Fixtures 2,618.58 151.28 36.86 2,733.00 1,330.85 170.46 21.82 1,479.49 1,253.51 1,287.73
Patents 1,095.97 - - 1,095.97 239.70 123.67 - 363.37 732.60 856.27
Livestock 0.22 - - 0.22 - - - - 0.22 0.22
Capital Work in Progress 926.08 1,502.30 1,121.52 1,306.86 - - - - 1,306.86 926.08
Total 32,672.44 4,446.33 2,989.40 34,129.37 13,511.83 1,904.59 1,170.74 14,245.69 19,883.69 19,160.61
Previous Year 27,450.18 9,043.48 3,821.22 32,672.44 11,955.85 1,709.92 153.94 13,511.83 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 As at 31st As at 31st As at 31st
March,2006 March,2005 March,2006 March,2005
(Rs.in lacs) (Rs.in lacs) (Rs.in lacs) (Rs.in lacs)

Schedule G - Investments C. Share Application money pending allotment 2,178.00 17,103.15

(Subscription of 600000 equity shares of Dabur International Ltd
A Current investments
of Pound 1 each at a price of Rs. 363 per share INC)
Quoted-other than trade
Total 27,534.76 27,094.25
1 Alliance Mutual Fund — 0.00 0.00
Less provision for diminution in long term trade investment 26.99 0.00
(Purchased during the year) Units 19361076.60
(Sold during the year) Units 19361076.60 Total 27,507.77 27,094.25
Notes :
2 ABN Mutual Fund — 0.00 1,775.00
Aggregate Book Value of Unquoted Investments 23,442.97 22,712.46
(Purchased during the year) Units 54525669.05 (17,259,242.05) Aggregate Book Value of Quoted Investments 4,091.79 4,381.79
(Sold during the year) Units 71784911.1 Aggregate Market Value of Quoted Investments (Based on 31st March 2006 Quotes) 4,342.80 4,617.80
Notes :
3 Birla Mutual Fund — 0.00 0.00 1 All Equity shares are fully paid up.
2 Provision for dimunition in long term trade investment pertains to investment in Dabon
(Purchased during the year) Units 11325215.95 International Pvt.Ltd.
(Sold during the year) Units 11325215.95 3 Disclosure of shareholding in subsidiaries/step down subsidiaries is as follows:
Name of Subsidiaries % Stake
4 CHOLA Liquid Fund - Institutional Plus-Growth 6,121,645.75 871.00 1,080.00 Dabur International Ltd 100% held by Dabur India Limited
Dabur Foods Ltd. 100% held by Dabur India Limited
(Purchased during the year) Units 40193243.81 (8,025,741.82) Pasadensa Foods Ltd 100% held by Dabur Foods Ltd
(Sold during the year) Units 42097339.89 African Consumercare Ltd 90% held by Dabur International Ltd
Dabur Overseas Ltd 100% held by Dabur International Ltd
5 DSP Mutual Fund 100,000.00 1,000.00 0.00 Asian Consumer Care Pvt Ltd 76% held by Dabur International Ltd
Besta Cosmetics Ltd 2.13% held by Balsara Home Products Ltd
(Purchased during the year) Units 5619790.69 49.89% held by Balsara Hygeine Products Ltd
(Sold during the year) Units 5519790.69 47.98% held by Dabur India Ltd
Balsara Hygeine Products Ltd 99.52% held by Dabur India Ltd
6 Deutsche Bank Mutual Fund — 0.00 0.00 Balsara Home Products Ltd 94.18% held by Dabur India Ltd
5.82% held by Balsara Hygeine Products Ltd
(Purchased during the year) Units 3590135.74
Dabur Egypt Ltd. 24% held by Dabur International Ltd
(Sold during the year) Units 3590135.74 76% held by Dabur Overseas Ltd
Weikfield International (UAE) Ltd 38.41% held by Dabur International Ltd
7 HSBC Mutual Fund Dabur Nepal Pvt.Ltd 97.5% held by Dabur International Ltd
(Purchased during the year) Units 1663874.52 — 0.00 0.00
(Sold during the year) Units 1663874.52
Schedule H -Current Assets, Loans and Advances
A. Current Assets :
8 JM Floter Fund- S T P Growth — 0.00 0.00
(Purchased during the year) Units 14021759.21 Inventories
(Sold during the year) Units 14021759.21 Raw Materials 3,464.00 4,383.16

9 Kotak Mahindra Mutual Fund 12,160,294.80 1,716.00 0.00 Packing Materials,Stores And Spares 2,059.37 1,957.67
(Purchased during the year) Units 22070258.03 Stock In Process 794.39 614.82
(Sold during the year) Units 9909963.24 Finished Goods 5,243.14 5,846.92
10 Principal Mutual Fund — 0.00 522.00 11,560.90 12,802.57
(Purchased during the year) Units 131782808.67 (5,069,567.91) Sundry Debtors (Unsecured) :
(Sold during the year) Units 136852376.59 Debts Outstanding For A Period Exceeding Six Months :
11 Prudential Mutual Fund 4,510,477.84 500.00 0.00 Considered Good 23.62 219.51
(Purchased during the year) Units 11673863.38 Considered Doubtful 119.89 11.98
(Sold during the year) Units 7163385.54
143.51 231.49
12 Reliance Liquid Fund — 0.00 0.00 Less :Provision For Doubtful Debts 119.89 11.98
(Purchased during the year) Units 14965422.50
23.62 219.51
(Sold during the year) Units 14965422.50
Other Debts (Considered Good) 2,670.63 2,694.25 4,708.76 4,928.27
13 Sahara Mutual Fund — 0.00 1,000.00
Cash And Bank Balances :
(Purchased during the year) Units 22583566.95 (8,395,600.71)
(Sold during the year) Units 30979167.65 Cash In Hand 28.63 18.90
Balances With Scheduled Banks
14 SCB Mutual Fund — 0.00 0.00
(Purchased during the year) Units 5709112.89 In Current Accounts ( Includes Rs. 121.19 In Unpaid Dividend Account ; 3,661.55 950.23
(Sold during the year) Units 5709112.89 Previous Year Rs.96.49)

15 Sundram Mutual Fund In Fixed Deposit Accounts 49.71 38.09

(Purchased during the year) Units 19160961.65 0.00 0.00 ( Pledged With Government Authorities Rs 10 Previous Year Rs. 10)
(Sold during the year) Units 19160961.65 Balance With Non Scheduled Banks
16 TATA Mutual Fund 0.00 0.00 In Current Accounts 61.32 49.73
(Purchased during the year) Units 4635609.87 In Fixed Deposit Accounts
(Sold during the year) Units 4635609.87 Postal Savings Bank Accounts(Deposited With Excise Authority) 0.95 0.95
17 UTI Mutual Fund — 0.00 0.00 Remittance-In-Transit & Cheques-In-Hand 2.25 3,804.41 7.48 1,065.38
(Purchased during the year) Units 246888.06 18,059.56 18,796.22
(Sold during the year) Units 246888.06
B. Loans and advances (unsecured, considered good, unless stated otherwise)
B. Long term investement Loans & Advances To Subsidiaries 3,000.00 -
I) Quoted-Equity Shares- Other than Trade
Security Deposit With Various Authorities(Including Deposit 758.39 901.04
1 Dabur Pharma Ltd 479,400.00 4.79 4.79
With Govt. Authorities Rs. 264.54 Previous Year Rs. 435.89)
II) Unquoted -Equity Shares - Trade Investments
Advance Payment Of Tax 4,353.53 2,910.44
1 Sanat Products Ltd 50,000.00 105.00 105.00
Advances to suppliers (including due from subsidiaries 1,326.52 847.15
2 Dabon International Pvt Limited 270,000.00 27.00 1,350.00 Rs.142.14 previous year Rs.72.64)
(13230000 shares sold during the year) Advances To Employees 158.16 170.53
3 Green Valley Products Pvt. Ltd — 0.00 6.50 Balance With Excise Authorities 434.39 990.91
(65000 shares sold during the year) Other advances recoverable in cash or in kind or for value to be received 345.67 580.89
III) Unquoted Equity Shares - Trade Investments in 10,376.66 6,400.96
Subsidiary Companies Total (A+B) 28,436.22 25,197.18
1 Dabur Overseas Limited — 0.00 161.06 Notes

(50000 shares sold during the year) 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
2 Dabur Nepal Private Limited — 0.00 699.07
A. Debts due from director/officer of the company 0.00 0.00
(638520 shares sold during the year) B. Maximum amount due from director/office of the company 0.00 0.00
At any time during the year
3 Dabur Foods Limited 20,000,000.00 2,000.00 1,000.00 3. Additional disclosure as per clause 32 of listing agreement
(1000000 Shares allotted during the year) A. Loans and advances to subsidiaries
Dabur Foods Ltd; amount outstanding 300.00 0.00
4 Dabur International Limited 1,000,000.00 2,287.50 2,287.50 Maximum outstanding during the year 300.00 0.00
Dabur International Ltd; amount outstanding 2,700.00 0.00
5 Balsara Hygiene Products Limited 3,862,100.00 11,650.73 0.00 Maximum outstanding during the year 2,700.00 0.00
(3862100 Shares purchased during the year) Balsara Home Products Ltd 0.00 0.00
Maximum outstanding during the year 500.00 0.00
6 Balsara Home Products Limited 12,290,711.00 3,404.55 0.00 B. Loans and advances to associates 0.00 0.00
(10000000 Shares allotted during the year and
2290711 shares purchased during the year) Schedule IA - Miscellaneous Expenditure
(759300 shares held by Balsara Hygeine Products Ltd.)
(To the extent not written off or adjusted)
7 Besta Cosmetics Limited 431,800.00 1,790.01 0.00
Technical knowhow fees paid 65.62 84.37
(431800 Shares purchased during the year)
[449000 shares held by Balsara Hygeine Products Ltd] Less:Amortised during the year 18.75 46.87 18.75 65.62
(19200 shares held by Balsara Home products Ltd) Deferred employee compensation under ESOP
IV) Unquoted Equity Shares - Other than Trade Opening balance 515.42 575.33

1 Commerce Centre Cooperative Housing Society Limited 15.00 0.02 0.02 Addition during the year 3503.78 279.03
Less:Cancelled during the year 1.43 0.00
2 Capexil (Agencies) Limited 3.00 0.01 0.01
4017.77 854.36
3 Dabur Employees Consumers Co-op Stores Limited 250.00 0.03 0.03
Less:Amortised related to subsidiary 91.17 —
4 Dabur Employees Cooperative Credit Society Ltd 650.00 0.07 0.07
Less:Amortised during the year 685.99 3240.61 338.94 515.42
5 Co-operative Stores Limited,Super Bazar 500.00 0.05 0.05
Total 3287.48 581.04
 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 For the year ended For the year ended For the year ended
31st March,2006 31st March, 2005 31st March, 2006 31st March,2005
(Rs.in lacs) (Rs.in lacs) (Rs. in lacs) (Rs.in lacs)

Schedule J- Sales and Other Income — Reimbursement Of Expenses 11.55 8.13

A. Sales : — Provident Fund And Certificates 5.85 35.66 6.07 30.79

Domestic Sales Less Returns 132,454.64 122,023.32 Donation 320.50 240.98

Export Sales 4,513.65 4,848.19 Contribution For Scientific Research Expenses 663.00 540.97

136,968.29 126,871.51 Provsion For Doubtful Debts 108.36 1.53

B. Other Income : Loss On Sale Of Fixed Assets (Net Of Profit Rs Nil — 4.18
Previous Year Rs.10.66)
Export Subsidy 48.06 44.65
Rent Realised 13.46 19.27
Provision For Contingent Liability — 89.08

( Tax Deducted At Source Rs.Nil Previous Year Rs. Nil) Provision For Diminution In Long Term Trade Investment 26.99 —
Sale Of Scrap 196.78 187.59 Total 39,394.05 39,488.95

Dividend From Subsidiary Companies — 159.63 Notes :

( From Long Term Trade Investment) 1.Bad Debts Written Off Due From Related Parties 0.00 0.00
( Tax Deducted At Source Rsnil Previous Year Rs. 7.98)
2. Commission, Rebate & Discount Includes 367.21 365.85
Other Dividend - (From Long Term 0.48 0.50 Commission To Selling Agents
Investment Other Than Trade Investments)
( Tax Deducted At Source Rs.Nil Previous Year Rs Nil)
Schedule O- Financial Expenses
Royalty 26.36 254.62
Interest Paid On :
( Tax Deducted At Source Rs.Nil Previous Year Rs. 14.22)
Fixed Period Loan 57.34 70.21
Miscellaneous Receipts 84.46 76.68
Others 247.73 71.31
Profit On Sale Of Long Term Investment — 10.41
( Net Of Int.Received Rs.6.81; Previous Year Rs.36.48
Profit On Sale Of Current Investments- Other Than Trade 96.09 396.97
T.D.S. Rs.Nil; Previous Year Rs.6.32)
( Net Of Loss Of Rs.1274.05 Previous Year Rs.Nil)
305.07 141.52
Profit On Sale Of Fixed Assets 69.33 —
Bank Charges 260.80 288.05
( Net Of Loss Of Rs.366.92 Previous Year Rs.Nil)
( Including Capital Profit Of Rs. 19.27; Previous Year Rs. Nil) Total 565.87 429.57

Total 535.02 1,150.32

Notes : Schedule IB- Misc. Expenditure Written Off
1. Dividend from Current Investments 0.48 0.50 Technical Knowhow Fees Paid 18.75 18.75

2. Dividend from Long Term Investments 0.00 159.63 Deferred Employee Compensation Under Esop 685.99 326.49
Less:Transferred To Director Remuneration 278.50 407.49 195.91 130.58
Schedule K- Cost of Materials Total 426.24 149.33
Raw Materials Consumed :
i) Opening Stock 4,383.16 4,257.19
SCHEDULE P - Accounting Policies & Notes To Accounts
ii) Add :Purchases 25,015.34 22,388.50
(All amounts in Indian Rupees in lacs except share capital)
29,398.50 26,645.69
A. ACCOUNTING POLICIES
iii) Less : Closing Stock 3,464.00 25,934.50 4,383.16 22,262.53
Significant accounting policies are summarized below:
Packing Materials Consumed :
i) Opening Stock 1,491.43 793.12
1. Accounting Convention: The accounts have been prepared in accordance with the historical cost convention.

ii) Add :Purchases 14,454.12 11,140.25 2. Fixed Assets and Depreciation:

15,945.55 11,933.37 • Fixed assets are stated at carrying amount i.e. subject to deduction of accumulated depreciation.
• Cost includes inward freight, duties, and taxes and expenses incidental to acquisition and installation.
iii) Less : Closing Stock 1,728.47 14,217.08 1,491.43 10,441.94 • Depreciation on Fixed Assets have been provided on written down value method at rates specified in Sched-
Purchase Of Finished Products 16,935.43 22,456.43 ule 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
Adjustment Of Stocks In Process And Finished Goods
aforesaid Schedule.
Opening Stock : • Patents are being amortized over the period of ten years on straight line basis.
Stock In Process 614.82 1,116.98
3. Impairment of Assets : The company identifies impairable fixed assets based on cash generating unit concept at the
Finished Products 5,846.92 4,549.22 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
6,461.74 5,666.20 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.
Closing Stock :
Stock-In-Process 794.39 614.82 4. Investments : Current investments are held at lower of cost and NAV/Market value. Long term investments are held
Finished Products 5,243.14 5,846.92 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.
6,037.53 6,461.74
Increase(-)/Decrease in stock in process & finished goods 424.21 (795.54) 5. Deferred Entitlement on LTC : In terms of the opinion of the Expert Advisory Committee of the ICAI, the Company
has provided liability accruing on account of deferred entitlement towards LTC in the year in which the employees
Total 57,511.22 54,365.36
concerned render their services.

Schedule L- Mfg. & Operating Expenses 6. Inventories: Stocks are valued at lower of cost or net realizable value. Basis of determination of cost remain as follows:
• Raw materials, Packing materials, stores & Spares On FIFO Basis
Power and Fuel 2,627.96 2,169.48
• Work-in-process At cost of input plus overhead upto the stage of completion.
Stores & Spares Consumed 731.90 307.39 • Finished goods At cost of input plus appropriate Overhead.
Repairs & Maintenance:
7. Research and Development Expenses: Contributions towards scientific research expenses are charged to the Prof-
— Building 51.12 88.19 it & Loss Account in the year in which the contribution is made.
— Plant & Machinery 27.34 27.62
8. Retirement Benefits: Liabilities in respect of retirement benefits to employees are provided for as follows:-
— Others 252.44 279.36
• Leave Salary of employees on the basis of payment advice from Life Insurance Corporation of India from whom
Processing Charges 54.79 47.42 Company has taken coverage in this connection.
Total 3,745.55 2,919.46 • Gratuity Liability on the basis of payment advice from Life Insurance Corporation of India from whom the Com-
pany’s gratuity trust has taken the Group Gratuity Insurance Policy.
• Liability for superannuation fund on the basis of the premium paid to the Life Insurance Corporation of India
Schedule M- Payments to & Provisions in respect of employees covered under Superannuation Fund Policy.
for Employees • VRS, if paid, is charged to revenue in the year of payment.
Salaries,Wages And Bonus 6,053.70 4,849.68
9. Recognition of Income and expenses:
Contribution To Provident And Other Funds 861.31 724.90 • Sales and purchases are accounted for on the basis of passing of title to the goods.
Workmen And Staff Welfare 2,208.23 1,924.07 • 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.
Directors' Remuneration 707.54 709.91
( Inclduing Perquisites Rs.326.03 Previous Year Rs 208.83) 10. Income Tax & Deferred Taxation: The liability of company on account of income tax is estimated considering the pro-
Total 9,830.78 8,208.56 visions 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.
Schedule N - Selling & Adminstrative Expenses
Rent 629.23 506.58 1 1 . Contingent Liabilities: Disputed liabilities and claims against the company including claims raised by fiscal authori-
ties (e.g. Sales Tax, Income Tax, Excise etc.), pending in appeal/court for which no reliable estimate can be made of the
Rates And Taxes 67.76 92.03
amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed
Insurance 192.53 195.97 in notes to accounts.
Sales Tax 11,173.54 10,527.22 However, present obligation as a result of past event with possibility of outflow of resources, when reliably estimable,
is recognized in accounts.
Freight And Forwarding Charges 4,050.33 3,287.48
Commission, Discount And Rebate 1,256.61 1,236.78 12. Foreign Currency Translation:
• In respect of foreign branches/offices, the company has adopted integral foreign operation approach as per re-
Advertising And Publicity 15,165.85 17,178.91
vised AS 11 and accordingly revenue items have been converted at average of month end exchange rates dur-
Travel & Conveyance 1,485.94 1,405.88 ing the year. Fixed assets have been converted at the rates prevailing on dates of purchase. Assets & Liabilities
Legal & Professional 687.43 702.26 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.
Telephone ,Fax Expenses 261.11 251.55 • Receivables/payables (excluding for fixed assets) in foreign currencies are translated at the exchange rate rul-
Security Expenses 146.02 136.22 ing at the year end date and the resultant gain or loss, is accounted for in the Profit & Loss Account.
• Capital as well as revenue implication of exchange fluctuation, charged or credited to revenue, are disclosed
General Expenses 3,114.19 3,053.69
in notes to accounts.
Directors' Fees 9.00 6.85 13. Employee Stock Option Purchase (ESOP): Aggregate of quantum of option granted under the scheme in monetary
Auditors' Remuneration: 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.
— Audit Fee 11.22 9.36
— Branch Auditors' Fee 7.04 7.23 14. Miscellaneous Expenditure:
• 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
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. 5 D Value of raw materials, stores and spares parts consumed
Employee compensation in respect to option granted to subsidiary company employees is being reimbursed Raw Material Packing Material,Stores & Spares
by subsidiary companies to holding company.
31.03.2006 31.03.2005 31.03.2006 31.03.2005
B. NOTES TO ACCOUNTS Value % Value % Value % Value %
Imported 188.52 0.73 308.64 1.39 31.56 0.21 31.75 0.30
1. Building constructed on leasehold land included in the value of building shown in Fixed Assets Schedule:
Indigenous 25745.98 99.27 21953.89 98.61 14917.41 99.79 10717.58 99.70
As at 31st March 2006 As at 31st March 2005
Cost/Revalued 6757.63 5378.72 Total 25934.50 100.00 22262.53 100.00 14948.97 100.00 10749.33 100.00
Written Down 4781.37 3607.73
5 E Net Dividend remitted in foreign currency 2005-06 2004-05
2. Loans and Advances include Rs.48.64 (Previous year Rs.48.64)paid by the Company to Excise authorities on be-
half of Sharda Boiron Laboratories Limited, now known as SBL Limited, in respect of excise duty demand of Rs.68.13 2003-04 Final Dividend to 147 shareholders on 147020 shares — 2.06
raised by the District Excise Officer, Ghaziabad, against the Company and Sharda Boiron Laboratories Limited. The 2004-05 Interim Dividend to 140 shareholders on 141000 shares — 1.41
Hon’ble Supreme Court of India had concurred with the order of the District Excise Officer, Ghaziabad.
2004-05 Final Dividend to 128 shareholders on 129000 shares 1.94 —
The Company had filed the review petition before Division Bench 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 Laborato- 2005-06 Interim Dividend to 110 shareholders on 111000 shares 1.66 —
ries Limited in favour of the Company and as per the terms and conditions of the contract executed with them, the Total 3.60 3.47
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 Hon’ble 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 6. Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the year, to the Directors:
paid directly by Sharda Boiron Laboratories Limited to Excise Authorities. During the year 1991-92 the company 31.03.2006 31.03.2005
had received a refund of Rs.5.95, pursuant to the decision of Hon’ble Supreme Court in this regard. Necessary ad-
Salary 158.45 286.54
justments in respect of recovery/refund will be made as per the arbitration proceedings.
Commission (as computed below) 88.64 38.80
3. a) Further to para A(3) above, company has assessed recoverable value of cash generating units (CGUs) based on Contribution to Provident Fund 19.73 26.92
value-in-use method which for each CGU worked out to much higher than corresponding book value of net Residential Accommodation 95.08 97.40
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. Medical & Leave Travel Benefit 4.72 8.12
Contribution to Superannuation Fund 23.77 31.62
b) CGUs include Narenderpur plant, Sahibabad plant, Baddi plants, Jammu plants and Rudrapur Plant all Others (Including Rs.278.50 Previous year Rs.83.55 Under ESOP) 317.15 220.51
belonging to FMCG segments.
Total 707.54 709.91
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. Computation of net profit in accordance with Section 198 and section 309 (5) of the Companies Act,1956 and calculation of Direc-
tor’s commission :
4. Contingent Liabilities:
31.03.2006 31.03.2005
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) Profit for the year before tax as per
ii. In respect of claims by employees Rs.0.50 (previous year Rs 0.50) Profit & Loss Account 21435.53 14801.82
iii. In respect of letters of credit Rs. Nil (previous year Rs.1366.66)
Add: Provision for Diminution in Long term Investment 26.99 0.00
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)) Profit after the provision for diminution in long term inv. 21462.52 14801.82
vi. In respect of excise duty disputes pending with various judicial authorities Rs.2798.56 (previous year Rs.2131.93). Add:Managerial remuneration 707.54 709.72
vii. In respect of Corporate Guarantees given by the Company Rs. 14759.72 (previous year Rs.14148.94)
Directors fees 9.00 716.54 6.85 716.57
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). Less: Capital Profit 19.27 0 .00
Adjusted net profit 22159.49 15518.39
b) Information pursuant to AS 29 issued by ICAI:
Commission payable:To one non whole-time Director 88.64 38.80
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 es-
timable within the meaning of relevant standards. 7A Particulars Of Consumption Of Important Raw Materials (Rs. In Lacs)
ii) Existing provision referred to in “a” above relates to nil (Rs. 62.64), nil (Rs.26.15) and nil ( Re.0.29) to-
wards liabilities on account of VAT, Sales Tax and Entry Tax respectively to be carried as such at the year Class Of Goods Unit Quantity Value
end in view of absence of any additional provision therefore during the year. Sugar And Molases Tonnes 14915.24 2610.45
iii) Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCT’s, if mature, are (11676.65) (1820.66)
expected to be in succeeding financial year. Vegitables Oils Tonnes 10376.90 5293.98
iv) Provisions are made herein for medium risk oriented issues as a measure of abundant precaution. (6533.87) (3705.13)
v) Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities
listed in para 4 (a) above. Herbs, Jari Booti & Raw Madhu Tonnes 5782.65 7144.41
(4698.38) (7117.96)
5A. Expenditure in Foreign Currency 31-03-2006 31-03-2005 Chemicals & Perfumery Compounds Tonnes 17378.12 8479.39
— Professional & Consultation Fees 14.95 4.30 (13314.55) (5670.35)

— Interest 13.49 25.65 Others Raw Materials Assorted 2406.26

(3948.43)
— Salary 0.00 111.55
Total Raw Materials 25934.49
— Others (Travellling,Conveyance & administration) 69.72 52.09
(22262.53)
98.16 193.59
Glass Containers Pcs In Lacs 1017.76 2198.58
5 B. CIF Value of Imports: (869.35) (1743.60)
— Raw Materials 152.95 310.75 Plastic Containers/Caps/Jar Pcs In Lacs 5660.96 4914.42
— Stores & Spares (Including of packing material) 154.84 41.02 (3798.52) (3254.45)
— Capital Goods 130.23 75.10 Printed Packing Materials Assorted 3429.28
438.02 261.71 (2319.40)
Laminates & Lamitubes Assorted 2134.87
(1390.47)
5 C Earning in Foreign Exchange:
Other Packing Materials Assorted 1539.92
— Export sales at FOB 2631.85 3682.77
(1734.02)
— Royalty/Technical Consultancy 26.36 35.59
Total Packing Materials 14217.07
— Dividend 0.00 0.00 (10441.94)
2658.21 3718.36 Note: Figures In Brackets Are For Previous Period.

7B Particulars In Respect Of Goods Manufactured

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

7C Particulars Of Traded Goods

Purchases Opening Stock Closing Stock Sale
Class Of Goods Unit Qty Value Qty Value Qty Value Qty Value
Hair Oils Kilo-Ltrs 3793.95 4061.28 164.73 198.83 150.34 163.18 3808.34 7195.90
(7828.39) (8669.11) (470.49) (517.50) (164.73) (198.83) (8134.16) (15759.01)
Tooth Powder & Paste Tonnes 7803.91 5946.62 360.40 326.91 288.68 256.98 7875.62 13345.14
(9883.50) (7737.74) (300.19) (304.52) (360.40) (326.91) (9823.30) (16613.72)
Hajmola Tonnes 1100.84 1123.20 35.39 44.00 30.89 62.29 1105.34 2110.84
(1541.38) (1701.55) (23.92) (32.16) (35.39) (44.00) (1529.92) (3039.22)
Others 5804.32 1017.21 606.31 11788.94
(4348.02) (1040.41) (1017.21) (11128.39)
Total 16935.43 1586.95 1026.47 32329.99
(22456.43) (1894.59) (1586.95) (46540.34)
Note: Figures In Brackets Are For Previous Period.
 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 10. The company's freehold land situated at Sahibabad measuring about 7.58 acres was acquired by U.P. Govern-
information available with the Company. The name of small scale industries to whom the Company owes any sum ment under Land Acquisition Act and the State Government had allotted and given possession of about 4.72
which is outstanding as on 31st March 2006 for more than 30 days are :- acres of land on lease to the Company in lieu of acquired land. The company has filed a claim for compensa-
tion of Rs.572.42 before the Office of Special Land Acquisition Officer, Ghaziabad against the land so acquired.
4R Health Care Products Hi Tech Packers Plastic Packaging Industries However, keeping in view the generally accepted accounting practice, the same claim has not been consid-
A N Products Interlabels Industries P Ltd Prakash Printers & Stationers ered in the books of accounts.

Abhimanyu Containers Jainex India Precise Laboratories Pvt Ltd

1 1 . A. Related party Disclosures
Abhinav Printing & Packagings Jasmer Packers Pvt Ltd Prem Industries
Adchem Industries Jiwan Plasto Moulds Pvt Ltd Print & Public Related party disclosures as required under AS 18 issued by the Institute of Chartered Accountants of In-
dia are given below:
Agarwal Polysacks Ltd. Jyot Overseas Pvt.Ltd. Printex Centre
Agi Glaspac Kamet Plastics Pvt Ltd Print-N-Wrap (a) Name of related party and nature of related party relationship where control exists:
Ajanta Packaging Krishna Industries Process Instrumentation and Control
(i) Subsidiaries
Ajay & Company Krishna Printers Protech Engg Industries Pvt Ltd.
Amita Polymers Pvt Ltd Kush Prints Pvt.Ltd. PSN Chemicals Dabur Foods Ltd. (Domestic Subsidiary)

Anipra Chemicals Pvt Ltd Magadh Plas Pvt Ltd Reliplast Pvt.Ltd. Pasadensa Foods Ltd. (Domestic Subsidiary)

Baya Traders
Bharat Rubber
Bhargava Poly Packs
Burman Laboratories P Limited
Care Marketing Co Pvt Ltd
Classic Bottle Caps Pvt.Ltd.
Compack Enterprises India Pvt Ltd
Continental Crowns
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
G S Engineering
Green Valley Products
H B D Packaging Pvt Ltd
H S Enterprises
Magnesium Products Pvt Ltd Responsive Industries Balsara Hygeine Products Ltd. [Domestic Subsidiary]
Works Mahabir Industries RSG Packagings Pvt.Ltd. Balsara Home Products Ltd. [Domestic Subsidiary]
Mandagini Agencies S A Packaging Pvt Ltd Besta Cosmetics Ltd. [Domestic Subsidiary]
Maxcare Laboratories Limited Sai Packaging Co. Asian Consumercare Pvt Ltd . (Foreign Subsidiary Company)
MC Packaging P Satish Enterprises Dabur Nepal Pvt. Ltd. (Foreign Subsidiary Company)
Mega Packages Sea-Shell Chemicals Pvt Ltd Dabur Egypt Ltd. (Foreign Subsidiary Company)
Mega Packers Sheel Packaging Pvt Ltd Dabur Overseas Ltd. (Foreign Subsidiary Company)
And Closures Merlin Printer Shiva Trading Company
Dabur International Ltd. (Foreign Subsidiary Company)
Morisha Enterprises Shivam Safety Industries
WeikField International (UAE) (Foreign Subsidiary Company)
N.K.Gossain & Shree Nath Printers
African Consumercare Limited [Foreign Subsidiary Company]
Naturalle Health Products P Ltd Special Air Gases
Nav Bharat Enterprises Speciality Valves [b] Other related parties in transaction with the company :
New Gaurav Printers Sudha Rasayan
[i] Joint Ventures/ Joint Venture Partners
New Samudra Art Centres Sunshine Polymers Pvt Ltd
Green Valley Products Pvt. Ltd. (upto 08.11.2005]
Nikita Plast (Unit III) Svar Plastics Pvt Ltd
Niranjan Containers P Ltd Taurus Packaging Pvt.Ltd
(ii) Key management personnel Relatives of Key
Northern Aromatics Ltd,Baddi V P Poly Udyog
(whole time directors) Management personnel
(India) Om Packaging Varahi Plastics Pvt Ltd
a) Pradip Burman R C Burman
Works Orgachemie Agencies Vimoni (India) Pvt Ltd
Chetan Burman
P Ltd P.M.C.Machines P.Ltd. Vipul Plastics
b) Amit Burman (upto 30.04.2005) Asha Burman
Pacwel Plastics Private Limited Walia Rubber Stamps
Penguin Plasti Windsor Packaging Pvt Ltd c) P. D. Narang —
d) Sunil Duggal —

9. Particulars of Balances with Non-Scheduled Banks:

(iii) Associate entities over which Key Management Personnel are able to exercise significant influence:
Current year: Balance as on 31.03.2006 Maximum Balance during the year 1. Welltime Housing & Finance Pvt. Ltd.
a) In Current Account - Barclays Bank, London 61.32 141.67 2. Miracle Commercial Enterprises Pvt Ltd.
b) In Postal Savings Bank Account 0.95 0.95 3. Wakarusa Laboratories Pvt Ltd.
4. Jetways Travels Pvt Ltd.
Previous year: Balance as on 31.03.2005 Maximum Balance during the year
[iv] An Enterprise owned by any Director (KMP) of Dabur India Limited:
a) In Current Account - Barclays Bank, London 49.73 114.41
b) In Postal Savings Bank Account 0.95 0.95 1. Welltime Housing & Finance Pvt. Ltd.

11 B. Transactions with related parties

Transaction Subsidiary Fellow Associates Key Mgt. Relatives Of Key Total Outstanding
Subsidiaries Personnel Mgt. Personnel As On 31.03.2006
Purchases of Goods 248.68 5986.22 0.00 0.00 0.00 6234.9 506.24
(96.45) (5706.00) (0.00) (0.00) (0.00) (5802.45) (93.53)
Sale of Goods 371.35 907.85 0.00 0.00 0.00 1279.20 298.30
(820.36) (718.08) (0.00) (0.00) (0.00) (1538.44) (686.22)
Sale of Assets 0.00 0.00 0.00 6.47 0.00 6.47 0.00
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Sale of Investments 2185.37 0.00 0.00 0.00 0.00 2185.37 0.00
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Receiving of Services 0.00 0.00 180.00 0.00 0.00 180 0.00
(0.00) (0.00) (159.75) (0.00) (0.00) (159.75) (2.57)
Loans Given 4025.00 0.00 0.00 0.00 0.00 4025.00 3082.50
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Rent Paid 0.00 0.00 6.00 0.00 0.00 6.00 0.00
(0.00) (0.00) (6.00) (0.00) (0.00) (6.00) (0.00)
Interest Recd On Loans Given 8.75 0.00 0.00 0.00 0.00 8.75 0.00
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Share Application Money 2178.00 0.00 0.00 0.00 0.00 2178 0.00
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Remuneration/Exgratia/Pension 0.00 0.00 0.00 340.71 125.98 466.69 0.00
(0.00) (0.00) (0.00) (472.65) (169.01) (641.66) (0.00)
Repayment of Loans Given(Instl.Recd) 1025.00 0.00 3.50 0.00 0.00 1028.50 0.00
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Emplloyee Stock Option Scheme 90.74 0.43 0.00 278.50 0.00 369.67 (0.00)
(0.00) (0.00) (0.00) (195.91) (0.00) (0.00) (0.00)
Guarantees & collaterals given 3750.00 3365.00 0.00 0.00 0.00 7115 7115
(4614.38) (1883.13) (0.00) (0.00) (0.00) (6497.50) (6497.50)
Dividend Recd. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(159.36) (0.00) (0.00) (0.00) (0.00) (159.36) (0.00)
Royalty Received 0.00 26.36 0.00 0.00 0.00 26.36 57.26
(207.75) (46.87) (0.00) (0.00) (0.00) (254.62) (171.66)
(Figues in brackets are of previous year]

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 16 Earnings per Share has been computed as under:
Account. 2005-2006 2004-2005
Profit after Tax 18908.37 14801.99
13 Information (to the extent applicable) pursuant to AS 19 issued by ICAI: Less Provision for Taxation for earlier year written off — 5.30
The future minimum lease payment under non-cancelable operating lease :- Add Provision for Taxation for earlier year written back 7.62 —
(i) Not later than 1 year 9.60
18915.99 14796.69
(ii) Later than 1 year not later than 5 year 8.10
Weighted average number of shares outstanding
(iii) Later than 5 year Nil
Basic 573149195 572839426
14 The treatment of share issue expenses has been changed during the year by way of charging the same in revenue as Diluted 577524999 575809845
against former practice of amortizing same equally over 10 years. This reduced the profit of the year by Rs. 43.87. Earning per Share (face value Re. 1 per share)
Basic 3.30 2.58
15 Sundry Creditors include Rs.75.13 (previous year nil) being dues to subsidiaries. Diluted 3.27 2.57
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: 19 Extraordinary items represents :
Profit on Sale of Long Term Trade Investments in Subsidiaries Rs.1325.25
Particulars Hair Oil MSY Unit Daburgram Unit Loss on sale of Long Term Trade Investments Rs.1274.05
Baddi Baddi Net profit/(loss) on Sale of Long Term Trade Investments Rs.51.20

1 Discontinued since March,04 Nov, 2000 July, 2003

20 a. Pension to relative of deceased director Rs.31.50(previous year Rs.7.87)
2 Segment the operation of the FMCG FMCG FMCG b. Pension of retired director Rs.68.24 (previous year Rs.17.06)
Unit relates to in financial statement
21 Dividend paid and proposed dividend are not subject to deduction of income tax at source.
3 Carrying amount of total assets 33.37 28.35 44.27
(33.37) (28.35) (44.27)
22 Figures for the previous year have been rearranged/regrouped as and where necessary in terms of current year's
4 Carrying amount of total liabilities 4.21 0.01 0.32 grouping.
(4.21) (0.01) (0.32)
23 Additional information as required under Part IV of Schedule VI of the Companies Act 1956:
5 Profit from ordinary activities 0.00 0.00 0.00
(-5.3) (-1.79) (0.00)
I. Registration Details:
6 Income Tax expenses 0.00 0.00 0.00
(0.00) (0.00) (0.00) Registration No. 7908

7 Gain on disposal of assets 0.00 0.00 0.00 State Code : 55

(-0.01) (0.00) (0.00) Balance Sheet Date: 31.03.2006
8 Cash flow from discontinued operations: II Capital raised during the year (Amount in Rs thousand):
Operating activities 0.00 0.00 0.00
(-71.46) (-0.47) (-3.97)
Public Issue Nil

Investing Activities 0.00 0.00 0.00 Right Issue Nil

(24.14) (0.00) (0.00) Bonus Issue 286651
Financial Activities 0.00 0.00 0.00 Private Placement Nil
(0.00) (0.00) (0.00)
III Position of Mobilisation of Deployment of Funds (Amount in Rs.Thousand):
Total Liabilities 7924689
Note : 1. Figures in brackets are for previous year.
2. 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 Total Assets 7924689
of the purview of '3' above Sources of Funds:
Paid up capital 573303
Reserve & Surplus 3905384
18 Information pursuant to AS - 17 issued by ICAI
Secured Loans 192323
Unsecured Loans 13429
FMCG OTHERS Dabur India Ltd.
Deferred Tax Liaiblity 167150
Current Previous Current Previous Current Previous
Period Period Period Period Period Period Application of Funds:

REVENUE Net Fixed Assets 1988368

External Sales 133406 122541 3562 4331 136968 126872 Investments 2750777

Inter-segment sales Net Current Assets -229478

Total Revenue 133406 122541 3562 4331 136968 126872 Misc Expenditure 328748

RESULT Deferred Tax Assets 13174

Segment result 21478 16405 523 527 22001 16932 IV Performance of Company (Amount in Rs.thousand):

Unallocated corporate expenses Turnover 13696829

Operating profit 21478 16405 523 527 22001 16932 Total Expenditure 11606778

Interest expense (Net Of Interest Income) 551 415 15 15 566 430 Profit/(Loss) Before Tax 214553

Interest income Profit/(Loss) After Tax 1890837

Income Tax(Current + Deferred+FBT) 2578 1700 Earning per share in Rs. 3.30

Profit from ordinary activities 20927 15990 508 512 18857 14802 Dividend Rate % 250%

Exceptional Item {Profit/(loss) on V Generic names of three Principal Products/Services of company (as per monetary terms):
Long Lerm Trade Investment} 51 Item Code No. (ITC Code) 30049001
Net profit 20927 15990 508 512 18908 14802 Product Description Ayurvedic Medicines
OTHER INFORMATION Item Code No.(ITC Code) 33059001
Segment assets 70630 67377 844 1164 71474 68541 Product Description Hair Oils
Unallocated corporate assets 4354 2910 Item Code No.(ITC Code) 33061000
Total assets 70630 67377 844 1164 75828 71451 Product Description Dentifrices
Segment liabilities 29826 35121 149 187 29975 35308
Signatures to the Schedules " A " to " P " Annexed to and forming part of the Accounts.
Unallocated corporate liabilities 4353 2918
Total liabilities 29826 35121 149 187 34328 38226 As per our report of even date attached For Dabur India Ltd.
Capital expenditure 2944 5316 2944 5316
For G.Basu & Co. V.C.Burman Chairman
Depreciation 1858 1656 46 54 1904 1710
Chartered Accountants P.D.Narang Director
Non-cash expenses other than depreciation 3241 515 Sunil Duggal Director
S.Lahiri A.K.Jain Addl.General Manager (Finance)
Secondary segment Partner & Company Secretary

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
New Delhi
Rs.136968 (Rs. 126872) , the export sales is of Rs.4514 ( Rs. 4848 ) and domestic sale is Rs. 132454 ( Rs. 122024)
25th April 2006
 CONSOLIDATED FINANCIAL STATEMENTS 25
Annual Report 2005-06 Dabur India Limited

The Board of Directors, c) In the case of the consolidated cash flow statement, of the cash flows of Dabur India Ltd. group for the year ended
Dabur India Limited, on that date.

We have audited the attached consolidated balance sheet of Dabur India Limited group, as at 31st March, 2006 and al- For G Basu & Co
so the consolidated profit and loss account and the consolidated cash flow statement for the year ended on that date an- Chartered Accountants
nexed thereto.
These financial statements are the responsibility of the Dabur India Ltd.'s management and have been prepared by S.LAHIRI
the management on the basis of separate financial statements and other financial information regarding components. Partner
Our responsibility is to express an opinion on these financial statements based on our audit. Membership No. 51717
We conducted our audit in accordance with the auditing standards generally accepted in India. These standards re-
quire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are pre- New Delhi
pared, in all material aspects, in accordance with an identified financial reporting frame work and are free of material 25th April 2006
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi-
nancial 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 cashflows (net) amounting to Rs.425.05 Profit and Loss Account for the year ended 31st March, 2006
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. Schedule For the year ended For the year ended
We report that the consolidated financial statements have been prepared by the Dabur India Ltd.'s management in 31st March, 2006 31st March, 2005
accordance with the requirements of AS-21 on consolidated financial statement issued by the Institute of Chartered
Accountants of India. (Rs. in lacs) (Rs.inlacs)
Based on our audit and on consideration of reports of other auditors on separate financial statements and on the oth- Income:
er financial information of the components, and to the best of our information and according to the explanations given Sales Less Returns 189,957.00 153,695.33
to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity
Other Income 1,336.68 920.62
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. Total Income 191,293.68 154,615.95
b) In the case of the consolidated profit and loss account, of the profit of Dabur India Ltd. group for the year ended on Expenditure:
that date; and
Cost Of Materials K 80,772.30 65,942.25
Excise Duty 3,372.14 4,280.40
Manufacturing Expenses L 5,711.24 4,050.37
Balance Sheet as at 31st March 2006 Payments To And Provisions For Employees M 14,495.75 10,848.34
Selling And Administrative Expenses N 56,522.85 47,691.25
Schedule As at 31st As at 31 st
Financial Expenses O 1,638.73 1,243.59
Marc, 006 March, 2005
Miscellaneous Expenditure Written Off IB 426.24 149.53
(Rs. in lacs) (Rs. in lacs)
Depreciation 2,692.46 2,800.01
Sources Of Funds:
Total Expenditure 165,631.71 137,005.74
Shareholders' Funds:
Balance Being Net Operating Profit Before Tax 25,661.97 17,610.21
(A) Share Capital A 5,733.03 2,864.20
Provision For Taxation Current 2,185.80 1,509.88
(B) Reserves And Surplus B 43,972.79 33,528.98 Provision For Taxation Deferred 353.04 399.83
49,705.82 36,393.18 Provision For Taxation Fringe Benefit 463.31 0.00
Minority Interest B2 546.08 1,522.04 Net Profit After Taxation And Before 22,659.82 15,700.50

Loan Funds: Extraordinary Item

Add Extraordinary Item (Profit/(Loss) On Long
(A) Secured Loans C 8,080.01 9,705.16
Term Tarde Investments -1,274.05 0.00
(B) Unsecured Loans D 2,352.75 5,383.23
Net Profit After Tax And Extraordinary Item 21,385.77 15,700.50
Deferred Tax Liability EB 1,715.06 1,277.51
Minority Interest -32.47 119.89
Total 62,399.72 54,281.12 Net Profit After Minority Interest 21,418.24 15,580.61
Application Of Funds: Balance Brought Forward 14,092.86 8,979.40

Fixed Assets: Transferred From Capital Redemption Reserve 56.93 0.00

Transferred From Investment Allowance Reserve 0.00 82.58
(A) Gross Block F 72,148.62 48,148.63
Transferred From Investment Deposit Reserve 0.00 182.50
(B) Less: Depreciation 20,903.32 18,698.43
Provision For Taxation For Earlier Year Written Back 148.53 0.00
(C) Net Block 51,245.30 29,450.20
Provision For Taxation For Earlier Year -51.83 -26.26
Investments G 4,213.15 23,329.02 Profit Available For Appropriation 35,664.73 24,798.83
Deferred Tax Assets EB 131.72 137.77 Appropriation/Allocation

Current Assets, Loans And Advances: H Interim Divided 4,303.03 2,862.89

Proposed Dividend-Final 5,733.03 4,296.30
(A) Inventories 21,277.84 20,312.92
Corporate Tax On Interim Dividend 602.98 374.14
(B) Sundry Debtors 7,435.01 7,589.28
Corporate Tax On Proposed Dividend 804.06 602.56
(C) Cash & Bank Balances 5,117.22 1,473.29
Employees Sharing Of Profit 0.00 3.25
(D) Loans & Advances 13,301.93 11,377.22 Transferred To Capital Reserve 19.27 0.00
47,132.00 40,752.71 Transferred To Legal Reserve 5.31 1.75

Less: Current Liabilities And Provisions EA Transferred To General Reserve 2,610.94 2,565.08
Balance Carried Over To Balance Sheet 21,586.11 14,092.86
(A) Liabilities 30,280.64 30,443.32
35,664.73 24,798.83
(B) Provisions 13,329.29 9,526.30
Earning Per Share (In Rs.)
43,609.93 39,969.62
Basic 3.74 2.72
Net Current Assets 3,522.07 783.09 Diluted 3.71 2.71
Miscellaneous Expenditure IA 3,287.48 581.04 No Of Shares

(To The Extent Not Written Off Or Adjusted) - Basic 573,149,195 572,839,426
Diluted 577,524,999 575,809,845
Notes To Accounts P
Notes To Accounts P
Total 62,399.72 54,281.12

As per our report of even date attached For Dabur India Ltd.

For G.Basu & Co. V.C. Burman Chairman

Chartered Accountants P.D.Narang Director
Sunil Duggal Director
S.Lahiri A.K.Jain Addl. General Manager (Finance)
Partner & Company Secretary

New Delhi
25th April 2006
26 CONSOLIDATED FINANCIAL STATEMENTS
Dabur India Limited Annual Report 2005-06

Schedules annexed to and forming part of the accounts for the year
Statement of Cash Flow ( Pursuant to AS-3 issued by ICAI) ended 31st March, 2006
Rs. Lacs
As At 31st As At 31st
For the year ended For the year ended
March 2006 March 2005
31st March,2006 31st March,2005
(Rs.In Lacs) (Rs.In Lacs)
A. Cash Flow From Operating Activities
Net Profit Before Tax And Extraordinary Items 22,659.82 17,610.21 Schedule B2- Minority Interest
Add: Share Capital 178.54 264.17

Depreciation 2,692.46 2,800.01 Share Premium 9.38 75.00

Loss On Sale Of Fixed Assets 65.85 108.87 Capital Reserve 126.91 126.91

Miscellenous Exp.Written Off 426.24 149.53 General Reserve 15.15 91.55

Miscellenous Exp.Written Off( Included In Director Remun. 777.16 195.91 Profit & Loss 216.10 964.41

Interest 1,615.15 1,243.59 546.08 1,522.04

5,576.87 4,497.92
28,236.69 22,108.12 Schedule C-Secured Loans
Less: I Term Loans :

Dividend Received 0.48 0.50 GE Capital Services 1845.99 1,090.91

Interest Received 10.28 0.00 Deferred Payment 253.41 82.16

Profit On Sale Of Investment 96.39 407.38 PICUP Under Trade Tax Loan Scheme 755.22 1,009.09

Profit On Sale Of Assets 211.91 0.00 II Short Term Loans - From Banks : 5225.39 7,523.00

319.06 407.88 8,080.01 9,705.16

Operating Profit Before Working Capital Changes 27,917.63 21,700.24 Schedule D - Unsecured Loans
Working Capital Changes Deposits :

Increase/(Decrease) In Inventories 964.92 5,028.47 Directors 48.13 48.13

Increase/(Decrease) In Debtors (102.11) 304.20 Companies 1021.92 800.00

Decrease/(Increase) In Trade Payables (273.66) (8,983.98) Security Deposit From Dealers And Others 9.58 16.06

Increase/(Decrease) In Working Capital 589.14 (3,651.31) Other Loans :

Cash Generated From Operating Activities 27,328.48 25,351.55 West Bengal State Industrial Development 0.00 75.00

Interest Paid 1,604.87 1,222.18 Corporation Limited

Tax Paid 2,649.11 1,668.57 Term Loan - From Banks 999.47 883.44

Corporate Tax On Dividend 1,205.54 887.60 Book Overdraft Of Current Account With Banks 125.30 754.67

5,459.52 3,778.35 Commercial Papers 0.00 2,000.00

Cash Used(-)/(+)Generated For Operating Activities (A) 21,868.96 21,573.20 External Commercial Borrowings -ABNAmro Bank NV 0.00 805.93

B. Cash Flow From Investing Activities Deferred Payment Credit 148.35 -

Purchase Of Fixed Assets (7,287.80) (7,852.75) Total 2352.75 5383.23

Sale Of Fixed Assets 1,171.02 500.02

Purchases Of Investment Including Investment In Subsidiaries (4,826.98) (153,206.88)
Sale Of Investments 6,067.63 143,260.48 Schedule EA - Current Liabilities and Provisions
Dividend Received 0.48 0.50 A Current Liabilities :

Cash Used(-)/(+)Generated For Investing Activities (B) (4,875.65) (17,298.63) Acceptance 8,050.56 12,206.55

C. Cash Flow From Financing Activities Amount Due To Ssi Units ( Goods) 1,037.21 874.67

Proceeds From Share Capital & Premium 2.31 1.71 Creditors For Goods 7,394.54 4,220.69

Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities 672.46 (457.43) Creditors For Expenses And Other Liabilities 13,272.32 12,578.32

Repayment(-)/Proceeds(+) From Short Term Loans (2,297.61) 1,878.15 Dividend Payable - 38.00

Repayment (-)/Proceeds(+) From Deposits (1.76) (266.86) Advances From Customers 273.63 325.78

Repayment(-)/Proceeds(+) From Other Unsecured Loans (3,024.01) 1,589.68 Interest Accrued But Not Due On Loans 62.66 39.08

Payment Of Other Advances (88.24) (750.08) Deposits - Others 55.43 47.24

Payment Of Dividend (8,612.56) (6,817.40) Investor Education And Protection Fund To Be

Cash Used(-)/+(Generated) In Financing Activities (C) (13,349.39) (4,822.23) Credited By :

Net Increase(+)/Decrease (-) in cash & cashe equv. (A+B+C) 3,643.93 (547.66) -Unpaid Dividend 121.19 96.42

Cash And Cash Equivalents Opening Balance 1,473.29 2,020.95 -Unpaid Matured Public Deposit 7.53 10.37

Cash And Cash Equivalents Closing Balance 5,117.22 1,473.29 -Interest Accured On Public Deposit 5.57 6.20
30,280.64 30,443.32

Schedules annexed to and forming part of the accounts for the year B Provisions :
ended 31st March, 2006 For Dividend (Proposed) - Final 5,733.03 4,296.30

As At 31st As At 31st For Corporate Tax On Proposed Dividend- Final 804.06 602.56
March 2006 March 2005 For Leave Salary 122.00 328.94
(Rs.In Lacs) (Rs.In Lacs) For Housing, Bonus & Gratuity & Other Welfares 755.08 536.05
Schedule A-Share Capital For Taxation 5,915.12 3,762.45
Authorised : 13,329.29 9,526.30
1250000000 Equity Shares Of Re.1 Each 12,500.00 5,000.00
Total (A + B) 43,609.93 39,969.62
(Previous Year 500000000 Equity Shares Of Re. 1 ) 12,500.00 5,000.00
Issued And Subscribed:
573302784 Equity Shares Of Re.1 Each Fully Called Up
(Previous Year- 286249052 Equity Shares Of Re. 1) 5,733.03 2,864.20
Schedule EB - Deferred Tax Liabilites ( Net)
5,733.03 2,864.20 Deferred Tax Liaibility :
Note : Authorized Share Capital During The Year Increased By Rs.7500 Lacs Depreciation 1715.08 1277.51
Schedule B-Reserves and Surplus Technical Knowhow Fees 0.00 0.00
Capital Reserve 1818.78 1,799.51 1715.08 1277.51
Share Premium Account 3051.45 5,758.08 Less:Deferred Tax Assets :
Employees Housing Reserve Fund 456.03 420.71 VRS Payment 74.55 6.01
Capital Redemption Reserve : 0.00 56.93 Other Disallowances Under Section 43B 57.19 131.74 131.74 137.75
General Reserve : 12775.82 10,450.49 Of Income Tax Act 1961
Legal Reserve 41.61 34.74 Toral 1583.34 1139.76
Profit And Loss Account 21586.11 14,092.86
Employee Stock Option Scheme Outstanding 4242.99 915.66
Total 43,972.79 33,528.98

Schedule F - Fixed Assets

( Rupees In Lacs)

Gross Block Depreciation Net Block

Name Of Asset Opening Inherited from Additions Transfer/ Closing Opening Inherited from For the Transfer/ Closing As on As on
Balance new subsidiary Adjustment Balance Balance new subsidiary Year Adjustment Balance 31.03.2006 31.03.05
Freehold Land 645.65 192.46 3.64 60.73 781.02 0.00 0.00 0.00 0.00 0.00 781.02 645.65
Leasehold Land 748.33 0.82 115.79 0.00 864.94 35.80 0.24 9.87 0.00 45.91 819.03 712.53
Building,Roads & Culvert 12,801.93 1,452.20 1,011.25 (6.45) 15,271.83 3,635.41 174.37 498.34 (2.62) 4,310.73 10,961.09 9,166.52
Plant & Machinery 23,006.00 922.19 4,633.18 1,429.41 27,131.96 10,166.45 221.17 1,705.88 737.93 11,355.56 15,776.39 12,839.55
Vehicles 1,145.68 163.88 242.59 302.74 1,249.41 478.12 61.87 201.19 162.31 578.88 670.54 667.56
Furniture & Off Equipment 3,828.73 597.44 382.89 245.50 4,563.56 1,905.28 316.66 329.07 100.80 2,450.21 2,113.35 1,923.45
Computers 2,534.56 0.00 532.60 194.43 2,872.73 1,802.82 0.00 257.60 268.81 1,791.61 1,081.12 731.74
Patents 1,095.97 16.90 0.00 0.00 1,112.87 239.70 5.35 125.36 0.00 370.41 742.46 856.27
Live Stock 0.22 0.00 0.00 0.00 0.22 0.00 0.00 0.00 0.00 0.00 0.22 0.22
Capital Work In Progress 938.81 0.00 1,500.11 1,134.24 1,304.68 0.00 0.00 0.00 0.00 0.00 1,304.68 938.81
Goodwill 1,402.75 10.30 15,582.35 0.00 16,995.40 434.85 0.00 (434.85) 0.00 0.00 16,995.40 967.90
Total 48,148.63 3,356.19 24,004.40 3,360.60 72,148.62 18,698.43 779.66 2,692.46 1,267.23 20,903.32 51,245.30 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 As At 31st As At 31st As At 31st
March 2006 March 2005 March 2006 March 2005
(Rs.In Lacs) (Rs.In Lacs) (Rs.In Lacs) (Rs.In Lacs)

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

A CURRENT INVESTMENTS Less : Provision For Doubtful Debts 153.84 25.98

QUOTED-OTHER THAN TRADE 324.51 253.31

1 Alliance Mutual Fund 0.00 0.00 - Other Debts (Considered Good) 7,110.50 7,335.97
(Purchase during the year) Units 19361076.60
7,435.01 7,589.28
(Sold during the year) Units 19361076.60
Cash And Bank Balances :
2 ABN Mutual Fund 0.00 1,775.00
(Purchased during the year) Units 54525669.05 (17,259,242.05) 'Cash In Hand 49.45 27.91
(Sold during the year) Units 71784911.1
- Remittance-In-Transit & Cheques-In-Hand 2.25 123.25
3 Birla Mutual Fund 0.00 0.00
- Balance With Scheduled Banks
(Purchased during the year) Units 11325215.95
(Sold during the year) Units 11325215.95 In Current Accounts 4,621.98 1,105.33

4 CHOLA Liquid Fund - Institutional Plus-Growth 6,121,645.75 873.34 1,080.00 In Fixed Deposit Accounts 137.28 84.40
(Purchased during the year) Units 40193243.81 (8,025,741.82)
- Balance With Non Scheduled Banks
(Sold during the year) Units 42097339.89
In Current Accounts 219.07 131.45
5 DSP Mutual Fund 100,000.00 1,000.00 0.00
(Purchased during the year) Units 5619790.69 In Fixed Deposit Accounts 86.24 -
(Sold during the year) Units 5519790.69
- Postal Savings Bank Accounts 0.95 0.95
6 Deutsche Bank Mutual Fund - 0.00 0.00
(Deposited With Excise Authority)
(Purchased during the year) Units 3590135.74
(Sold during the year) Units 3590135.74 5,117.22 1,473.29
7 HSBC Mutual Fund 33,830.07 29,375.49
(Purchased during the year) Units 1663874.52 - 0.00 0.00
B. Loans And Advances (Unsecured, Considered Good)
(Sold during the year) Units 1663874.52

8 JM Floter Fund- S T P Growth - 0.00 0.00 Security Deposit with Various Authorities 1,660.41 2,742.52
(Purchased during the year) Units 14021759.21 (Including Deposit with Govt. Authorities Rs. 887.27
(Sold during the year) Units 14021759.21
Previous Year Rs.435.89)
9 Kotak Mahindra Mutual Fund 12,160,294.80 1,716.00 0.00
(Purchased during the year) Units 22070258.03 Advance Payment Of Tax 5,914.13 3,690.49
(Sold during the year) Units 9909963.24 Advances To Suppliers 2,084.01 2,471.18
10 Principal Mutual Fund - 0.00 522.00 Advances To Employees 324.48 344.72
(Purchased during the year) Units 131782808.67 (5,069,567.91)
(Sold during the year) Units 136852376.59 Balance with Excise Authorities 434.84 992.80

11 Prudential Mutual Fund 4,510,477.84 500.00 0.00 Other advances recoverable in cash or in kind or for value to be received 2,884.06 1,135.51
(Purchased during the year) Units 11673863.38 13,301.93 11,377.22
(Sold during the year) Units 7163385.54
Total (A+B) 47,132.00 40,752.71
12 Reliance Liquid Fund - 0.00 0.00
(Purchased during the year) Units 14965422.50
(Sold during the year) Units 14965422.50 Schedule IA- Miscellaneous Expenditure
13 Sahara Mutual Fund - 0.00 1,000.00 (To the extent not written off or adjusted)
(Purchased during the year) Units 22583566.95 (8,395,600.71)
(Sold during the year) Units 30979167.65

14 SCB Mutual Fund - 0.00 0.00 Technical Knowhow Fees Paid 65.62 84.37
(Purchased during the year) Units 5709112.89 Less:Amortised During The Year 18.75 46.87 18.75 65.62
(Sold during the year) Units 5709112.89
Deferred Employee Compensation
15 Sundram Mutual Fund
(Purchased during the year) Units 19160961.65 0.00 0.00 Under ESOP Opening Balance 515.42 575.33
(Sold during the year) Units 19160961.65 Addition During The Year 3503.78 279.03
16 TATA Mutual Fund 0.00 0.00 Less: Cancelled During The Year 1.43 0.00
(Purchased during the year) Units 4635609.87
(Sold during the year) Units 4635609.87 4017.77 854.36

17 UTI Mutual Fund - 0.00 0.00 Less:Amortised Related To Subsidiary 91.17

(Purchased during the year) Units 246888.06 Less:Amortised During The Year 685.99 3240.61 338.94 515.42
(Sold during the year) Units 246888.06
Total 3287.48 581.04
B. LONG TERM INVESTEMENT
I) Quoted-Equity Shares- Other than Trade
1 Dabur Pharma Ltd 479,400.00 4.79 4.79

II) Unquoted -Equity Shares Trades Investments

1 Sanat Products Ltd 50,000.00 105.00 105.00
2 Dabon International Limited 270,000.00 27.00 1,350.00
3 Green Valley Products Pvt. Ltd - 0.00 6.50
(65000 shares sold during the year)

III) Unquoted - Equity Shares other than Trade

1 Commerce Centre Cooperative

Housing Society Limited 15.00 0.02 0.02

2 Capexil (Agencies) Limited 3.00 0.01 0.01

3 Dabur Employees Consumers Co-op Stores Limited 250.00 0.03 0.03

4 Dabur Employees Cooperative Credit Society Ltd 650.00 0.07 0.07

5 Co-operative Stores Limited,Super Bazar 500.00 0.05 0.05

6 National Saving Certificate 1.26 0.21

7 Kisan Vikas Patra 0.07 0.00

8 Saraswat Coop Bank Ltd 1,000.00 0.01 0.00

9 5% Special Bond 12.49 12.06

IV) Share Application Money 0.00 17,473.29

TOTAL 4,240.13 23,329.02

LESS PROVISION FOR DIMINUTION IN LONG TERM INVESTMENT 26.99 0.00

TOTAL 4,213.14 23,329.02

Schedule H - Current Assets, Loans and Advances

A. Current assets :

Inventories

- Raw materials 7,753.23 8,068.03

- Packing materials, stores and spares 4,820.50 3,646.80

- Stock in process 1,402.38 746.23

- Finished goods 7,301.73 7,851.86

21,277.84 20,312.92

Sundry debtors (unsecured):

- Debts outstanding for a period exceeding six months :

Considered good 324.51 253.31

Considered doubtful 153.84 25.98

478.35 279.30
28 CONSOLIDATED FINANCIAL STATEMENTS
Dabur India Limited Annual Report 2005-06

Schedules annexed to and forming part of the accounts for the year ended 31 st March, 2006
For the year ended For the year ended For the year ended For the year ended
31st March, 2006 31st March, 2005 31 st March, 2006 31st March, 2005
(Rs. in lacs) (Rs.in lacs) (Rs. in lacs) (Rs.in lacs)

Schedule J- Sales and Other Income Donation 331.37 257.90

A. Sales: Contribution For Scientific Research Expenses 720.00 597.97
Domestic Sales Less Returns 171,140.50 134,423.64 Provsion For Doubtful Debts 145.82 44.08
Export Sales 18,816.50 19,271.69 Loss On Sale Of Investments (Other Than Trade) 9.88 -
189,957.00 153,695.33 Loss On Sale Of Fixed Assets(Net Of Profit Rs.Nil, Previous Year Rs. 10.66) 65.85 108.87
B. Other Income: Provision For Contigent Liability - 89.08

Export Subsidy 172.37 44.65 Provision For Diminution In The Market Value Of 26.99 -
Long Term Trade Investment
Rent Realised 17.30 21.10
56,522.85 47,691.25
Sale Of Scrap 278.78 276.60
Dividend From Long Term Investment Other Than Trade Investment 0.48 0.50
Royalty 18.54 - Schedule O-Financial Expenses
Interest Paid On:
Miscellaneous Receipts 530.63 170.39
Fixed Period Loan 389.33 402.33
Profit On Sale Of Current Investments 96.39 396.96
Others 735.70 419.36
Prof it On Sale Of Long Term Investments - 10.42
Bank Charges 513.70 421.90
Profit On Sale Of Fixed Assets 211.91
(Net Of Loss Of Rs. 16.74 Previous Year Rs. Nil) 1,638.73 1,243.59
-
(Including Capital Profit Of Rs. 19.27 Previous Year Rs. Nil)
Interest Received 10.28 Schedule IB-Miscellaneous Expenditure written off
- - Technical Knowhow Fees Paid 18.75 18.95
1,336.68 920.62 Deferred Employee 685.99 326.49
Compensation Under Esop
Schedule K-Cost Of Materials Less:TransferredTo 278.50 407.49 195.91 130.58
Raw Materials Consumed: Director Remuneration
I) Opening Stock 7,154.31 5,912.78 Total 426.24 149.53
ii) Add: Stock Inherited From New 138.26 -
Subsidiaries
iii) Add: Purchases 38,693.11 32,233.70
45,985.68 38,146.48 Schedule P - Accounting Policies & Notes To Accounts
iii) Less: Closing Stock 7,227.27 38,758.41 7,154.31 30,992.17 (All figures in Indian Rupees lacs except share capital)
Packing Materials Consumed:
A. ACCOUNTING POLICIES
I) Opening Stock 3,009.44 2,105.61
li) Add: Stock Inherited From New 305.85 -
Significant accounting policies are summarized below:
Subsidiaries
lii) Add: Purchases 26,831.23 18,235.57 1. Principles of consolidation:
30,146.52 20,341.18 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. and2%by
lii) Less: Closing Stock 4,254.78 25,891.74 3,009.44 17,331.74 Balsara Home Products Ltd.) Dabur International Ltd., (wholly owned body corporate incorporated in lsle of MAN),
Dabur Overseas Ltd. (asubsidiary body corporate incorporated in British Virgin Island 100% stake wherein is held
Purchase Of Finished Products 15,385.77 19,784.12 by Dabur International Ltd.), Dabur Nepal Pvt. Ltd. (a subsidiary body corporate incorporated in Nepal, 97.5 % stake
Adjustment Of Stocks In Process And Finished Goods wherein is held by Dabur International Ltd.), Pasadensa Foods Ltd. (a wholly owned subsidiary company incorpo-
ratedin India, 100% stake where in is held by Dabur Foods Ltd.,), Dabur Egypt Ltd. (a wholly owned subsidiary body
Opening Stock: corporate incorporated in Egypt, 76% & 24% of stake wherein are held by Dabur Overseas Ltd. and Dabur Interna-
Stock In Process 813.84 1,212.78 tional 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 corpo-
Finished Products 7,784.26 5,219.54 rate incorporated in UAE, 38.41% stake wherein is held by Dabur International Ltd. which has control of compo-
Stock Inherited From New Subsidiaries 834.47 - sition 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).
9,432.57 6,432.32
Closing Stock: The consolidated financial statements have been prepared on the basis of AS-21, issued by ICAI read with the fol-
Stock-In-Process 1,506.17 746.23 lowing basic assumptions:
Finished Products 7,190.02 7,851.87 I. The financial statements of the parent company and its subsidiary companies have been combined on a line-by-
8,696.19 8,598.10 line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully elim-
inating intra-group balances and intra-group transactions and resulting in unrealized profits or losses.
lncrease(-)/Decrease In Stock In 736.38 (2,165.77) Investments of parent company in subsidiaries are eliminated against respective proportionate stake of parent com-
Process And Finished Goods pany 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.
80,772.30 65,942.25 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
Schedule L-Manufacturing and Operating Expenses capital reserve including gain/loss arising on account of translating the transactions of the year, year-end assets and
Power And Fuel 3,548.77 2,740.15 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.
Stores & Spares Consumed 1,083.63 545.60
Repairs & Maintenance II The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions
and other events in similar circumstances and are presented to the extent possible, in the same manner as the par-
Building 156.77 118.57
ent company's separate financial statements unless stated otherwise.
Plant & Machinery 202.15 120.57 III. Minority interest, where lying, in the net income of consolidated subsidiaries have been adjusted against the in-
Others 392.22 315.69 come 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
Processing Charges 327.70 209.79 equity since the date of parent subsidiary relationship has been disclosed in the consolidated financial statement
5,711.24 4,050.37 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 curren-
Schedule M- Payments to & provisions for Employees cy 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.
Salaries, Wages And Bonus 10,057.40 6,978.67
Fixed assets of the overseas subsidiaries have been accounted for in terms of the exchange rate prevailing at the
Contribution To Provident And Other Funds 1,110.58 818.88 point of commencement of production of relevant subsidiaries pertaining to assets appearing since that point of
Workmen And Staff Welfare 2,432.48 2,226.64
time and at purchase price (including cost of installation) for remaining fixed assets.

Directors' Remuneration 895.29 824.15 2 Accounting Convention:

14,495.75 10,848.34 The accounts have been prepared in accordance with the historical cost convention.

a. Fixed Assets and Depreciation:

Schedule N-Selling and Adminstrative Expenses
• Fixed assets are stated at carrying amount subject to deduction of accumulated depreciation.
Rent 1,031.21 738.89
Rates And Taxes 117.81 119.00 • Cost includes inward freight, duties, and taxes and expenses incidental to acquisition and installation.
Insurance 341.84 304.40
• Depreciation has been provided at rates provided in schedule XIV of Companies Act.
Sales Tax 14,306.39 11,996.24
• In respect of the parent company, Dabur Foods Ltd & Asian Consumer care Pvt. Ltd. depreciation on fixed assets
Freight And Forwarding Charges 6,405.88 4,339.22
has been provided on written down value method, except for Baddi, Katni, 5/1 Sahibabad, Jammu, Rudrapur
Cartage And Coolie 35.18 - unit and Corporate Office of parent company, Dabur Egypt Limited, Balsara Home Products Ltd., Dabur Inter-
Commission, Discount And Rebate 1,383.09 1,702.74
national 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., depre-
Advertising And Publicity 22,168.21 20,375.91 ciation on fixed asset acquired upto 31.03.1991 has been provided on written down method and subsequent
Travels Conveyance 2,098.76 1,891.14
addition on straight line method. For Besta Cosmetics Ltd. fixed assets acquired upto 31.03.1994 has been pro-
vided on written down value method and subsequent addition on straight line method. Fixed Assets of Daman
Legal & Professional 928.14 876.31 factory of Balsara Home Products Ltd. has been provided on written down value method.
Telephone, Fax Expenses 407.62 404.17
• Patent and trade marks are amortized equally over a period of 10 years.
Security Expenses 186.55 141.51
General Expenses 5,731.71 3,645.47 • Moulds are depreciated 100% in the year of addition.
Directors' Fees 9.00 6.80
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 ar-
Auditors' Remuneration: 71.55 51.55 riving at impairment loss thereon, if any, being the difference between the book value and recoverable value of rel-
 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.
d. Deferred Entitlement on LTC:
In terms of the opinion of the Expert Advisory Committee of the ICAI, the parent company has provided liability
accruing on account of deferred entitlement towards LTC in the year in which the employees concerned render
their services. 5.
e. Inventories:
Stocks are valued at lower of cost or net realizable value. Basis of determination of cost remain as follows:
6A. Related party Disclosures
• 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
b. Existing provisions referred to in "a" above relates to nil (Rs.62.64), nil (Rs.26.15) and nil (Rs.0.29)towards lia-
bilities 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.
c. Resulting outflows against above liabilities pending before Sales Tax DC/Tribunal/CCT's if any matured are ex-
pected to be in subsequent financial year's.
d. Provisions are made herein for medium risk oriented issues as a measure of abundant precaution.
e. Remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para 4(a) above
is presumed.
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.
Related party disclosures as required under AS 18 issued by the Institute of Chartered Accountants of India are giv-
en 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.

f. Research and Development Expenses: (i) Associates / Joint Ventures

Contributions towards scientific research expenses are charged to the Profit & Loss Account in the year in which Mr Rukma Rana, joint venture partner in Dabur Nepal Pvt Ltd
the contribution is made. ACI Ltd. Bangladesh
Weikfield Product Co. Pvt. Ltd
g. Retirement Benefits:
Green Valley Products Pvt Ltd
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 (ii) Key management personnel Relatives of Key Management Personnel
advice (Whole time directors)
a) Pradip Burman R C Burman
• Gratuity liability on the basis of actuarial valuation/management estimate/insurer's advice.
b) Amit Burman Asha Burman
• Liability for superannuation fund on the basis of insurer's advice c) Dr. Anand Burman A.C.Burman
d) Siddharth Burman —
• VRS, if paid, is charged to revenue on actual basis in the year of payment. e) P. D. Narang —
f) Sunil Duggal —
h. Recognition of Income and Expenses:
g) Sanjay Sharma —
• Sales and purchases are accounted for on the basis of passing of title to the goods. h) T K Gupta —
i) S. Ramakrishna —
• Sales comprise of sale price of goods including excise duty and sales tax but exclude discount. j) Mohit Burman —
k) Arvind Kumar —
• All items of incomes and expenses have been accounted for on accrual basis.
l) Chetan Burman —
i. Income Tax & Deferred Tax
Income Tax is estimated considering the provisions of the Statute. Deferred tax is recognized for entities where the (iii) Associate Entities over which Key Management Personnel are able to exercise significant influence:
same is mandatorily applicable subject to the consideration of prudence, on time differences being the difference 1. Welltime Housing and Finance Pvt.Ltd
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 2. Miracle Commercial Enterprises Pvt Ltd
under fiscal act unless there is virtual certainity of future taxable profit to realize the asset, due to restriction im- 3.Wakarusa Laboratories Pvt Ltd
posed under para 17- AS-22 issued by ICAI. 4. Jetways Travels Pvt Ltd
5. Gyan Enterprises Pvt.Ltd.
j. Contingent Liabilities:
6. Puran Associates Pvt. Ltd
Disputed liabilities and claims including claims raised by fiscal authorities, pending in appeal/court, for which no re-
liable estimate can be made of the amount of obligation or which are remotely poised for crystallization are not pro-
vided in accounts but disclosed in notes to accounts. However, present obligation as a result of past event with possi- [iv] An Enterprise owned by any Director (KMP) of Dabur India Limited / subsidiary:
bility of outflow of resources, when reliably estimable, is recognized in accounts. 1. Welltime Housing and Finance Pvt. Ltd.
2. Prayag Commercial Private Limited
k. Foreign Currency Translation:
In respect of foreign branches/offices, the company has adopted integral foreign operation approach has been adopt-
ed as per revised AS11 and accordingly revenue items have been converted at average of month end exchange rates 6B. Transactions with related parties (Consolidated) for the period from 01.04.2005 to 31.03.2006
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 ac- Associates Key Relatives Total Outstanding
counted for in Profit & Loss Account. Management Of Key AsOn
Receivables/payables (excluding for fixed assets) in foreign currencies are translated at the exchange rate ruling at Personnel Management 31.03.2006
the year-end date and the resultant gain or loss is accounted for in the Profit & Loss Account. Personnel
Exchange Loss / Gain arising out of transactions of revenue and capital nature are separately disclosed in notes to
accounts. Purchases of Goods 0.00 0.00 0.00 0.00 0.00
Capital as well as revenue implication of exchange fluctuation, accounted for in profit and loss account, are dis- [0.00) [0.00] [0.00] [0.00] [0.00]
closed in notes to accounts.
Sale of Goods 0.00 0.00 0.00 0.00 0.00
[1565.05] [0.00] [0.00] [1565.05] [18.93)
l. Employee Stock Option Purchase (ESOP):
Aggregate of quantum of option granted under the scheme in monetary term has been shown as Employees Stock Receiving of Services 180.00 0.00 0.00 180.00 0.00
Option Scheme outstanding in Reserve and Surplus head of the Balance Sheet by way of debiting deferred Em- [190.66] [0.00] [0.00] [190.66] [2.85]
ployee Compensation under ESOP as per guideline to the effect issued by SEBI.
Repayment of Loans Recd 0.00 0.00 0.00 00.00 0.00
m. Miscellaneous Expenditure: [200.00] [0.00] [0.00] [200.00] [0.00]

Loans Given 00.00 0.00 0.00 00.00 0.00

• Technical know-how fees paid to Technical Collaborators upto 31.03.2004 are being amortized equally over a (100.00) [0.00] [0.00] [100.00] [200.00]
period of six years. Subsequent such expenses are charged to revenue in the year of incurrence.
Rent Paid 6.00 0.00 0.00 6.00 0.00
• Deferred Employees Compensation under ESOP is being amortized on straight-line basis over vesting period. [20.77] [0.00) [0.00] [20.77) [0.00]
Employee compensation in respect to option granted to subsidiary company employees is being reimbursed by
Interest Recd On Loans Given 0.00 0.00 0.00 0.00 0.00
subsidiary companies to holding company.
(0.00) (0.00) [0.00] (0.00) [0.00]
B: NOTES TO ACCOUNTS Remuneration/Exg./Pension 0.00 532.84 125.98 658.82 0.00
[4.28] (638.58) [169.01] [811.87] [0.00]
1. Building constructed on leasehold land included in the value of building shown in Fixed Assets Schedule:
Repayment of Loans Given (Instl.Recd) 3.50 0.00 0.00 3.50 0.00
As at 31st March 2006 As at 31st March 2005 (0.00) (0.00) [0.00] [0.00] [0.00]
Cost/Revalued 6757.63 5378.72 Interest Paid On Loan Recd 0.00 0.00 0.00 0.00 0.00
Written Down 4781.37 3607.73 [4.09] [0.00] [0.00] [4.09] [0.00]

Donation Given 0.00 0.00 0.00 0.00 0.00

2. None of the assets qualify for the impairment loss for the year (Previous year Rs. NIL) which was adjusted against [0.00] [0.00] [0.00] [0.00] [0.00]
the profit & loss account /opening reserve.
Royalty Received 0.00 0.00 0.00 0.00 0.00
3. a. Further to para A(2)(b) above, recoverable value of cash generating units (CGUs] have been assessed based on (0.00) (0.00) (0.00) (0.00) (0.00)
value-in-use method which for each CGUs worked out to much higher than corresponding book value of net assets Employee Stock Option Scheme 0.00 278.50 0.00 278.50 0.00
thereby not warranting further exercise of arriving at their net-selling-price. This further confirms absence of exi-
(0.00) (195.91) (0.00) (195.91) (0.00)
gency of making any provision against impairment loss.
b. Beside those referred to in parent company financial statements, each plant of each subsidiary constitutes in- Sale of assets 0.00 6.47 0.00 6.47 0.00
dependent CGU. (0.00) (0.00) (0.00) (0.00) (0.00)
c. Annual discount rate considered for arriving at value-in-use of assets pertaining to each CGU are as per inter- Figures in brackets are of previous year
est rate of external borrowing plus risk factor at a rate of two percent per annum.
The amounts or appropriate proportions of outstanding items pertaining to related parties at the Balance Sheet date
4. Contingent Liabilities: and provisions for doubtful debts due from such parties at that date - nil (previous year nil)
a) i) Claims not acknowledged as debts: Amounts written off or written back in the period in respect of debts due from or to related to parties nil (previous year nil).
a) In respect of civil suits filed against the company Rs.338.61 (Previous year 276.82)
7. Earnings per share has been computed as under:
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) 2005-06 2004-05
ii. In respect of Bank Guarantees executed Rs.2933.96 (previous year 1988.20) Profit after Tax and after Minority Interest 21418.24 15580.61
iii. In respect of Sales Tax under appeal Rs.1291.95 (previous year 1042.21)
Less: Provision for taxation of earlier years written off 51.83 26.26
iv. In respect of excise duty disputes pending with various judicial authorities Rs.2832.24 (previous year
Add Provision for taxation of earlier years written back 0.00 0.00
Rs.2227.26)
v. In respect of Corporate Guarantees given by the Company Rs.7644.85 (previous year Rs.14148.94) 21470.07 15554.35
vi. In respect of Income tax under appeal Rs.319.79 (previous year Rs.401.25) Weighted average number of shares outstanding:
vii.Estimated Amount of contract remaining to be executed on capital Account Rs.450.89, net of Advance Basic 573149155 572839426
(previous year Rs.1064.15)
Diluted 577524999 575809845
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: Earnings per share (face value Re.1 per share):

a. Rs. NIL (previous year Rs.89.08) has been provided during the year against disputed liabilities in respect of Basic 3.74 2.72
amount reliably estimable within the meaning of relevant standards. Diluted 3.71 2.71
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 FOODS ELIMINATIONS OTHERS Total Consolidated
Current Period Previous Period Current Period Previous Period Current Period Previous Period Current Period Previous Period Current Period Previous Period
REVENUE
External Sales 164490 133264 20573 14215 4894 6216 189957 153695
Inter-segment sales
Total Revenue 164490 133264 20573 14215 4894 6216 189957 153695
RESULT
Segment result 24732 17390 1891 773 678 691 27301 18854
Unallocated corporate expenses
Operating profit 24732 17390 1891 773 678 691 27301 18854
Interest expense (Net Of Interest Income) 1054 720 519 446 66 78 1639 1244
Interest income
Income Tax(Current + Deferred+FBT) 3002 1910
Profit from ordinary activities 23678 16670 1372 327 612 613 22660 15700
Exceptional Item {Profit/(loss) on Long Lerm Trade Investment} (1274)
Net profit 23678 16670 1372 327 612 613 21386 15700
OTHER INFORMATION
Segment assets 98823 82271 14572 11615 (19412) (7152) 2693 3106 96676 89840
Unallocated corporate assets 5914 3690
Total assets 98823 82271 14572 11615 (19412) (7152) 2693 3106 102590 93530
Segment liabilities 46681 44290 9872 9749 (7970) (2762) 1083 1159 49666 52436
Unallocated corporate liabilities 6506 5282
Total liabilities 46681 44290 9872 9749 (7970) (2762) 1083 1159 56172 57718
Capital expenditure 22504 7876 22504 7876
Depreciation 2125 2353 448 316 119 132 2692 2801
Non-cash expenses other than depreciation 3241 515

SECONDARY SEGMENT
As the company also exports, the secondary segment for the company is based on the location of customer’s . 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)

9.a) Pursuant to parent Company's take over of 99.52%, 100% and 100% (after considering 52% held indirectly through 1 1 . Information pursuant to AS 24 on discontinued operations (pertaining to parent company only]
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 0 1 , 2005, following assets and liabili- Particulars Hair Oil MSY Unit Daburgram
ties of respective entities have been incorporated in CFS. Baddi Baddi Unit
1 Discontinued since March,04 Nov,2000 July,2003
Balsara Balsara Besta
Hygiene Home Cosmetics 2 Segment the operation of the FMCG FMCG FMCG
Products Ltd Products Ltd Ltd. Unit relates to in financial statement

1. Assets 3 Carrying amount of total assets 33.37 28.35 44.27

(33.37) (28.35) (44.27)
Gross Fixed Assets 992.98 2737.30 13.89
4 Carrying amount of total liabilities 4.21 0.01 0.32
Accumulated depreciation 430.24 339.12 8.82
(4.21) (0.01) (0.32)
Net Fixed Assets 562.74 2398.18 5.07
5 Profit from ordinary activities 0 0 0.00
Investments 731.94 1.12 - (-5.3) (-1.79) (0.00)
Inventories - 1293.65 - 6 Income Tax expenses 0.00 0.00 0.00
Sundry Debtors - 549.18 - (0.00) (0.00) (0.00)

Cash & Bank 5.57 126.27 7.76 7 Gain on disposal of assets 0.00 0.00 0.00
(-0.01) (0.00) (0.00)
Loans and Advances 819.13 656.20 106.05
8 Cash flow from discontinued operations:
Profit & Loss (Debit) 0.00 3949.64 92.13
Operating activities 0 0 0
2. Liabilities
(-71.46) (-0.47) (-3.97)
General Reserve 772.90 - -
Investing Activities 0.00 0.00 0.00
Capital reserve - 102.78 2.57 (24.14) (0.00) (0.00)
Capital redemption reserve - - 30.01 Financial Activities 0.00 0.00 0.00
(0.00) (0.00) (0.00)
Share Premium - 660.00 -
Note: 1. Figures in brackets are for previous year.
Profit & Loss 423.85 - - 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
Deferred tax liabilities 43.75 45.54 1.24
Secured Loans - 1039.62 -
12. Extraordinary item represents loss on sale of Long Term Trade Investments amounting to Rs.1274.05.
Un-secured loans - 46.75 -
Current Liabilities 112.30 3673.40 41.99 1 3 . Exchange loss works out to Rs.100.14 (Previous Year Rs. 57.34) net of gain which has been charged to Profit & Loss
Account.
Provisions 378.50 335.15 45.20
3. Income and expenses of the year are added by : 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.
Total Income 171.39 16436.87 121.83
Total expenses 204.16 15048.26 35.35 15. Grouping and heads of accounts of the subsidiaries have been rearranged in terms of presentation of those of par-
ent company as and when necessary. Besides, figures for previous year have been rearranged/ regrouped as and
4. The value of investment in excess of net assets of
when necessary in terms of current year's grouping.
subsidiary accounted for as good will. 10073.54 4249.61 1840.62
To above extent, the figures of previous year are not comparable with those of current year. Signatures to the Schedules "A" to "P" Annexed to and forming part of the Accounts.

10. Pursuant to parent Company's enhancement of stake in Dabur Nepal Pvt. Ltd. from 79.96% to 97.5% (stake herein As per our report of even date attached For Dabur India Ltd.
being held during the year through Dabur International Ltd., another wholly owned subsidiary unlike direct hold-
ing in previous year) CFS for the year have been affected as follows : For G.Basu & Co. V.C.Burman Chairman
Chartered Accountants P.D.Narang Director
Particulars Amount Sunil Duggal Director
Minority interest reduced by 946.21 S.Lahiri A.K.Jain Addl.General Manager (Finance)
Share of profit of minority reduced by 87.32 Partner & Company Secretary
Value of investments falling short of proportionate net assets of subsidiary accounted for as goodwil 581.41
To above extent,figures of previous year are not comparable with those of current year.
New Delhi
25th April 2006
 CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP 31
Annual Report 2005-06 Dabur India Limited

To t h e 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 state-
ments 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 fi-
nancial position of Dabur India Limited and subsidiaries as of March 3 1 , 2006, and the result of their operations, com-
prehensive 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 Consolidated statement of income for the year ended 31st March,2006
Current Assets INR in Lac
Cash and Cash equivalents 4892.75 1387.94 INR in Lac
Marketable securities 4096.15 4378.09 2005-06 2004-05
Accounts Receivable, net of allowances 7435.01 7589.28 Revenue 171996.64 136838.94
Inventories 21617.30 20312.92 Cost of revenues 94475.19 75993.61
Other current assets 11609.50 26106.05 Gross profit 77521.45 60845.33
Total current assets 49650.71 59774.28 Operating expenses
Property,plant and equipment,net 33911.52 29530.41 Selling, general and administrative expenses 41290.52 34685.14
Goodwill 17566.51 967.90 Personnel expenses 6930.40 4964.41
Intangibles 632.02 856.27 Depreciation and amortisation 3417.85 2830.95
Investments 364.31 357.68 Financial expenses 1638.70 1243.59
Other non-current assets 1916.88 2829.81 Total operating expenses 53277.46 43724.09
Total assets 104041.95 94316.35 Operating Income 24243.98 17121.24
Liabilities and stockholders' equity Other income,net 875.10 447.21
Current Liabilities Income before provision for taxes 25119.08 17568.45
Short term debt and current portion of long term debt 7420.77 12890.17 Provision for taxes
Trade accounts payable 16482.32 17301.91 Current tax expenses 2185.80 1509.88
Accrued expenses and other current liabilities 20300.90 17959.66 Defered tax benefit 598.48 -198.54
Total current liabilities 44203.99 48151.74 Prior year tax adjustment
Long term debt,excluding current portion 3002.08 2311.21 Fringe benefit tax 463.31
Other non-current liabilities 6837.21 4595.06 Minority interest -32.51 138.01
Total non-current liability 9839.29 6906.27 Net income 21904.00 16119.10
Deffered Tax liabilities (net) 1171.45 470.39 Earning per common share
Total liabilities 55214.73 55528.40 Basic 3.82 2.81
Minority interest 565.76 1858.76 Diluted 3.79 2.80
Stockholders' equity Weighted Average common shares outstanding
Common stock, Re 1/ Pre value. Basic 573149195 572694600
1250000000 equity sharesauthorised Diluted 577524990 575535148
573302784 issued and outstanding 5733.03 2864.20 The accompaying notes are an integral part of these consolidated financial statements

Additional paid in capital 4068.97 6158.32

Retained earning 38438.93 27793.90
Accumulated & other comprehensive income 20.53 112.77
Total liabilities and stock holders' equity 104041.95 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 Comprehensive Accumlated other Retained earings Total stockholders'
paid in capital income comprehensive (Accumulated equity
income (loss) earnings)
Balance as of 01.04.2004 286249052 2862.49 5819.38 19840.54 28522.41
Adjustment for prior period items (Refer note No. 22 ) -26.60 -26.60
Balance as of 01.04.2004 2862.49 5819.38 0.00 0.00 19813.94 28495.81
Issue of share against exercise stock option 170661 1.71 1.71
Amortization of employees stock option 338.94 338.94
Employees share of Profit -3.25 -3.25
Interim Dividend -2862.89 -2862.89
Proposed Dividend -4296.30 -4296.30
Tax on Interim Dividend -374.14 -374.14
Tax on Proposed Dividend -602.56 -602.56
Net Income 16119.10 16119.10
Translation adjustment -9.02 -9.02 -9.02
Investment realised during year net of deferred tax (16.34) -28.31 -28.31 -28.31
Unrealised gain on short term investment (net of deffered Tax 0.4) 0.69 0.69 0.69
Unrealised gain on long term investment (net of deffered tax 86.22) 149.41 149.41 149.41
Balance as of March 3 1 , 2005 2864.20 6158.32 112.77 112.77 27793.90 36929.19
Adjustment for prior period items (Refer note No. 38 ) 96.70 96.70
Issue of share against exercise stock option 2.32 2.32
Bonus Shares 2866.51 -2866.51 0.00
Amortization of employees stock option 777.16 777.16
Change resulting from purchase of additional share in subsidiaries
Employees share of Profit 0.00
Interim Dividend -4303.03 -4303.03
Proposed Dividend -5733.03 -5733.03
Tax on Interim Dividend -602.98 -602.98
Tax on Proposed Dividend -716.63 -716.63
Net Income 21904.00 21904.00 43808.01
Translation adjustment -100.10 -100.10 -100.10
Unrealised gain on short term investment (net of deffered Tax 1.27) 3.79 3.79 3.79
Unrealised gain on long term investment (net of deffered tax) 4.06 4.06 4.06
Balance as of March 3 1 , 2006 5733.03 4068.97 21924.53 20.53 38438.93 70165.46
The accompaying notes are an integral part of these consolidated financial statements

As per our report of even date attached For Dabur India Ltd.

For G.Basu & Co. V.C.Burman Chairman

Chartered Accountants P.D.Narang Director
Sunil Duggal Director
S.Lahiri A.K.Jain Addl.General Manager (Finance)
Partner & Company Secretary

New Delhi
25th April 2006
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 Weikfield International (UAE) Ltd United Arab Emirate 38.41% by Dabur international Ltd.
Dabur Foods Ltd. India 100%

INR in Lac Pasadensa Foods Ltd. India 100% by Dabur foods Ltd

31.03.2006 31.03.2005 Dabur Egypt Ltd. Egypt 76% by Dabur overseas Ltd & 24% by Dabur
International Ltd
Cash flows from operating activities
African Consumercare Ltd Nigeria 90% by Dabur International Ltd
Net Income 21904.00 16119.89
Asian Consumercare Pvt. Ltd Bangladesh 76% by Dabur International Ltd
Adjustments to reconcile net income to net cash and
cash equivalents provided by operating activities Balsara Home Products Limited India 99.52%

Depreciation and amortization 3436.80 2830.95 Balsara Hygiene Products Limited India 100%

Provision for Taxation 2185.80 1509.88 Besta Cosmetics Limited India 48% by Dabur India Limited, 50% by Balsara
Hygiene Products Limited and 2% by Balsara
Deferred tax benefits 598.48 (198.54) Home Products Limited
Allowance for doubtful accounts 14.00
Loss / (gain) on disposal of property, plant and equipment (146.00) 202.63 d) Cash and Cash equivalents :
Cash equivalents include all highly liquid investments purchased with an original maturity of three months
Loss / (gain) on disposal of investment (55.00) (407.38)
or less.
Amortization of employees stock option plan expenses 777.16 338.94
Minority interest (32.51) 138.01
e) Accounts Receivable
Allowances for doubtful account based on direct analysis of receivable against uncollected dues are pro-
Prior period adjustment 96.70 (26.60) vided in account.
Dividend Income (0.50)
f) Inventories :
Interest expenses 1638.70 1243.59 Finished goods are stated at the lower of cost and net realizable value. Cost is determined using first-in-first
Changes in operating assets and liabilities 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
(Increase) / decrease in accounts Receivable 54.17 (487.91) direct labour, material costs and production overheads. Allowance for potentially obsolete or slow mov-
(Increase) / decrease in Inventories (1304.38) (5,028.47) ing 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.
Decrease / (increase) in other non current assets 912.93 870.16
Decrease / (increase) in other current assets (2439.45) g) Investment Securities :
The Group Companies follow investment policies, which are consistent with the provisions of Statements
Increase / (decrease) in account payable (819.59) 6476.76
of Financial Accounting Standard (SFAS) No. 115, "Accounting for certain Investments in Debt and Equi-
Increase / (decrease) in other Current Liabilities 2341.24 2613.41 ty Securities".
Increase / ( decrease) in other non current liabilities 2242.15 1069.72 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
Income tax paid (2240.41) (1,668.57) market price and in its absence for unlisted securities at fair value. Investment held for long term not ex-
Interest paid (1638.70) (1,222.18) ceeding 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. Unre-
Net cash provided by operating activities 27512.09 39394.8 alized gain and losses , net of related tax effect are reported as a separate component of stock holder's equi-
Cash flow from Investing activities ty until realized. Realized gain or losses on sale of securities are computed with reference to their weight-
ed average cost. Realized gains, losses and decline in value on non-readily marketable available-for-sale
Expenditure on property, plant and equipment (7841.71) (7,134.77) securities that are judged to be other than temporary, are included in the statement of income. Interest and
Proceeds from sale of propety, land and equipment 500.02 dividend income is recognized when earned.
Purchase of intangibles (11.55) (717.99)
h) Property, Plant and Equipment:
Purchase of Securities (364.80) 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
Purchase of Marketable securities (4089.34)
capital leases and leasehold improvements are amortized over the lower of their estimated useful lives or
Sale of marketable securities 143,259.86 the term of the lease.
Sale proceed of Dabon / Green Valley 55.00 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 out-
Sale of other securities 4377.00 standing at the balance sheet date and the cost of property, plant and equipment not put to use before such
Dividend received 0.50 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 re-
Net cash issued in investing activities (7875.40) (34,772.73) sulting gain or loss is included in the Consolidated Statement of Income.
Cash flows from financing activities 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 suspen-
Proceeds from exercise of stock option 2.32 1.71 sion of use or poised for sale.
Increase of short term debts (net) (5469.40) 3177.40 The Group Companies have determined the estimated useful lives of assets for depreciation purposes.
Repayment of long term debts (net) 690.87 (528.57)
Dividend Tax (1319.61) 0 A. Assets held & used 31.3.06
Payment of dividend (10036.06) (7,761.23) Type of assets Estimated useful life for charging depreciation
Net cash provided by financing activities (16131.88) (5,110.69) Leasehold Land 20 Years
Net increase in cash and cash equivalent during the year 3504.81 (488.62) Buildings 10-15 Years
Cash and cash equivalent at the beginning of the year 1387.94 1876.56 Plant and Machinery 6-15 Years
Cash and cash equivalent at the end of the year 4892.75 1387.94 Furniture and Fixtures 10-15 Years
The accompaying notes are an integral part of these consolidated financial statements Office Equipment 15 Years
Vehicles 5 Years

Notes to consolidated financial statement for the year ended 31.3.2006 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 /
(all amounts in Indian Currency in lac unless specified otherwise): hypothecated to bank & financial institutions towards security on loan.

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 ex-
isting 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 & Nige-
ria. 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.
i) Intangible ( Patent & Trade mark)
Amortized over the useful lifetime of the asset on straight-line method subject to periodic review of utility.
j) 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 en-
tities 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 combi-
nation working out to negative, is deducted proportionately from the fixed assets of acquired entity.

2) Significant Accounting Policies : k) Impairment of long lived assets :

Significant Policy for preparation of accompanying Consolidated Financial Statement (CFS) is summarized be- The carrying value of long-lived assets, including intangible assets and property and equipment, are re-
low: viewed 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 pe-
a) Basis of presentation and use of estimates: riod for the remaining carrying value of the impaired asset is revised, if necessary.
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 l) Employees Stock Option Scheme
of consolidated financial statement in conformity with US GAAP requires management to make estimates Compensation expenses for stock options granted to a section of management employees are measured by
and assumption. These estimates and assumptions affect the reported amount of assets and liabilities, rev- using the intrinsic value based method of accounting under the USGAAP, as permitted by SFAS No. 123.
enues and expenses and disclosure of contingent assets and liabilities. Actual result could differ from these Under the method compensation expenses is recognized over vesting period based on difference, if any,
estimates. The management's estimates for charge back, rebates, discount, returns, and the useful life of between the market value of stock of parent company on the date of grant of the stock option and the amount
tangible and intangible assets and realization of deferred assets present sensitive estimate in particular. to be paid by the employees for exercising the option.
m) Research and Development Expenses
b) Foreign currency translation : Contributions towards scientific research expenses are charged to the statement of income in the year in
Functional currency of Dabur India Limited is Indian Rupee (INR) and the accompanying financial state- which the contribution is made.
ments 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 n) Dividends
expenses are translated using the monthly average exchange rates in effect during the year being reported. Dividends on common stock are recorded as a liability when recommended by the Board.
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. o) Advertising cost
Expenditure on advertising is expensed when incurred.
c) Principles of consolidation:
The consolidated financial statements include the financial statements of DIL and its subsidiaries. An en- p) Earnings per share
tity in which DIL has directly or indirectly, through other subsidiary undertakings, has taken a controlling In accordance with SFAS No. 128, "Earning per Share", basic earning per share in computed using the weight-
interest or is in a position to control composition of directors is classified as a subsidiary. All material inter- ed average number of common shares outstanding during the period. Diluted earning per share is com-
company accounts and transactions have been eliminated on consolidation. puted using the weighted average number of common and diluted common equivalent shares outstand-
The Group Companies, which are consolidated under DIL, presently comprise of entities with the follow- ing during the period.
ing details:-
q) Revenue recognition :
Customers of the Group Companies consist primarily of large wholesalers and dealers network who sell
Name of Subsidiary: Country of incorporation Shareholding 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 arrange-
Dabur Nepal Pvt Ltd Nepal 97.5% by Dabur International Ltd
ment exists (ii) delivery of the products has occurred; (iii) the selling price is both fixed and determinable
Dabur overseas Ltd British Virgin Island 100% and (iv) collectibility is reasonably assured.
Provisions for sales discounts, damaged product returns, exchange for expired product are established as
Dabur International Ltd Isle of MAN 100%
 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 8) Inventories :
rebate programmes extended to customers pursuant to industry standards are recognized as a reduction Inventories comprises of the following :-
from product sales revenues. Besides taxes/duties incidental to sale are recognized as a reduction from prod-
uct sale revenue.
INR in Lac
r) Income Taxes : 2006 2005
The Group Companies account for deferred taxes under the full liability method, in accordance with the
Raw Materials 8092.69 8068.03
provisions of SFAS No. 109 "Accounting for Income Taxes". Deferred Tax assets and liabilities are recog-
nized for the future tax consequences attributable to differences between carrying amounts of existing as- Packing materials,stores & spares 4820.50 3646.80
sets and liabilities in the financial statements and their respective tax basis. Deferred tax assets and liabil-
Stock in process 1402.38 746.23
ities 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 Finished goods 7301.73 7851.86
change. Based on management's judgment, the measurement of deferred tax assets is reduced, if necessary, Total 21617.30 20312.92
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. 9) Other Current assets :
Other current assets comprise of the following :
s) Employees' benefit :
Eligible employees of group companies are entitled to gratuity, superannuation and leave salary for which INR in Lac
liabilities are accrued or payment made to appropriate agencies entrusted to provide relevant benefits on
2006 2005
behalf of group companies. Accrued liabilities are ascertained on the basis on actuarial advice / manage-
ment estimate and when payment is made to the agencies entrusted for the purpose, the same is account- Fixed deposit 0.00 22.00
ed for as per payments made to these agencies in terms of their advice.
Securty deposits with various authorities 0.00 10.31

3) Advertising and Publicity costs during the period amounted to INR 22168 lac. Advance payment of Tax 5914.13 3690.49
Advances to suppliers 2084.01 2471.18
4) Changes in Accounting Procedures:
Advance to employees 292.48 310.47
This being the 1st financial period of presentation of account in US GAAP, accounting treatments remain in terms Balances with excise authority 434.84 992.80
of latest pronouncement of appropriate bodies and as such the question of disclosure on the changes in account-
ing procedure does not arise. Other advances recoverble in cash or in kind or value to be received 2884.04 1135.51
Advance against acquisition of equity shares of Balsara Hygience Products Ltd. 0.00 17473.29
5) Business Combination :
Total 11609.50 26106.05
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 10) Property, Plant & Equipment:
numbering 12290711, 3880800 and 431800 in the respective entities. The total purchase considerations paid Property, Plant & Equipment Comprise of the following :
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
INR in Lac 2006 2005
Balsara Home Balsara Hygiene Besta FREEHOLD LAND 781.01 645.65
Products Products Cosmetics
LEASEHOLD LAND 864.94 748.33
Limited Limited Limited
BUILDING,ROADS & CULVERT 15271.82 12801.93
Current Assets
PLANT & MACHINERY 27132.00 23006.00
Cash and Cash equivalents 126.27 5.58 7.75
VEHICLES 1249.40 1145.68
Accounts Receivable, net of allowances 549.18 0.00
FURNITURE & OFF EQUIPMENT 4563.55 3828.73
Inventories 1293.65 0.00
COMPUTERS 2872.73 2534.56
Other current assets 656.20 819.12 106.04
CAPITAL WORK IN PROGRESS 1304.70 938.81
Total current assets 2625.30 824.70 113.79
Total Gross Block 54040.14 45649.69
Property,plant and equipment,net 1930.84 562.74 5.07
Less: Accumulated Depreciation -19232.95 -16119.28
Investments 1.12 731.94
Negative Goodwill -895.70 0.00
Other non-current assets
Net Block 33911.50 29530.41
Total assets 4557.26 2119.38 118.86
LIABILITIES AND STOCKHOLDERS' EQUITY
The depreciation expenses relating to Property, Plant and Equipment for the year is 3634.48
Current Liabilities
11) Investment:
Short term debt and current portion of long term debt 1039.62
Trade accounts payable 3673.41 112.30 41.99 a) Current Investment
Accrued expenses and other current liabilities 335.15 378.50 45.20
INR in Lac
Total current liabilities 5048.18 490.80 87.19
Cost of the investment 4089.30
Other non-current liabilities 46.75 0.00
Gross unrealized holding gain in accumulated other comprehensive income 6.90
Total non-current liability 5094.93 490.80 87.19
Carrying value 4096.20
Deffered Tax liabilities (net) 45.54 43.75 1.23
Total liabilities b) Investment readily available for sale
Stockholders' equity 305.00 388.08 90.00
(I) Readily marketable equity securities:
Additional paid in capital 2766.00 0.00
Retained earning -3654.21 1196.75 -59.56 INR in Lac
Total liabilities and stock holders' equity 4557.26 2119.38 118.86 Cost of the investment 4.80
Gross unrealized holding gain in accumulated other comprehensive income 241.60
Excess of purchase consideration over fair value of net assets, accounted for as Goodwill amount to INR Carrying value 246.40
4249.6 lac, INR 10073.54 lac and INR1840.62 lac for three respective entities.
b) 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 addi- (II) Readily marketable debt securities:
tional 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 in Lac
INR 1293.00 lac.
Cost of the investment 12.50
6) Cash & Cash Equivalent : Gross unrealized holding gain in accumulated other comprehensive income Nil
Cash & cash equivalent comprises following: Carrying value 12.50

INR in Lac
(III) Not readily marketable equity securities
2006 2005

Cash in hand 49.45 27.91 INR in Lac

Remittance in transit 2.25 123.25 Cost of the investment 105.00

Gross unrealized holding gain in accumulated other comprehensive income Nil
Balance with schedule Bank 4621.98 1105.33
Carrying value 105.00
Balance with non-schedule Bank 219.07 131.45

Fixed deposit with Non-schedule Bank 0.00 0.00

Fixed deposit account 0.00 0.00 12) Goodwill and intangibles :

Postal savings Bank 0.00 0.00 I) Component of goodwill (valued as per 2j)
Total 4892.75 1387.94
a) Goodwill arising out of consolidation of Balsara Home Products Limited, Balsara Hygiene Products Limit-
ed and Besta Cosmetic limited due to DIL's owning 99.52% in Balsara Home, 100% in Balsara Hygiene and
Cash equivalent represent deposits placed with Banks in the normal course of business operation. 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
7) Accounts Receivable : 5 above.
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 b) On September 14, 2003, the parent company acquired 100% stake in Dabur International Limited by way
receivable after considering historical experience and the current economic environment on case-to-case basis. of acquiring 100000 numbers of shares therein at a consideration of INR 2287.50 Lac. Excess of considera-
Trade account receivable as at March 31,2006, net of allowance for doubtful account of INR 154.97 lac amounts to tion money over the net asset value of the investee entity amounting to INR 1178.57 lac has been account-
INR 7435.00 lac. ed for as Goodwill.

c) On September 14, 2003, the parent company acquired 38.41% stake in Weikfied international Limited
INR in Lac
by way of acquiring 615 number of shares amounting to INR 356.89 Lac. Excess of consideration mon-
2006 2005 ey over the net asset value of the investee entity amounting to INR 224.03. lac has been accounted for as
Goodwill.
Allowance at the beginning of the year 25.98 11.98

Allowance for Doubtful debts for the year 273.68 58.08 d) 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
Account receivable written off during the year 145.82 44.08 364.80 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
Balance for allowance for Doubtful debts 153.84 25.98
fixed assets.
34 CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP
Dabur India Limited Annual Report 2005-06

II) Details of other intangible assets (Patent & Trademark) : 18) Other non-current Liabilities :

INR in Lac INR in Lac

2006 2005 2006 2005

Leave salary 122.00 1009.09
Gross Carrying Amount 1112.87 1095.97
Housing gratuity & other welfare 700.00 112.99
Accumulated amortisation 480.85 239.70
Taxation 5959.78 16.06
Net Carrying amount 632.02 874.67 Dividend payable 0.00 2311.21
Amortisation in succeeding five years 235.79 235.79 Deferred payment credit against machine 148.40 0.00
Deposits others 55.43 0.00
Total 6985.61 3449.35
13) Other non-current assets:
Other non-current assets include security deposits & those segment of current assets, which are not due for real-
ization within a period of one year. 19) Stockholders' Equity -

INR in Lac a) Common Stock -

DIL has only one class of common stock i.e. Equity Share of INR 1/ each Shareholders enjoy voting power
2006 2005 in accordance to the number of Equity Shares held by it.
Fixed deposit 223.52 62.40
b) Employees stock exchange option -
Post office savings bank for excise regis. 0.95 0.95 Non-cancelled component of additional paid in share net-off quantum remaining unamortized shown sep-
arately under retain additional paid-in capital.
Securty deposits with various authorities 1660.41 2732.21

Advance to employees 32.00 34.25 c) Dividend -

During the period Interim dividend INR 4299.29 lac @ 150% and Final dividend of INR 5733.03 Lac @
Total 1916.88 2829.81
100% have been distributed and proposed respectively.

20. Employees stock option

14) Borrowing : The parent Company has an Employees Stock Option Scheme (ESOP), which provides for grant of stock options
a) Short Term Debt (including current portion of long term debt) in DIL to eligible management employees of group companies. The ESOP is administered by the Management
Working capital and short term loan from banks comprises following: Committee of the Board("the Committee"). The criteria for granting options are essentially on the basis of the man-
agement grade of the employee. Exercise price of option is the nominal value of shares.
Stock option activity during the year was as follows:
Name of entity Name of Bank Amount Rate of Nature of security
in INR Lac interest 31st Mar 06 31st Mar 05
per anum Outstanding, beginning of the year 1534740 1320658
Dabur Nepal Ltd Nabil Bank Ltd 823.70 11.00% Stocks,movable properties Granted 5388423 384743
& guarantee by Excercised 231679 170661
Dabur India ltd.
Cancelled 0 0
- Do - Standard Chartered Bank 533.80 11.00% Do Outstanding at the end of the year 6691484 1534740
Nepal Ltd

Nepal SBI Bank Ltd 546.30 11.00% Do

Up to March 31, 2006 the options granted are summarized as follows:
Dabur foods ltd Hongkong sanghai 479.27 8.50% Stocks,movable properties
Date of Number of Vesting Vesting Exercise Market price Amount INR
banking corporation & guarantee by
grant options period Date price as on date amortized
Dabur India ltd.
granted in Days of grant in 2005-06
Dabur foods ltd GE Capital service 1000.03 10.50% Movable & immovable (INR per (INR per
assets share) share)
Asian consumercare Standard Chartered Bank 417.04 12.00% Stocks,book debts,lease 6-Nov-02 20000 1825 5-Nov-07 1 45.10 92820
& ABN Amro Bank hold property, movable 30-Apr-03 137500 1095 29-Apr-06 1 37.00 868216
property,plant,equipment 30-Apr-03 262500 1826 29-Apr-08 1 37.00 993958
& personal guarantee of
10-Oct-03 150006 1024 30-Jul-06 1 60.55 1675434
one of the director.
10-Oct-03 1549982 1389 30-Jul-07 1 60.55 12762716
Weikfield (Standard Chartered Bank 78.21 5% Stock ,book Debts,Lease 5-May-04 74998 1182 31-Jul-07 1 79.70 959056
& ABN Amro Bank ) hold property, Personal
23-Jul-04 7148 729 22-Jul-06 1 69.95 129846
Bank Overdraft guarantee of one director.
23-Jul-04 87206 1094 22-Jul-07 1 69.95 1055602
Dabur International (Standard Chartered Bank 380.28 5% Stock ,book Debts,Lease 23-Jul-04 150108 1825 22-Jul-09 1 69.95 1089211
Limited & ABN Amro Bank ) hold property, Personal
26-Oct-04 34080 551 30-Apr-06 1 73.35 859456
Bank Overdraft guarantee of one director.
26-Oct-04 5454 1106 6-Nov-07 1 73.35 68523
Dabur Egypt Ltd Banque Du cairo barklays 122.76 14.50% Encumbrance on inventory
26-Oct-04 71572 1282 30-Apr-08 1 73.35 775766
Balsara Home Ltd Standard Chartered Bank 253.29 Stock / Book Debt 28-Apr-05 136056 364 27-Apr-06 1 116.85 7785324

HDFC Bank 222.32 8.75% Book Debt 28-Apr-05 95240 364 27-Apr-06 1 116.85 5449772
28-Apr-05 12218 1643 27-Oct-09 1 116.85 154890
HSBC 200.36 8.00% Stock / Book Debt
26-Jul-05 52606 365 26-Jul-06 1 151.45 2868935
Short term loan 26-Jul-05 30476 1826 26-Jul-10 1 151.45 332227
Dabur India Ltd Consortium of IDBI Bank, 1293.36 8.00% Stock & book debts 26-Jul-05 101746 365 26-Jul-06 1 151.45 5548847
SBC,SBI,ABN AMRO,UBI, 26-Jul-05 111250 1826 26-Jul-10 1 151.45 1212767
UTI Bank,HDFC
26-Jul-05 18700 980 1-Apr-08 1 151.45 379834
& Standard Chartered
26-Jul-05 4572 365 26-Jul-06 1 151.45 249340
Dabur International Depopsits of Directors / 1070.05 8.50% 26-Jul-05 6858 1826 26-Jul-10 1 151.45 74761
Limited Companies
26-Jul-05 3810 365 26-Jul-06 1 151.45 207783
26-Jul-05 3810 1826 26-Jul-10 1 151.45 41534
15) Trade accounts payable 26-Jul-05 2500 365 26-Jul-06 1 151.45 136341
Trade accounts payable of INR 16482.32 lac (PY 17301.92) comprise trade creditors for goods & services which in- 26-Jul-05 2500 980 1-Apr-08 1 151.45 50780
clude notes payable of INR 8050.56 lac (PY INR 12206.55 lac). 26-Jul-05 18750 370 31-Jul-06 1 151.45 1008737
26-Jul-05 106250 735 31-Jul-07 1 151.45 2877530
16 Accrued expenses & other current liabilities
Accrued expenses & other current liabilities comprise the following 26-Jul-05 9376 370 31-Jul-06 1 151.45 504422
26-Jul-05 53124 735 31-Jul-07 1 151.45 1438738
INR in Lac 24-Oct-05 6100 372 31-Oct-06 1 142.65 195792
2006 2005 24-Oct-05 7010 1825 23-Oct-10 1 142.65 45863
24-Oct-05 6100 890 1-Apr-08 1 142.65 81837
Proposed dividend 5733.03 4296.30
24-Oct-05 6310 1825 23-Oct-10 1 142.65 41283
Corporate tax on proposed dividend 804.06 602.56
24-Oct-05 1500 372 31-Oct-06 1 142.65 48146
Bonus 55.05 117.62 24-Oct-05 1500 890 1-Apr-08 1 142.65 20124
Creditor for expenses 13224.12 12578.32 25-Nov-05 4500 535 14-May-07 1 170.55 95865
25-Nov-05 13876 901 14-May-08 1 170.55 175526
Advance from customers 273.63 325.78
25-Nov-05 13876 1266 14-May-09 1 170.55 124920
Interest accrued but not due on loan 62.66 39.08 25-Nov-05 121498 1631 14-May-10 1 170.55 849020
Total 20152.55 17959.66 25-Nov-05 8250 535 14-May-07 1 170.55 175753
25-Nov-05 8250 901 14-May-08 1 170.55 104359
25-Nov-05 8250 1266 14-May-09 1 170.55 74272
17) Long term debt, excluding current portion
25-Nov-05 85250 1631 14-May-10 1 170.55 595721
25-Nov-05 4500 535 14-May-07 1 170.55 95865
Name of entity Bank / Inst. Amount Rate of Nature of Repayment
25-Nov-05 13876 901 14-May-08 1 170.55 175526
in INR Lac interest security Terms
25-Nov-05 13876 1266 14-May-09 1 170.55 124920
Pasadensa GE Capital service 1822.72 10.50% Movable & Quarterly
25-Nov-05 121498 1631 14-May-10 1 170.55 849020
Food Ltd. immovable assets
25-Nov-05 49500 535 14-May-07 1 170.55 1054518
Asian Consumer Standard Chartered Bank 23.27 12% Plant & Machinery Quarterly 25-Nov-05 143256 901 14-May-08 1 170.55 1812136
Care
25-Nov-05 143256 1266 14-May-09 1 170.55 1289680
DNPL Standard Chartered Bank 253.41 11% Movable & Quarterly 25-Nov-05 1261488 1631 14-May-10 1 170.55 8815195
immovable assets
25-Nov-05 75000 901 14-May-08 1 170.55 948723
DIL Deffered payment Credit 755.22 Int. free Fixed assets of 5/1 Yearly 25-Nov-05 75000 1266 14-May-09 1 170.55 675197
Shahibabad 25-Nov-05 600000 1631 14-May-10 1 170.55 4192760
DIL Investor Protection Fund 137.88 Int. free Nil 27-Jan-06 7776 364 26-Jan-07 1 107.05 152290

DIL Security Deposits from 9.58 Int. free Nil 27-Jan-06 44374 472 14-May-07 1 107.05 670197
Dealers 27-Jan-06 41250 838 14-May-08 1 107.05 350910
27-Jan-06 41250 1203 14-May-09 1 107.05 244441
Total 3002.08
27-Jan-06 442918 1568 14-May-10 1 107.05 1971064
 CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP 35
Annual Report 2005-06 Dabur India Limited

21) Other Income : c) Breakup of current guarantees furnished along with other particulars
Other income comprises rent realization, dividend earning, miscellaneous receipts and capital
profit. INR in Lac

22) Related party transaction Guaranteed party Name of party on whose Carrying Fair value
behalf guarantee issued amount
a) Service of INR 180 lac received from Jetways Travels Private Limited and Associates in which one key man- 31-3-06 31-3-06
agement personnel exercises significant influence. Nepal Arab Bank Ltd Dabur Nepal Pvt.Ltd 188.00 188.00
Nepal Arab Bank Ltd Dabur Nepal Pvt.Ltd 125.00 125.00
b) 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 HDFCLtd A.K.Jain 10.00 10.00
key management personnel. HDFCLtd D.K. Upadhyaya 3.00 3.00
HDFC Ltd J.P.Sharma 8.00 8.00
c) Remuneration to key management personnel INR 811.34 lac.
HDFCLtd Naseem Ahmed 5.00 5.00
d) Post retirement benefits to relative of key management personnel INR 125.98 lac. HDFCLtd R.S.Saini 9.00 9.00
HSBC Ltd,New Delhi Dabur Egypt Ltd 291.00 291.00
e) 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. Canara Bank Dabur Foods Ltd 1200.00 1200.00
HSBC Ltd. Dabur Foods Ltd 2550.00 2550.00
Note: ABN Amro Bank Dabur Oncology Plc 1945.00 1945.00

i) Key management personnel include Mr. Pradeep Burman, Dr. Anand Burman, Mr. Amit Burman, Mr. Mo- ABN Amro Bank Dabur Oncology Plc 5666.00 5666.00
hit Burman, Mr. Chetan Burman, Mr. P. D Narang, Mr. Sunil Duggal, Mr. Sanjay Sharma, Mr. T. K gupta, Mr. ICICI Bank Ltd Pasadensa Foods Ltd 400.00 400.00
Arvind Kumar and Mr. S Ramakrishan all wholetime directors of group companies. G.E. Capital Services India Pasadensa Foods Ltd 950.00 950.00

ii) Relatives of key management personnel include Mr. R. C Burman, Mr. A. C Burman and Ms Asha Burman. HSBC Ltd. Dabur Egypt Ltd 211.00 211.00
Hongkong Bank Dabur India Limited 811.00 811.00
23) Income Taxes Nepal Arab Bank Ltd Dabur India Limited 117806.00 117806.00
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 : Canara Bank Dabur India Limited 1232.00 1232.00
ICICI Bank Ltd Dabur India Limited 5361.00 5361.00
INR in Lac ACCL Dabur India Limited 57528.00 57528.00
2006 2005 Standard Chartered Bank,Dubai Dabur India Limited 420.00 420.00

A Deffered tax liability (Non-Current) HSBC Bank,Egypt Dabur India Limited 27307.00 27307.00
Standard Chartered Bank Dabur India Limited 1900.00 1900.00
Depreciation of Plant & equipment 1228.53 1041.98
HSBC Dabur India Limited 195.00 195.00
Long term investment 88.28 86.22 HSBC Dabur India Limited 505.00 505.00

Total Deffered Tax liability (Non –Current) 1316.81 1128.20 Standard Chartered Bank,Dubai Dabur India Limited 48588.00 48588.00

B Deffered Tax assets (Non Current)

None of the parties favouring whom guarantee have been furnished is related party.
VRS Payment 0.00 4.01
ii) Non current Loans and Advances includes INR 48.64 lac paid by the Company to Excise authorities on be-
Long term investment 0.00 496.44
half of Sharda Boiron Laboratories Limited, now known as SBL Limited, in respect of excise duty demand
Technical know how fees 15.56 24.02 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 Ex-
Total Deffered Tax assets (Non Current) 15.56 524.47 cise Officer, Ghaziabad.
The Company had filed the review petition before Division Branch of the Hon'ble Supreme Court of India,
C Deffered Tax liability (A - B) 1301.25 603.73 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
D Deffered tax liability (current)
executed with them, the recovery proceedings have been initiated by the Company against Sharda Boiron
Current investment 1.93 0.40 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
Total Deffered tax liability (current) 1.93 0.40 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,
E Deffered Tax assets (Current) pursuant to the decision of Hon'ble Supreme Court in this regard. Necessary adjustments in respect of re-
covery / refund will be made as per the arbitration proceedings.
VRS Payment 0.00 2.00

Disallowance U/S 43B of Income Tax Act, 1961 131.73 131.74 26) Concentration of customer
The products of the groups meant for indigenous usage predominantly find outlet through dealers' networks wide-
F Total deffered tax Assets (Current) 129.80 133.34 ly 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 coun-
G Total deffered tax liability (C -F) 1171.45 470.39
tries.
Products constituting lions share of the total revenue include Chywanprash, Hajmola, Hair oil, Fruit juices, Hon-
24) Fair value of financial instruments ey, Shampoo, Toothpaste and other Cosmetics etc.
The Company uses the following methods and assumptions to estimate fair value of each class of financial in-
struments for which it is practicable to estimate fair value: 27) Revenue
Cash, cash equivalents and restricted cash - The carrying amount approximates fair value because of the short-
term maturity (up to months) of such instruments. INR in Lac
Accounts receivable - The carrying amount approximates fair value due to their short them nature and historical 2006 2005
collectability.
Investments - The fair value of some investments are estimated based on their quoted market prices. For other in- Domestic sales less returns 152729.01 117246.00
vestments, for which there are no quoted market prices, a reasonable estimate of fair value could not be made with- Export sales 18816.48 19271.69
out incurring significant costs. Subsidy 172.37 44.65
Accounts payable - The carrying value of accounts payable approximates fair value due to the short-term nature
of obligations. Sale of scrap 278.78 276.60
Long term debt - The fair value of debt of the Company is estimated based on quoted market prices or current rates Total 171996.64 136838.94
offered to the Company for same or similar debt. The carrying value of material long-term debt approximates its
fair value.
28) Cost of revenues
Estimated fair values of the Company's financial instruments are as follows :
INR in Lac
INR in Lac 2006 2005
2006 2005 Raw Material consumed 38758.41 30992.17

Cash & cash equivalent 4892.75 1387.94 Packing Materials consumed 25891.75 17331.74
Purchase of Finished goods 15385.77 19784.12
Accounts receivable 7435.01 7589.28
Increase(-) / Decrease in stock in process & finished goods 736.39 -2165.78
Investments for which:
Mfg.Expenses 5711.25 4050.37
Practicable to estimate fair value 4355.46 4630.77 Misc exp / receipt 18.95 -13.52
Non-practicable to estimate fair value 105.00 105.00 Workmen & staff welfare 7972.67 6014.51

Accounts payable 16482.32 17301.91 Total 94475.19 75993.61

Long term debt 3002.08 2311.21

29) Selling, general and administrative expenses

25) Other contingency & capital commitment INR in Lac

2006 2005
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 Rent 1031.21 738.89
material effect on the financial statement of the Company. Rates & Taxes 117.81 119.00
Insurance 341.84 304.40
List of contingencies are as follows:
Freight & forwarding charges 6441.06 4339.22
INR in Lac Commission ,Discount 650.09 801.74

2006 2005 Advertisement & Publicity 22168.21 20375.91

Travel & Conveyance 2098.76 1891.14
Claims not acknowledged as debts 338.62 277.32
Telephone 407.62 876.31
In respect of Guarantees furnished
Legal & Professional Telephone, fax expenses 928.14 404.17
Current 9378.86 14937.10 Security expenses 186.55 141.51
Non Current 1200.00 1200.00 General expenses 5631.61 3645.47
Directors fees 9.00 6.80
Bills purchased / discounted under letters of credit 2396.58 3807.34
Auditors' remuneration 71.55 51.55
Demand for taxes pending disposal of appeal(s) 4443.98 1665.72
Donation 331.37 257.90
In respect of Capital Commitment for un-executed contract 450.89 1064.15
Contribution to scientific research expenses 720.00 597.97
Bad debts 145.82 44.08

b) Non Current guarantee relates to guarantee furnished by Parent company for INR 1200.00 lac to GE Capi- Provision for contingent liability 0.00 89.08
tal Services India Limited on behalf of Pasedensa Foods Limited against term loan facility obtained by lat- Loss on sale of fixed assets 9.88 0.00
ter from the former.
Total 41290.52 34685.14
36 CONSOLIDATED FINANCIAL STATEMENTS AS PER US GAAP
Dabur India Limited Annual Report 2005-06

30) Personnel expenses 32) Other income

INR in Lac INR in Lac

2006 2005
2006 2005
Directors' remuneration 895.29 824.15
Salaries & benefits 5537.11 4009.68 Rent Realised 17.30 21.10
ESOP Employees 498.00 130.58
Total 6930.40 4964.41 Dividend 0.48 0.50

Misc Receipt 540.88 127.10

31) Financial expenses
Profit on sale of investment 151.84 407.38
INR in Lac
2006 2005 Royalty 18.54 0.00
Interest paid on
Profit / loss on sale of fixed assets 146.06 -108.87
Fixed period loan 389.30 402.33
Others 735.70 419.36 Total 875.10 447.21
Bank charges 513.70 421.90
Total 1638.70 1243.59

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; -

INR in lac (Rounded off)

FMCG FOODS ELIMINATIONS OTHERS Total Consolidated

05-06 04-05 05-06 04-05 05-06 04-05 05-06 04-05 05-06 04-05

REVENUE

External Sales 148938 118649 18628 12656 4431 5534 171997 136839

Inter-segment sales 0 0
Total Revenue 148938 118649 18628 12656 0 0 4431 5534 171997 136839

RESULT

Segment result 23447 16939 1793 753 643 673 25883 18365

Unallocated corporate expenses 0 0

Operating profit 23447 16939 1793 753 0 0 643 673 25883 18365

Interest expense (Net) 1054 720 519 446 66 78 1639 1244

Interest income 0 0
Income Tax(Current + Deferred) 3248 1311

Profit from ordinary activities 22393 16219 1274 307 0 0 577 595 20996 15809

Other Income 875 447

Net profit 22393 16219 1274 307 0 0 577 595 21871 16257

OTHER INFORMATION

Segment assets 98823 82271 14572 11615 (19412) (7152) 2693 3106 96676 89840

Unallocated corporate assets 7366 4476

Total assets 98823 82271 14572 11615 (19412) (7152) 2693 3106 104042 94316

Segment liabilities 46680 44290 9872 9749 (7968) (2762) 1083 1159 49667 52436

Unallocated corporate liabilities 5548 3092

Total liabilities 46680 44290 9872 9749 (7968) (2762) 1083 1159 55215 55528

Capital expenditure 22504 7876 0 0 0 0 22504 7876

Depreciation 3000 2378 302 319 0 0 116 133 3418 2831

34) Employees post retirement benefit : c) Benefit of superannuation

a) Gratuity :
(i) Dabur India Ltd., Dabur Food Ltd. And Pasedensa Foods Ltd.
These companies have taken comprehensive insurance coverage for payment of gratuity liability to eligi-
ble employees from Life Insurance Corporation of India (LIC) for which annual contribution is paid. Un-
der 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, Paseden-
sa Foods Ltd. to LIC in this connection amount to INR 277.53 lac.
(ii) Dabur International Ltd. and Weikfield International (UAE) Ltd.
Gratuity liability has been provided based on management estimate on the assumption of all employees re-
tiring 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.
b) Leave Salary :
DIL provides benefit of superannuation towards employees for which it has obtained comprehensive cov-
erage from LIC. Under this scheme the settlement obligation lies with the company although LIC admin-
isters 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. Valuation of investment under US GAAP at market price as against lower of costs under market value un-
der Indian GAAP leading to comprehensive total income.
ii. 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.
iii. 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.

i) Dabur India Ltd. and Dabur Foods Limited and Pasedensa Foods Ltd. iv. Above resulted in difference of profit of DIL Group between Indian GAAP and US GAAP by INR 485.80 lac,
Respective companies provided benefit of leave encashment to employees through annual contribution to the latter being higher.
a fund managed by LIC. Under this scheme the settlement obligation remains with the respective compa-
nies although LIC administers the fund and determines the annual contribution to be paid. 36) Comprehensive income has been accounted for in respect of income / loss on earned or sustained subsequent to
Total payment made during the year on account of annual contribution to LIC in respect of Leave Salary 1st April 2004. Prior period income / loss predominantly arising out of translation adjustments forms part of re-
amounts to INR 20.53 lac, INR 2.08 lac and INR 1.57 lac by DIL , Dabur Foods Limited and Pasedensa Foods tained earning.
Ltd. respectively.
37) Prior period adjustment: An income of INR 96.70 lac relating to past years tax provision written back.
ii) Dabur International Pvt. Ltd., Weikfield International (UAE) Ltd
These companies estimate their liabilities towards leave salary on the assumption of all employees retir- 38) Difference between Indian GAAP vis a vis US GAAP, if not material, for any head of accounts, has been ignored.
ing 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 INR 21.83 lac

Weikfield International Limited INR 11.97 lac

As per our report of even date attached For Dabur India Ltd.

For G.Basu & Co. V.C.Burman Chairman

Chartered Accountants P.D.Narang Director
Sunil Duggal Director
S.Lahiri A.K.Jain Addl.General Manager (Finance)
Partner & Company Secretary

New Delhi
25th April 2006