half yearly report 2006-07 dabur india limited · pdf fileentities—balsara hygiene...

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Half Yearly Report 2006-07Dabur India Limited

Board of Directors 03

Chairman’s Message 04

Half Yearly Management Review 05

Auditor’s Report 17

Financials 18

Consolidated Financials 30

Half Yearly Report 2006-07 Dabur India Limited

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a trusted name in natural healthcare for over 100 years, is known for providing a range of

efficacious and time-tested healthcare products based on the principles of Ayurveda.

a leading provider of Oral Care and Household care products in the Indian market, Balsara

is a new member in the Dabur family. With this acquisition, the company has further

strengthened its oral care portfolio and made its debut in the high growth homecare area.

a tasty fun-filled digestive available in various forms - from tablets, traditional Churnas to

modern formats like centre-filled candy - appealing to all age groups.

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.

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.

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.

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Mr V C Burman Chairman

Dr Anand Burman Vice-Chairman

Mr Pradip Burman Director

Mr Amit Burman Director

Mr P D Narang Director

Mr Sunil Duggal Director

His Highness Maharaja Gaj Singh Director

Mr R C Bhargava Director

Mr P N Vijay Director

Dr. S. Narayan Director

Addl. GM ( Finance) & Company Secretary

Mr Ashok Jain

Auditors

M/s G. Basu & Co.

Chartered Accountants

Internal Auditors

Price Waterhouse Coopers Pvt. Ltd.

Bankers

Punjab National Bank

Standard Chartered Bank

HSBC Ltd.

State Bank of India

ABN Amro Bank NV

Citibank NA

United Bank of India

HDFC Bank Ltd.

IDBI Bank Ltd.

Corporate OfficeDabur India Limited,Dabur Tower,Kaushambi, Sahibabad,Ghaziabad - 201 010, U.P., IndiaTel: 0120 – 3982000, 3001000Fax: 0120 – 4374935E-mail: [email protected]: www.dabur.com

Registered Office8/3, Asaf Ali Road,New Delhi-110002


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Dear Shareholders,

I have always believed in the immense potential that Indiaoffers to FMCG players like Dabur. A period of sustainedgrowth was needed for the economic uptrend to translateinto higher consumer spending on FMCG products. Now, with3 consecutive years of over 7.5 per cent growth, we arewitnessing a distinct revival in the fortunes of the FMCGsector. In the first half of financial year 2006-07 a number ofkey FMCG categories have witnessed good demand andregistered strong growth both in value and volume terms.

FMCG demand reaches higher growth trajectories onceeconomic growth gets distributed across the population andthere is all-round improvement in the well being of the middleclass. AC Nielson estimates suggest that, in India, the middleclass forms 20-25 per cent of the total population (200 millionto 250 million people) and their spending is estimated tohave increased by more than US$300 million. The lifestyleorientation of people in India is also changing. More than40 million in India already have the same purchasing poweras an average American. Overall consumer spending hasgrown at a compound annual growth rate of 6 per cent inthe past 10 years. In addition, about 75 per cent of India’spopulation is under 40 years of age. This segment has a muchlarger propensity to consume. In a nutshell, there is anupsurge in demand for FMCG goods and the challenge forcompanies like Dabur is to have products that offerconsumers great value propositions and to reach out toconsumers spread across the vast Indian geography.

In the past when markets were down, we continued to focuson a two pronged strategy. First, was to create a strongproduct portfolio through in-house development and alsothrough strategic acquisitions. Second, was to lay emphasison improving internal efficiencies and developing nichebusinesses that acted as growth drivers and helped constantlydeliver value to all our stakeholders. The first half of 2006-07has seen us leverage this product profile and operationalstrength in a growing market to deliver results.

• Net sales grew by 17.8 per cent from Rs.882.2 crore inH1 2005-06 to Rs.1039.6 crore in the correspondingperiod of 2006-07

• Profit after tax (PAT) registered a growth of 30.3 percent from Rs.97.2 crore in H1 2005-06 to Rs.126.6 crorein the corresponding period of 2006-07.

Driven by its slew of well-positioned products and efficientdistribution systems, the company’s core business—consumer-care—grew by over 15 per cent. The foods businessalso continued to do well—growing by over 28 per cent. Whileon the face of it, the 13 per cent growth in the healthcarebusiness looks a dampener compared to its phenomenalgrowth last year, the complete picture is quite different. Thisbusiness—was affected by a corrective stock position related

measure that was essential to gain long term benefits fromthe SAP based ERP, that affected primary sales. Secondaryand tertiary sales remain buoyant and we have been playinga major role in promoting the development of Ayurveda as amajor therapeutic form in India.

While there is a lot of positive energy within the companydue to the surge in FMCG demand, we are by no meansbeing complacent. We continue to drive at constantlydeveloping and positioning new products that are good valuepropositions for our customers. There is a healthy pipelineof new products, which will be introduced in the second halfof 2006-07 and several brands and product ranges will besupported by new advertising campaigns.

On the operations side, we have been developing in-housecapacities and setting up strategic manufacturing bases toproduce products in the most cost efficient manner. There isa culture of continuous improvements in productivity acrossall plants. From 1 April 2006, the company went live on SAPbased ERP system. This is at a stabilisation stage today andwill considerably enhance the quality of the company’s supplychain functions in the future.

On the distribution side, we rolled out a well-defined ‘retailexcellence strategy’ program titled “DARE”—DrivingAchievement of Retail Excellence—to further improve ourdistribution effectiveness. All these initiatives help us meetthe challenges of dynamic demand conditions and constantlydeliver value to you, our shareholders.

In this half year period another milestone was completed –the merger of the Balsara group of companies with DaburIndia. Having fully integrated the Balsara business during FY2005-06, it was only logical that the Balsara entities be mergedwith Dabur. This was completed on 28th September 2006 andBalsara has now become an integral part of Dabur,operationally as well as structurally.

I would like to thank all our stakeholders—our employees,our customers, our suppliers, our shareholders—forcontinuing to repose faith in the Dabur philosophy and takingthe company forward.

I am pleased to inform you that Dabur has announced a bonusissue of one share for every two shares of the companysubject to approval of shareholders. In addition, the companyhas also announced an interim dividend of 100% on facevalue of each share.

Regards,

V.C.Burman

Chairman

Chairman’s Message

Chairman’s Message

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Half Yearly Report 2006-07Dabur India LimitedHalf Yearly Management Review

Half Yearly Management Review

The Indian economy continues to follow a high growth

trajectory. With a growth of 8.9 per cent in the first

quarter of 2006-07, India has now recorded 12

consecutive quarters of over 7 per cent growth, barring

a minor blip in the second quarter of 2004-05 (see chart

A). While the early years of high growth raised

expectations, it is the sustained strong economic

performance that is now translating into higher

consumer spending, not only in urban centres but also

in up-country India.

Dabur’s portfolio of businesses includes consumer care,

healthcare, foods and international. The company continues

to develop and leverage its strong “ayurvedic” foundation to

create a niche platform for promoting consumer well-being.

Through internal developments and strategic acquisitions,

the company offers a slew of products in the consumer goods

and healthcare space. These products have been well

positioned under different brand umbrellas catering to

different needs and aspirations of consumers. To constantly

meet the challenges posed by market dynamics, Dabur

regularly upgrades its back-end and distribution systems, so

that the right products reach the right customers in the most

cost efficient manner. In H1 2006-07, with improved market

demand, it is this combination of a strong product profile

backed by an efficient supply chain and manufacturing system

that has contributed to the company’s performance. The

highlights of Dabur’s consolidated financial performance

during H1 2006-07 are:

• Net sales grew by 17.8 per cent from Rs.882.2 crore in

H1 2005-06 to Rs.1039.6 crore in the corresponding period

of 2006-07.

• Operating profit (EBIDTA) increased by 30.7 per cent from

Rs.135.3 crore in H1 2005-06 to Rs.176.8 crore in the

corresponding period of 2006-07.

• Profit after tax (PAT) registered a growth of 30.3 per cent

from Rs.97.2 crore in H1 2005-06 to Rs.126.6 crore in the


• Half yearly earning per share (EPS) rose from Rs.1.7 in H1

2005-06 to Rs.2.2 in the corresponding period of 2006-07.

H1 2006-07 also saw the technical completion of Dabur’s

Balsara acquisition. The companies had already gone through

the successful integration of products, people and processes.

On 13 September 2006, the high courts of Delhi and Mumbai

formally approved the merger of the 3 Balsara group

entities—Balsara Hygiene Products Limited, Balsara Home

Products Ltd and Besta Cosmetics Ltd—with Dabur India

Limited.

The subsequent section will map out Dabur’s performance

in terms of markets, operations and finance.


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Consumer Care Division (CCD)

Apart from product positioning and marketing initiatives,

major emphasis has been laid on developing the sales and

distribution mechanism to effectively cater to the growing

demand in the marketplace. Continuing with these efforts,

the company felt the need for a well-defined ‘retail

excellence’ strategy to further improve its distribution

effectiveness. In Aug 2005, Dabur initiated a ‘Retail

Excellence Strategy’ program titled “DARE”—‘Driving

Achievement of Retail Excellence’. This was aimed at

improving Dabur’s distribution effectiveness to achieve the

aggressive revenue growth targets. This initiative is at the

implementation phase, which is scheduled to be completed

by the end of 2006-07. The DARE Retail Excellence strategy is

expected to forge a competitive advantage for Dabur by

fulfilling the multiple objectives of:

• Improving trade service levels through increased reach

and tailored service terms for target channels

• Increasing reach through enhanced distribution focus

in target channels and rural markets

• Improving sales force effectiveness by deployment of

information technology systems and performance

enhancement tools

Markets

The Consumer Care Division (CCD) is the largest

business within Dabur contributing 67 per cent to the

company’s consolidated net sales in H1 2006-07. The

other 3 businesses Consumer Healthcare Division

(CHD), Dabur Foods (DFL) and International Business

Division(IBD) contribute 8 per cent, 11 per cent and

13 per cent respectively (see chart B).

The consumer care business, which focuses on FMCG

products, grew by 15 per cent from Rs.615 crore in H1

2005-06 to Rs.706 crore in H1 2006-07. The business

has benefited from the overall growth in demand for

FMCG products in India. Chart C shows the healthy

growth rates recorded by key FMCG segments during

H1 2006-07.


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• Strengthening customer relationships through

enhancement of stockist return on investment,

institution of structured wholesale loyalty and key retail

activation programs

As part of this initiative, the sales teams have been

reorganized on lines of channel expertise — channel aligned

teams in urban markets and exclusive rural teams in rural

focus states. A Trade Marketing cell was set up to leverage

channel expertise and trade insights to develop customized

channel programmes and enhance effectiveness of trade

spend.

Key customer segments have been leveraged through

strategic channel activation programmes that were rolled out

in the first half of the year. Initiatives to improve brand impact

at “Point of Sale” have been kicked off through an expert

agency. The Dabur Stockists in DARE markets have

significantly increased distribution capability and have been

provided the opportunity to enhance earnings based on

improvement in efficiency. Dabur has also rolled out a ‘Point

of Sale software’ at Stockists for gathering ‘real time’ market

information as well as integrate them into the Dabur

information network. This is expected to further improve

business efficiency, reduce costs and improve decision

making at all levels of the sales heirarchy.

The consumer care business portfolio can be divided into 6

categories—hair care, oral care, health supplements,

digestives, skin and baby care, and home care. Chart D gives

the relative contribution of these categories to CCD’s sales.



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Hair Care

With a 37 per cent share, hair care is the largest category in

CCD’s portfolio. Dabur’s hair care sales grew by 11.5 per cent

during H1 2006-07. This growth has been primarily fuelled

by strong growth in hair oils as well as shampoos. Volume

growth from increased sales of sachets has contributed to

24% growth in shampoos. Hair oil sales grew by 9.1 per cent.

While Vatika hair oil suffered some minor reverses, Dabur

Amla Hair Oil and Dabur Anmol Mustard Oil registered good

growth. Sales of Dabur Anmol Coconut oil grew by over 50

per cent. To rejuvenate the Vatika Hair Oil brand a new

campaign under the “Vatika woman” genre has been put on

air from September 2006.

Oral Care

The Balsara oral care products are completely integrated with

Dabur’s oral care business under CCD. The oral care portfolio

now contributes 23 per cent to CCD sales. The category grew

by 23.6 per cent during H1 2006-07. A twenty per cent growth

in the Dabur Red portfolio and a 51 per cent growth in sales

of Babool toothpaste have been the prime drivers in this

category. Consequently, Dabur’s market share in toothpastes

has increased to 7.6 per cent.

After a period of de-growth, there has been a revival in sales

of Dabur’s tooth powder—Dabur Lal Dant Manjan—which

grew by 18 per cent. Local activation and consumer

awareness programmes resulted in strong growth of this

brand. Sales were further boosted by the introduction of a

new packaging in the last quarter of 2005-06 and its market

share has increased to over 30 per cent.

Health Supplements

Dabur’s sales in this category grew by 26.2 per cent in H1

2006-07 and its share in CCD portfolio stands at 16 per cent.

Chyawanprash sales grew by over 39 per cent, while glucose

sales grew by 23 per cent and Dabur honey grew by over 13

per cent during H1 2006-07. Chyawanprash is essentially a

winter product and the momentum generated in H1 2006-

07 should hold it in good stead during second half of 2006-

07. Dabur’s new campaign on Chyawanprash continues to

feature Amitabh Bachchan and focuses on the need to

consume this health supplement in today’s environment.


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Digestives

Digestives sales growth for H1 2006-07 was 2.6 per cent.

Hajmola tablet sales grew around 7 per cent, while the Hajmola

Candy grew at a little over 9 per cent. Pudin Hara sales, on the

other hand, faced a minor setback. New marketing inputs are

being planned to capture the potential for this brand which

is highly prone to counterfeits and look alikes. A new product

variant is set to be introduced under Hajmola in the second

half of 2006-07.

Skin care and Baby care

The skin and baby care portfolio remained stagnant in H1

2006-07. The baby care brands grew by 3.4 per cent while

sales of skin care brands were under pressure. Dabur Gulabari

sales remained stagnant due to shifting of production. Dabur

entered the personal wash market last year with Vatika honey

and saffron soap.This is now being scaled up and a new

sandal based variant has been launched in September 2006.

Homecare

The homecare portfolio has grown by 21.1 per cent during

H1 2006-07. The surge in mosquito carried diseases like

Dengue and Chikunguniya has prompted a growth in usage

of mosquito-repellents. Consequently there has been good

growth of 26% in the Odomos brand.The company has also

successfully launched Odomos coils in Eastern Indian states

and these have been well received in the market. However,

today, supply constraints prevent major growth in the coils

business. With in-house production coming on stream in the

second half at the company’s plant in Jammu, significant

growth is expected in coil sales. Odonil aerosol was launched

at the beginning of H1 2006-07. The first half sales have been

very encouraging. The company also re-launched its toilet

cleaner Sani Fresh with a new positioning of “germ kill” and

a new packaging.

Consumer Healthcare Division(CHD)Dabur’s consumer healthcare business continues to focus

on redefining the Ayurvedic market in India and being a trend

setter. It deals in “grantha” based Asavs and Churnas, branded

ethicals, and “Over The Counter” (OTC) products. The

emphasis remains on creating awareness and promoting



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Foods BusinessDabur Foods Limited (DFL), a wholly owned Dabur India

subsidiary, registered a growth in sales of 27 per cent from

Rs.91.4 crore in H1 2005-06 to 116 crore in H1 2006-07.

As shareholders might be aware, Dabur Foods has three well-

entrenched brands—Real, Real Activ and Coolers—in the fruit

beverage and nectar categories. The Real and Activ Fruit Juices

posted 29 per cent growth in sales. This is despite the fact

that business lost almost a month’s supplies on account of

closure of the Nepal plant due to political developments in

products through healthcare professional endorsements and

advertisements.

Sales of the consumer health business grew by 12.5 per cent from

Rs.70.5 crore in H1 2005-06 to Rs.79.3 crore in H1 2006-07.

The product profile is characterised by a very large number of

SKUs, which are low in volume but high on differentiation. In

order to integrate this with the newly implemented SAP ERP

solution, the company had to make changes to stock positions.

Consequently, primary sales were affected in the first quarter

of 2006-07. Secondary and tertiary sales, however, continued

to be good. Even after accounting for the first quarter setback,

the division’s sales grew by 12.5 per cent in H1 2006-07. Already,

in the second quarter of 2006-07, sales have picked up and the

company recorded sales growth of around 22 per cent. This

one time correction was needed to align the business with

SAP, so that it can benefit in the long term from improved supply

chain efficiencies.

Growth was primarily driven by the Honitus and Shilajit brands.

In the branded ethicals segment, the company has launched

Mensta and Rheumatil. In the OTC space “Dabur Super Thanda

Tail”, a cooling oil was launched. The business has a robust

new product pipeline, where some new classical products are

expected to be launched in the near future.

The company continues to pursue its slew of activities to support

the business. 460 specialised Dabur Ayurvedic centres have

been developed, which have on-site ayurvedic doctors and

provide complete ayurvedic solutions to customers. In addition,

the business conducted health camps, promoted shop-in-shops,

and communicated directly with patients. A big thrust has also

been made to promote Ayurveda amongst new users.


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the country. However supplies returned to normal after this

period and the business recorded strong growth in the

second quarter.

Under the Coolers brand the Company held back supplies of

pomegranate juice and, going forward, is seeking to

reposition this flavour under the Real brand. This portfolio

re-organisation resulted in a minor decline in sales of Coolers.

However the new variants launched under the brand received

encouraging response form consumers.

Driven by bulk sales of mango pulp to markets like the Middle

East and Russia, DFL posted a strong 146 per cent growth in

exports, from Rs.6 crore in H1 2005-06 to Rs.15 crore in H1

2006-07. The newly launched ‘Mango Twist’ also registered

a robust growth of 46 per cent on the back of an aggressive

pricing strategy.

The food additives business under the Hommade brand is

well positioned to capture the increasing potential in this

market. Production of some products such as Capsico, Garlic

Paste and Tomato Puree was relocated to the Jaipur plant.

This will enable the division to service large closer-by markets

at a reduced cost due to lower freight cost.

During the period under review, DFL added over 700 new

institutional clients translating into a growth of 28 per cent

in the total number of such clients. Going forward, DFL is

well poised to capitalise on its strong brand equity and

comprehensive beverage portfolio.

DFL is planning a number of new introductions in the

beverage and food additives space during the second half

of the year.

International BusinessThe Company’s initiatives in international markets have begun

to yield significant returns. In order to prioritise strategic focus

and position itself favourably to leverage new opportunities,

Dabur has divided its international ventures into ‘focus’,

‘potential’ and ‘opportunistic’ markets. During the period

under review, your Company saw 31.4 per cent growth in its

overseas business.

The sales growth in Pakistan and Egypt during the first half

of 2006-07 has been particularly encouraging. While Egypt

posted a growth of 56%, Pakistan more than doubled from

last year corresponding period levels. In fact, the favourable



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OperationsThe period under review witnessed a series of capacity

additions aimed at meeting the growing demand for products

as well as imparting greater flexibility in servicing different

markets. The Company added capacity for production of

Odomos cream and is in the process of setting-up capacity

for production of Odomos coils at the Jammu plant. This

capacity enhancement will help the Company to capture

efficiencies arising out of economies of scale and also lower

freight costs while catering to markets in North India. At the

same time, these products will continue to be produced at

their current locations to service markets in South India as

well as for exports. The Company has also expanded capacity

for production of sachets and bottles of Vatika shampoo at

response generated in Pakistan has prompted us to

strengthen our team and increase the span of operations of

our subsidiary located there. Dabur’s products are also finding

increasing acceptance in the Middle-East. Sales in GCC

countries, which comprise almost 32 per cent of our focus

markets, was encouraging and all leading brands posted

significant gains. In Nigeria, the business registered a robust

30 per cent growth despite changing over to a new distributor

during the period under review. Our business in Bangladesh

has also done well though the unfavourable movement in

foreign exchange rate has impacted sales figures temporarily.

Dabur’s (erstwhile Balsara’s) private label business in the US

grew at 19 per cent during the first half of 2006-07. The

business was affected by loss of a key account to China during

this period. However, the Company is aggressively scanning

for new value-added opportunities in this market and has

appointed a full-fledged resource for this purpose.

The Company remains steadfastly focussed on further

strengthening its international forays. We are exploring the

possibility of effecting greater market presence in SAARC

countries by leveraging various bi-lateral and regional treaties.

In addition, the Company is also looking to expand its

business in Russian and CIS markets on the back of brand

building exercise initiated in the first half of the year. Overall,

performance in our international markets over the period

under review has been satisfactory and we are confident of

continuing the momentum in the business.


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the Jammu plant. In fact, this capacity addition stood us in

good stead while meeting the high growth in demand for

shampoos.

The Company has also enhanced capacity of Hajmola and

Chyawanprash at its Uttaranchal Plant. The Company’s plant

located at Baddi saw capacity addition for Odonil, Sanifresh

as well as Odopic. The Company has also set-up a new line

for production of toothpastes at the Baddi plant in addition

to existing capacities.

Emphasising its stress on maintaining and developing the

most efficient manufacturing facilities, the Company disposed

off its ‘Daburgram’ unit at Deogarh.

There were three major new products which have been

developed in the first half of 2006-07, namely; ‘Thanda Tail’,

‘Sandal Soap’ and ‘Vatika root strengthening shampoo’. As

mentioned earlier, Thanda Tail has received a very

encouraging response.

The other two products are being launched in the second

half of the year.

Going forward, the Company is seeking to position its Silvassa

plant into an export dedicated facility. To this end, the

Company is currently engaged in upgrading existing facilities

and meeting the exacting standards of safety, quality,

performance and effectiveness necessary to gain certification

from the medicines and healthcare products regulatory

agency (MHRA), an executive agency of the Department of

Health, Government of UK.

Information TechnologyAs planned, the Company’s new SAP based ERP went live on

1 April 2006 across all its operations apart from those in

Bangladesh, Nepal and Egypt. Despite initial teething

problems the system has been broadly stabilised. We believe

that SAP implementation would not only give the Company

greater operational flexibility and uniformity but also provide

it the necessary tools to make informed and timely strategic

business decisions.

Going forward, the Company will be rolling out SAP to its

businesses in Bangladesh, Nepal and Egypt. In addition, and

more importantly, it will also aim at leveraging the entire

gamut of enhanced benefits available in the new system.



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FinancialsThe abridged financials of Dabur (consolidated) for the year

2006-07 including revenue, expenditure and profits, are

presented in Table 1.

Table 1: Abridged profit and loss account for Dabur

(Consolidated) (Rs. crore)

H1, H1,

2006-07 2005-06

Net Sales 1039.6 882.2

Other Income 15.6 5.6

Total Income 1055.2 887.8

Total Expenditure: 878.4 752.5

EBIDTA 176.8 135.3

EBIDTA % of Net Sales 17.0% 15.3%

Interest and Financial Charges 9.6 8.7

Depreciation and Amortisation 20.3 16.0

Profit Before Tax (PBT) 147.0 110.7

PBT % of Net Sales 14.1% 12.5%

Taxes 20.4 13.5

(including Fringe Benefit,

Current and Deferred)

Profit After Tax 126.6 97.2

PAT % of Net Sales 12.2% 11.0%

PAT after minority Interest 126.9 99.3

Basic EPS 2.2 1.7

(in Rs. not annualized)

Diluted EPS 2.2 1.7

(in Rs. not annualized)

Capital Employed 592.3 617.1

Return on Capital Employed 47% 35%

(ROCE) (annualized)


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Highlights

• Net sales grew by 17.8 per cent from Rs.882.2 crore in

H1 2005-06 to Rs.1039.6 crore in the corresponding

period of 2006-07.

• Operating profit (EBIDTA) increased by 30.7 per cent

from Rs.135.3 crore in H1 2005-06 to Rs.176.8 crore in

the corresponding period of 2006-07.

• Profit after tax (PAT) registered a growth of 30.3 per

cent from Rs.97.2 crore in H1 2005-06 to Rs.126.6 crore

in the corresponding period of 2006-07.

• PAT margin (PAT as a percentage of net sales) grew

from 11 per cent in H1 2005-06 to 12.2 per cent in the


• Return on Capital Employed (ROCE) grew from 35 per

cent in H1 2005-06 to 47 per cent in the corresponding

period of 2006-07.

• Earning per Share (EPS) rose from Rs.1.7 in H1 2005-06

to Rs.2.2 in the corresponding period of 2006-07.

The financial position of your Company continues to remain

strong. Dabur recorded a 17.8 per cent growth in net sales

from Rs.882.2 crore in H1 2005-06 to Rs.1039.6 crore in H1

2006-06. During the same period, total expenditure growth

has been restricted to 16.7 per cent from Rs.752.5 crore in

H1 2005-06 to Rs.878.4 crore in H1 2006-07. Consequently,

operating profit (EBIDTA) has grown by 30.7 per cent from

Rs.135.3 crore in H1 2005-06 to Rs.176.8 crore H1 2006-07.

Profits After Tax (PAT) has also grown by 30.3 per cent from

Rs.97.2 crore in H1 2005-06 to Rs.126.6 crore in H1 2006-07.

The operating profit margin (EBIDTA as a percentage of net

sales) has seen a significant jump from 15.3 per cent in H1

2005-06 to 17 per cent in H1 2006-07. Particularly encouraging

has been the growth in PAT margin (PAT as a percentage of

net sales) from 11 per cent in H1 2005-06 to 12.2 percent in

H1 2006-07. Capital gain from sale of the Daburgram factory

amounted to Rs.4.1 crore which is included in other income.

As shareholders might be aware, the 3 Balsara group

companies have been merged with Dabur India with effect

from 1 April 2006. This has had a favourable impact on the

balance sheet of the company. In accounting terms, the

goodwill generated on account of the Balsara acquisition was

off-set against the reserves of the company—leading to a net

reduction in the net fixed assets as well as capital employed.

This, coupled with the profit growth has resulted in Return

on the Capital Employed (ROCE) increasing significantly from

35 per cent as on 30 September 2005 to 47 per cent as on 30

September 2006. Table 2 gives the financials of Dabur India

Limited (stand-alone). The numbers are not strictly

comparable with last year as due to the merger, the Balsara

financials are included in current year figures but not in

previous year figures.

Table 2: Abridged profit and loss account for Dabur India stand

alone (Rs. crore)

H1, H1,

2006-07 2005-06

Net Sales 824.6 632.2

Other Income 13.1 2.2

Total Income 837.6 634.3

Total Expenditure: 687.8 528.5

EBIDTA 149.8 105.9

EBIDTA % of Net Sales 18.2% 16.7%

Interest and 2.6 3.3Financial Charges

Depreciation 14.1 10.5and Amortisation

Profit Before Tax (PBT) 133.1 92.1

PBT % of Net Sales 16.1% 14.6%

Taxes 18.5 11.2(including Fringe Benefit,Current and Deferred)

Profit After Tax 114.6 80.9

PAT % of Net Sales 13.9% 12.8%

Basic EPS 2.0 1.4(in Rs. not annualized)

Diluted EPS 2.0 1.4(in Rs. not annualized)

Capital Employed 400.5 437.5

Return on Capital 63% 39%

Employed (ROCE) (annualized)



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Segment-wise reporting

Beginning this year, your company has reorganized its

segment reporting format in order to provide a greater

visibility of segment wise financials and bring them in line

with business structure. Table 3 gives the details.

Highlights

• The consumer care business grew by 16.1 per cent from

Rs.699.3 crore in H1 2005-06 to Rs.812.1 crore in the

corresponding period of 2006-07 while Profit Before

Interest and Tax (PBIT) grew by 30.7 per cent from Rs.150

crore to Rs.196 crore during the same period. This includes

the consumer care business outside India as well.

• Sales of the consumer health business grew by 12.5 per

cent from Rs.70.5 crore in H1 2005-06 to Rs.79.3 crore in

the corresponding period of 2006-07 however PBIT saw

a marginal de-growth of 5.3 per cent from Rs.21.1 crore

to Rs.19.9 crore during the same period mainly due to

the investments in brand building and sales and

distribution.

• Sales of the food business grew by 32.9 per cent from

Rs.95.5 crore in H1 2005-06 to 126.9 crore in the

corresponding period of 2006-07 while PBIT saw a growth

of 15.8 per cent from Rs.11.7 crore to Rs.13.6 crore during

Cautionary statementStatements in this management discussion and analysis describing the Company’s objectives, projections,

estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws

and regulations. Actual results may differ substantially or materially from those expressed or implied.

Important developments that could affect the Company’s operations include a downward trend in the

domestic FMCG industry, rise in input costs, exchange rate fluctuations, and significant changes in political

and economic environment in India, environment standards, tax laws, litigation and labour relations.

In the segment wise financials the overseas business isincluded therefore the financials as per segment reportingabove and those stated under the management discussionof each business may differ to that extent.


the same period. The foods business as stated in the

segment includes foods business outside India as well.

Table 3: Segment-wise revenues and profit for Dabur

(Consolidated) (Rs. crore)

H1, H1, Growth

2006-07 2005-06

Segment RevenueSegment RevenueSegment RevenueSegment RevenueSegment Revenue

A. Consumer Care Business 812.1 699.3 16.1%

B. Consumer Health Business 79.3 70.5 12.5%

C. Foods Business 126.9 95.5 32.9%

D. Others 21.4 16.9 26.3%

Net Sales/Income from Operations 1039.6 882.2 17.8%

Segment Results:- Profit/ lossSegment Results:- Profit/ lossSegment Results:- Profit/ lossSegment Results:- Profit/ lossSegment Results:- Profit/ loss

(-) Before Tax and Interest(-) Before Tax and Interest(-) Before Tax and Interest(-) Before Tax and Interest(-) Before Tax and Interest

A. Consumer Care Business 196.0 150.0 30.7%

B. Consumer Health Business 19.9 21.1 -5.3%

C. Foods Business 13.6 11.7 15.8%

D. Others 0.2 0.2 -12.6%

Sub TotalSub TotalSub TotalSub TotalSub Total 229.7229.7229.7229.7229.7 183.0183.0183.0183.0183.0 25.5%25.5%25.5%25.5%25.5%

17


AUDITORS’ REPORT

To the Board of Directors,To the Board of Directors,To the Board of Directors,To the Board of Directors,To the Board of Directors,

Dabur India Limited,Dabur India Limited,Dabur India Limited,Dabur India Limited,Dabur India Limited,

We have audited the attached condensed Balance Sheet of Dabur India Limited as at 30th September, 2006 and its Profit & Loss

Account and the Cash Flow Statement for the half year ended on that date attached thereto. These financial statements are

the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements

based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial

statement. An audit also includes assessing the accounting principles used and significant estimates made by management,

as well as, evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for

our opinion.

i. The report on the accounts of London branch audited by the branch auditors were received and properly dealt with by us

while preparing our report.

ii. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for

the purpose of audit.

iii. In our opinion, proper books of accounts, as required by law have been kept by the Company so far as appears from our

examination of books of accounts.

iv. The Condensed Balance Sheet and Condensed Profit and Loss Account dealt with by this report are in agreement with the

books of accounts.

v. Condensed Balance Sheet, Condensed Profit & Loss Account and Cash Flow Statement have been prepared in due

compliances of accounting standards referred to in sub section (3c) of Section 211 of Companies Act 1956.

vi. In our opinion and according to the information and explanations given to us, the said accounts read with other notes

appearing in Schedule “A” give the information required by the Companies Act, 1956, in the manner so required and give

a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of Condensed Balance Sheet, of the State of Affairs of the company as at 30th September, 2006;

b) In the case of Condensed Profit and Loss Account, of the Profit for the half year ended on that date; and

c) In the case of cash flow statement, of the cash flows for the half year ended on that date.

For G Basu & CoG Basu & CoG Basu & CoG Basu & CoG Basu & Co


S.LAHIRIS.LAHIRIS.LAHIRIS.LAHIRIS.LAHIRI

Partner

New DelhiNew DelhiNew DelhiNew DelhiNew Delhi Membership No. 51717

31st October, 2006

Auditor’s Report


18

Rupees in lacsSr. Particulars Schedule As at As atNo 30.09.2006 31.03.2006

I.I.I.I.I. Sources of FundsSources of FundsSources of FundsSources of FundsSources of Funds1. Share Capital 5,741 5,7332. Reserves and surplus 29,485 39,0543. Loan funds

(a) Secured loans 1,650 1,923(b) Unsecured loans 1,254 134

4. Deferred tax liability 1,921 1,672TotalTotalTotalTotalTotal 40,05140,05140,05140,05140,051 48,51648,51648,51648,51648,516

II.II.II.II.II. Application of FundsApplication of FundsApplication of FundsApplication of FundsApplication of Funds1. Fixed Assets A-2.14

(a) Tangible fixed assets 38,257 33,033(b) Intangible fixed assets 1,113 1,096Gross Block (a+b) 39,370 34,129Less: Depreciation 15,882 15,161

Net BlockNet BlockNet BlockNet BlockNet Block 23,48823,48823,48823,48823,488 19,88419,88419,88419,88419,8842. Investments 9,584 27,5083. Deferred Tax Assets 138 1324. Currents assets, loans and advances A-2.15

(a) Inventories 22,198 11,561(b) Sundry debtors 7,488 2,694(c) Cash and bank balances 4,697 3,804(d) Loans and advances 10,881 10,377Sub Total (4)Sub Total (4)Sub Total (4)Sub Total (4)Sub Total (4) 45,26445,26445,26445,26445,264 28,43528,43528,43528,43528,435

5. Less: Current liabilities and provisions A-2.16(a) Liabilities 27,243 19,341(b) Provisions 14,064 11,389Sub Total (5)Sub Total (5)Sub Total (5)Sub Total (5)Sub Total (5) 41,30741,30741,30741,30741,307 30,73030,73030,73030,73030,730Net current assets (4-5)Net current assets (4-5)Net current assets (4-5)Net current assets (4-5)Net current assets (4-5) 3,9573,9573,9573,9573,957 -2,295-2,295-2,295-2,295-2,295

6. Miscellaneous expenditure to the extent 2,884 3,287not written off or adjustedTotalTotalTotalTotalTotal 40,05140,05140,05140,05140,051 48,51648,51648,51648,51648,516

Accounting policies & notes to accountsAccounting policies & notes to accountsAccounting policies & notes to accountsAccounting policies & notes to accountsAccounting policies & notes to accounts AAAAA

Balance Sheet

Condensed Balance Sheetas at 30th September, 2006

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

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

P.D. Narang, P.D. Narang, P.D. Narang, P.D. Narang, P.D. Narang, Director Chartered Accountants

Sunil Duggal,Sunil Duggal,Sunil Duggal,Sunil Duggal,Sunil Duggal, Director S. LahiriS. LahiriS. LahiriS. LahiriS. Lahiri

A.K.Jain,A.K.Jain,A.K.Jain,A.K.Jain,A.K.Jain, A.G.M. ( Finance) & Co. Secy. Partner

New Delhi

31st October, 2006

19


Condensed Statement of Profit and Loss Accountfor the six months period ended 30th September, 2006

Rupees in lacsSr. Particulars Schedule For the For the For the For theNo. Quarter Quarter six months six months

ended ended ended ended30.09.2006 30.09.2005 30.09.2006 30.09.2005

1 Sales A-2.17 43,688 33,285 82,456 63,215

2 Other Income 769 9 1,306 219

TotalTotalTotalTotalTotal 44,45744,45744,45744,45744,457 33,29433,29433,29433,29433,294 83,76283,76283,76283,76283,762 63,43463,43463,43463,43463,434

3 (Increase)/Decrease in Stock in Trade A-2.18 (4,094) (2,724) (7,618) (3,055)4 Consumption of Materials A-2.19 16,472 12,036 29,900 21,827

5 Purchase of Finished Goods 6,702 4,402 12,613 8,177

6 Excise Duty 970 795 1,644 1,321

7 Salaries, wages and other staff costs 3,040 2,314 5,960 4,521

8 Advertising & Sales Promotions 3,590 3,318 8,882 7,024

9 Other expenditure A-2.20 8,994 6,551 17,402 13,031

10 Operating cash profit before interest & Tax 8,783 6,602 14,979 10,588

11 Interest 101 168 257 329

12 Depreciation 498 464 995 925

13 Miscellaneous expendiutre written off 235 74 416 122

14 Profit from ordinary activities before tax 7,949 5,896 13,311 9,212

1616161616 Net Profit before TaxNet Profit before TaxNet Profit before TaxNet Profit before TaxNet Profit before Tax 7,9497,9497,9497,9497,949 5,8965,8965,8965,8965,896 13,31113,31113,31113,31113,311 9,2129,2129,2129,2129,212

17 Provision for Taxation:

- Current 893 496 1,495 775

- Fringe Benefit 75 90 151 148

- Deferred 100 105 200 200

1818181818 Net Profit after Tax for the periodNet Profit after Tax for the periodNet Profit after Tax for the periodNet Profit after Tax for the periodNet Profit after Tax for the period 6,8826,8826,8826,8826,882 5,2055,2055,2055,2055,205 11,46511,46511,46511,46511,465 8,0898,0898,0898,0898,089

19 Earning per share:

1. Basic earning per share (in Rs) 1.20 0.91 2.00 1.41

2. Diluted earning per share (in Rs) 1.19 0.90 1.98 1.40







New Delhi

31st October, 2006

Profit and Loss Acount


20

Rupees in lacsParticulars For the period ended For the period ended

30th Sept. 2006 30th Sept. 2005A.A.A.A.A. Cash Flow from Operating ActivitiesCash Flow from Operating ActivitiesCash Flow from Operating ActivitiesCash Flow from Operating ActivitiesCash Flow from Operating Activities

Net Profit Before Tax And Extraordinary Items 13,311 9,212Add:Depreciation 995 925Provision For Contigent Liability 196 0Loss On Sale Of Fixed Assets 12 0Miscellenous Exp. Written Off 416 122Miscellenous Exp. Written Off (Included In Director Remun.) 191 132Interest 257 329

2,067 1,50815,378 10,720

Less:Profit On Sale Of Investment 349 27Profit On Sale Of Assets 429 31

778 58Operating Profit Before Working Capital Changes 14,599 10,662Working Capital Changes:Increase/(Decrease) In Inventories 8,903 4,398Increase/(Decrease) In Debtors 3,271 (121)Decrease/(Increase) In Trade Payables (3,214) 921Increase/(Decrease) In Working Capital 8,960 5,198Cash Generated From Operating ActivitiesCash Generated From Operating ActivitiesCash Generated From Operating ActivitiesCash Generated From Operating ActivitiesCash Generated From Operating Activities 5,6405,6405,6405,6405,640 5,4645,4645,4645,4645,464Interest Paid 261 331Tax Paid 1,523 855Corporate Tax On Dividend 804 603

2,587 1,789Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A) 3,0523,0523,0523,0523,052 3,6753,6753,6753,6753,675

B.B.B.B.B. Cash Flow From Investing ActivitiesCash Flow From Investing ActivitiesCash Flow From Investing ActivitiesCash Flow From Investing ActivitiesCash Flow From Investing ActivitiesPurchase Of Fixed Assets (1,587) (896)Sale Of Fixed Assets 519 288Purchases Of Investment Including Investment In Subsidiaries (44,642) (21,241)Sale Of Investments 46,068 24,918Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B) 359359359359359 3,0693,0693,0693,0693,069

C.C.C.C.C. Cash Flow From Financing ActivitiesCash Flow From Financing ActivitiesCash Flow From Financing ActivitiesCash Flow From Financing ActivitiesCash Flow From Financing ActivitiesProceeds From Share Capital & Premium 7 2Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities (376) (254)Repayment(-)/Proceeds(+) From Short Term Loans (573) 1,988Repayment (-)/Proceeds(+) From Deposits 1 1Repayment(-)/Proceeds(+) From Other Unsecured Loans 1,073 (1,861)Payment Of Other Advances 2,398 395Payment Of Dividend (5,690) (4,260)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C) (3,159)(3,159)(3,159)(3,159)(3,159) (3,989)(3,989)(3,989)(3,989)(3,989)Net Increase(+)/Decrease (-) in cash & cash equivalents (A+B+C)Net Increase(+)/Decrease (-) in cash & cash equivalents (A+B+C)Net Increase(+)/Decrease (-) in cash & cash equivalents (A+B+C)Net Increase(+)/Decrease (-) in cash & cash equivalents (A+B+C)Net Increase(+)/Decrease (-) in cash & cash equivalents (A+B+C) 252252252252252 2,7552,7552,7552,7552,755Cash And Cash Equivalents Opening BalanceCash And Cash Equivalents Opening BalanceCash And Cash Equivalents Opening BalanceCash And Cash Equivalents Opening BalanceCash And Cash Equivalents Opening Balance 4,4454,4454,4454,4454,445 1,0651,0651,0651,0651,065Cash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing Balance 4,6974,6974,6974,6974,697 3,8203,8203,8203,8203,820

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


V.C. Burman,V.C. Burman,V.C. Burman,V.C. Burman,V.C. Burman, Chairman For G. Basu & Co.G. Basu & Co.G. Basu & Co.G. Basu & Co.G. Basu & Co.P.D. Narang, P.D. Narang, P.D. Narang, P.D. Narang, P.D. Narang, Director Chartered AccountantsSunil Duggal,Sunil Duggal,Sunil Duggal,Sunil Duggal,Sunil Duggal, Director S. LahiriS. LahiriS. LahiriS. LahiriS. LahiriA.K.Jain,A.K.Jain,A.K.Jain,A.K.Jain,A.K.Jain, A.G.M. ( Finance) & Co. Secy. Partner

New Delhi31st October, 2006

Cash Flow Statement

21


SCHEDULE A: Accounting Policies & Notes to Accounts1.1.1.1.1. ACCOUNTING POLICIESACCOUNTING POLICIESACCOUNTING POLICIESACCOUNTING POLICIESACCOUNTING POLICIES1.1 Basis of Preparation of Financial Statements

Accompanying financial statements are prepared in terms of Generally Accepted Accounting Principles (“GAAP”) as

practiced in India which includes, inter alia, due adherence of mandatory accounting standards issued by the Institute

of Chartered Accountants of India, the provisions of the Companies Act, 1956 and guidelines issued by the Securities

and Exchange Board of India. Accounting policies have been consistently applied from period to period.

1.2 Significant Accounting Policies

The Company has applied the same accounting policies in this half yearly financial statements as have been applied in

its annual financial statements for the year ended 31st March 2006 except inventory valuation.

2.2.2.2.2. NOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTS

2.1 All amounts in the financial statements are presented in Rupees Lacs, except for those specifically stated otherwise.

2.2.1 Contingent Liabilities:i. In respect of claims against the company not acknowledged as debts towards:

a) civil suits filed against the company Rs.255 (previous year Rs.235).b) claims by employees Rs. 0 (previous year Rs. 0).

ii. In respect of Bank Guarantees executed Rs. 570 (previous year Rs.811).iii. In respect of Sales Tax under appeal Rs. 1072 (previous year Rs. 593).iv. In respect of excise duty disputes pending with various judicial authorities Rs. 2656 (previous year Rs. 2799).v. In respect of Corporate Guarantees given by the Company Rs. 15149 (previous year Rs. 14760).vi. In respect of Income Tax under appeal Rs. 269 (previous year Rs. 174).vii. Estimated amount of contract remaining to be executed on Capital Account Rs. 321 (previous year Rs. 442) net of

advances.viii. In respect of letters of Credit Rs. 113 (previous year Rs. NIL)

Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in para

2.2 of the above.

2.2.2 Information pursuant to AS 29 issued by ICAI i. During the period, the company has provided Rs. 196 (Previous year Rs. NIL) against disputed liabilities of excise duty

formerly not being accounted for on the ground of contingent liability in respect of amount reliably estimablewithin the meaning of relevant standards.

ii Opening balance against such provision aggregate Rs. 89 which includes disputed liabilities on account of VAT,Sales tax and Entry tax amounting to Rs. 62, Rs. 26 & Rs. 1 respectively.

iii. No part of such provision has been utilized during the period.iv. Provisions are made herein for high & medium risk oriented issues as a measure of abundant precaution. Future

period in which expected cash out flow is going to mature is not readily forcastable.

2.3 Related Party Disclosures and Transactions

2.3.1 Related parties where control exists:Dabur Foods Ltd. (Domestic Subsidiary)Pasadensa Foods Ltd. (Domestic Subsidiary)Dabur U.K. Ltd. (Foreign Subsidiary Company)Dabur Egypt Ltd. (Foreign Subsidiary Company)Dabur International Limited (Foreign Subsidiary Company)Weikfield International (UAE) LLC (Foreign Subsidiary Company)Asian Consumer care Private Limited (Foreign Subsidiary Company)Dabur Nepal Private Limited (Foreign Subsidiary Company)Asian Consumer care Pakistan Limited (Foreign Subsidiary Company)African Consumer care Limited (Foreign Subsidiary Company)

Associate/Joint Ventures: NIL

Schedules


22

2.3.2 Other related parties in transaction with the company

2.3.2.1 Key Management Personnel and relatives of such personnel:

Director Relatives

Pradip Burman R C Burman

Chetan Burman

P D Narang -

Sunil Duggal -

2.3.3 Enterprises over which Key Management Personnel and their relatives are able to exercise significant influence:

Miracle Commercial Enterprises Pvt. Ltd.

Wakarusa Laboratories Pvt. Ltd.

Welltime Housing & Finance Pvt. Ltd.

2.3.4 An Enterprise owned by any Director (KMP) of Dabur India Limited:

Welltime Housing & Finance Pvt. Ltd.

2.4. Related Party Transactions: Rs. in Lacs

Subsidiary Associates Key Relatives Total Outstanding

Transaction Management Of Key As On

Personnel Management 30.09.2006

Personnel

Purchases of Goods 3925 - - - 3,925 154

(3003) (-) (-) (-) (3,003) (191)

Sale of Goods 966 - - - 966 340

(618) (-) (-) (-) (618) (530)

Rent Paid - 2 18 - 20 -

(-) (3) (14) (-) (17) (-)

Loan Given 2,000 82 - - 2082 1082

(4,025) (-) (-) (-) (4,025) 3083

Repayment of Loans 3,000 - - - 3,000 -

Given(Instl.Recd)

(1,025) (4) (-) (-) (1,029) (-)

Interest Recd On Loans Given 52 - - - 52 -

(-) (-) (-) (-) (-) (-)

Remuneration/Exg./Pension - - 389 46 435 -

(-) (-) (283) (59) (342) (-)

Guarantees & collaterals given 7,126 - - - 7,126 7,126

(7115) (-) (-) (-) (7,115) (7,115)

Employee Stock Option Scheme 25 - - - 25 -

(26) (-) (-) (-) (26) (-)

(Figures in brackets are of the corresponding previous period)

2.5 Since external and internal sources of information do not provide for any indication for impairment of fixed assets

based on cash generating unit concept, recoverable values of assets have not been determined for the period as

authorized by clause 6, AS-28 issued by ICAI.

Schedules

23


2.6 The company has provided for deferred tax liability on estimated basis.

2.7.1 The company has paid the final dividend @ Rs. 1 i.e. 100% (previous period Rs. 1.50 i.e. 150%) per Equity share (having

face value of Re 1/- each) for the financial year 2005-06 (previous year 2004-05) aggregating Rs. 57 crores (previous

period Rs. 43) excluding tax on dividend on 12th July 2006, (previous period on 20th July 2005).

2.7.2 Board of directors has declared interim dividend @ Re.1.00 i.e., 100% (previous period Rs.1.50 i.e, 150%) for the period,

the amount of interim dividend working out to Rs. 6546 (previous period Rs. 4902) including incidence of tax thereon.

2.8 During the period the company has allotted 724,982 (previous period 199,489) equity share of Re 1/- each to the

employees upon their exercise of stock option.

2.9 58,94,379 (previous year 6691484) equity shares of Re.1/- each are outstanding under “Employees Stock Option Scheme”

as on 30th September, 2006

2.10. Investment at half-year end includes Rs. 3011 (previous year Rs. 4087) towards current investment carried at lower of

cost and market value. Remaining investments, being long term in nature, are valued as per disclosure made in preceding

annual financial statement.

2.10.1 Pursuant to merger of two wholly owned subsidiaries namely, Balsara Home Products Ltd and Besta Cosmetics Limited

and one subsidiary namely Balsara Hygiene Products Ltd. with effect from April 01, 2006, the company has inherited

assets and liabilities of these entities in terms of scheme of the merger approved by Hon’ble High court of Mumbai on

8th September 2006 and High court of Delhi on 12th September 2006 and subsequent filling of the certified copy of the

order with Registrar on 28th September 2006. Consequent assets and liabilities inherited by the company as on April 01,

2006 includes following: Rs. in Lacs

Particulars Balsara Home Balsara Hygiene Besta Cosmetics Total

Product Ltd. Products Ltd. Ltd.

AssetsAssetsAssetsAssetsAssets

Fixed Assets 2,600.50 508.89 2.53 3,111.92

Investments 1.12 0.10 - 1.22

Current Assets 3,031.70 15.71 10.63 3,058.04

Loans & Advances 671.96 719.61 167.93 1,559.50

Total AssetsTotal AssetsTotal AssetsTotal AssetsTotal Assets 6.305.286.305.286.305.286.305.286.305.28 1,244.311,244.311,244.311,244.311,244.31 181.09181.09181.09181.09181.09 7,730.687,730.687,730.687,730.687,730.68

LiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilities

Reserve & Surplus (32.23) 1,163.98 26.92 1,158.66

Secured Loan 675.97 - - 675.97

Unsecured Loan - - - -

Deferred Tax Liability - 42.71 0.85 43.57

Current Liabilities 3,973.37 50.28 4.51 4,028.16

Provisions 462.36 331.10 58.80 852.26

Total LiabilitesTotal LiabilitesTotal LiabilitesTotal LiabilitesTotal Liabilites 5,079.465,079.465,079.465,079.465,079.46 1,588.071,588.071,588.071,588.071,588.07 91.0991.0991.0991.0991.09 6,758.626,758.626,758.626,758.626,758.62

Net AssestsNet AssestsNet AssestsNet AssestsNet Assests 1,225.821,225.821,225.821,225.821,225.82 (343.76)(343.76)(343.76)(343.76)(343.76) 90.0090.0090.0090.0090.00 972.06972.06972.06972.06972.06

A. Net Assets ( As per above) 972.06

B. Investment in Subsidiaries as on 31.03.06 16,847.15

C. Additional issue of shares(pending allotment) pursuant to merger 0.64

D. Additional total capital outlay ( A-B-C) -15,875.73

E. Adjusted against

Share Premium 5,835.36

General Reserve 10,040.37

Schedules


24

2.10.2 Share Capital includes Rs 63,336 being 63,336 number of equity shares of Re. 1 each pending allotment ( for consideration

other than cash) to erstwhile minority stakeholder of Balsara Hygience Products Limited in terms of merger of the

subsidiary with the company w.e.f. 1st April 2006 as approved by Hon’ble High court of Mumbai & Delhi.

2.10.3 To above extent, figures in current financial statements are not comparable with earlier year/periods.

2.11 Information (to the extent applicable) pursuant to AS 19 issued by ICAI: -

The future minimum lease payment under non-cancelable operating lease

30.09.2006 31.03.2006

Not later than 1 year 18 10

Later than 1 year not later than 5 years 8 8

Later than 5 years Nil Nil

2.12 Employee benefit schemes of the company are of the nature of defined benefit plan and defined contribution plan

within the meaning of revised AS 15 issued by ICAI. Additional condition laid down under AS 15(revised) will be complied

with at the closing of the financial year.

2.13 Information pursuant to AS 24 on discontinued operations:

Particulars Hair Oil Baddi MSY Unit Baddi

1 Discontinued since March, 04 Nov, 2000

2 Segment the operation of theUnit relates to in Consumer Care Division Consumer Care Divisionfinancial statement

3 Carrying amount of total assets 33 28(33) (28)

4 Carrying amount of total liabilities 4 0(4) (0)

5 Profit from ordinary activities 0 0(0) (0)

6 Income Tax expenses 0 0(0) (0)

7 Gain on disposal of assets 0 0(0) (0)

8 Cash flow from discontinued operations:

Operating activities 0 0(0) (0)

Investing Activities 0 0(0) (0)

Financial Activities 0 0

(0) (0)

Note: I. Figures in brackets are for previous year

II. Part of fixed assets belonging to discontinued operations under reference has been used for new plants set up in

relevant premises. Such assets have been left out of the purview of ‘3’ above.

Schedules

25


2.14 Fixed Assets

Particulars Gross Block Depreciation Net Block

As at Inheri- Addi- Adjust- As at As at Inheri- For the Adjust- As at As at As at

31.3.06 ted from tions ment 30.9.06 31.3.06 ted from Period ment 30.9.06 30.9.06 31.3.06

Merger Merger

Freehold land 234 192 0 0 427 0 0 0 0 0 427 427

Leasehold land 755 1 44 0 800 45 0 4 0 49 751 711

Building, roads & culvert 10,061 1,679 492 49 12,183 2,918 220 175 25 3,288 8,895 8,603

Plant & machinery 14,557 1,613 970 191 16,947 7,376 384 473 160 8,073 8,874 8,408

Vehicles 775 82 90 83 865 374 29 58 50 412 453 455

Furniture & off equipment 2,677 149 130 11 3,071 1,710 208 143 10 2,050 1,021 1,034

Computers 2,667 285 50 41 2,835 1,460 68 78 28 1,577 1,258 1,298

Patents * 1,096 17 0 0 1,113 363 7 63 0 433 680 742

Goodwill 0 10 0 0 10 0 0 0 0 0 10 10

Capital work in progress 1,307 0 129 317 1,119 0 0 0 0 0 1,119 1,307

Total 34,129 4,028 1,905 692 39,370 14,246 916 994 273 15,881 23,488 22,994

Previous year 32,672 0 4,446 2,989 34,129 13,512 0 1,905 1,171 14,246 119,884

* Intangible Asset

2.15 Current Assets, Loans and Advances

Particulars As at 30.09.2006 As at31.03.2006

Current assetsCurrent assetsCurrent assetsCurrent assetsCurrent assets

Inventories: 22,198 11,561

- Raw materials 4,382 3,464

- Packing materials, stores and spares 3,290 2,059

- Stock in process 2,065 794

- Finished goods 12,460 5,243

Sundry debtors (unsecured) -net of doubtful debtors 7,488 2,694

Cash and bank balances 4,697 3,804

Loans and advances (unsecured, considered good)Loans and advances (unsecured, considered good)Loans and advances (unsecured, considered good)Loans and advances (unsecured, considered good)Loans and advances (unsecured, considered good) 10,88110,88110,88110,88110,881 10,37710,37710,37710,37710,377

Loans & advances to subsidiaries 1,000 3,000

Security deposit with various authorities 944 758

Advance payment of tax 6,638 4,354

Advances to suppliers 1,147 1,327

Advances to employees 248 158

Balance with excise authorities 288 434

Other advances recoverable in cash or in kind or for 615 346

value to be received

Schedules


26

2.16 Current Liabilities and Provisions

Particulars As at 30.09.2006 As at 31.03.2006

Current liabilities:Current liabilities:Current liabilities:Current liabilities:Current liabilities: 27,243 19,341

Acceptance 3,159 4,933

Creditors for goods 6,278 3,611

Creditors for expenses and other liabilities 16,701 10,594

Advances from customers 924 51

Interest accrued but not due on loans 0 4

Deposits - others 4 13

Investor education and protection fund to be credited by:

- unpaid dividend 165 121

- unpaid matured public deposit 7 8

- interest accrued on public deposit 5 6

Provisions :Provisions :Provisions :Provisions :Provisions : 14,064 11,389

For dividend 5,741 5,733

For corporate tax on proposed dividend 805 804

For Contigent liabilities 196 -

For staff welfare 540 480

For leave salary 28 19

For taxation 6,754 4,353

Particulars For the Quarter For the Quarter For the six months For the six months

ended 30.09.06 ended 30.09.05 ended 30.09.06 ended 30.09.05

2.17 Sales

Sales 43,688 33,285 82,456 63,215

Domestic sales less returns 41,111 31,931 79,057 61,096

Export sales 2,577 1,354 3,399 2,119

2.18 Increase/Decrease in Stock in trade)

Adjustment of stocks in process

and finished goods:

- Opening stock

Stock in process 2,452 693 837 615

Finished products 7,979 6,101 6,070 5,847

- Closing stock

Stock in process 2,065 595 2,065 595

Finished products 12,460 8,923 12,460 8,923

Increase(-)/decrease in stock -4,094 -2,724 -7,618 -3,056

Schedules

27


Particulars For the Quarter For the Quarter For the six months For the six months

ended 30.09.06 ended 30.09.05 ended 30.09.06 ended 30.09.05

2.19 Consumption of Materials.

Raw material consumed 10,220 7,236 18,257 13,387

i) Opening stock 4,219 4,895 3,885 4,383

ii) Add: purchases 10,383 7,334 18,754 13,997

iii) Less: closing stock 4,382 4,993 4,382 4,993

Packing material consumed 6,252 4,800 11,643 8,440

i) Opening stock 2,545 1,537 2,161 1,491

ii) Add: purchases 6,898 5,473 12,673 9,158

iii) Less: closing stock 3,191 2,210 3,191 2,210

Total 16,472 12,036 29,900 21,827

2.20 Other expenditure

Power and fuel 768 705 1,406 1,240

Stores & spares consumed 330 169 586 291

Processing charges 179 13 268 22

Repairs & maintenance 146 80 287 203

Rent 143 164 320 325

Rates and taxes 23 9 156 30

Insurance 82 69 122 110

Sales tax 3,376 2,719 6,995 5,384

Freight and forwarding charges 1,182 913 2,423 1,796

Commission, discount and rebate 374 258 694 544

Travel and conveyance 428 338 844 724

Legal and professional 210 163 370 314

Telephone, fax expenses 83 65 170 147

Security expenses 46 37 85 73

General Expenses 1,294 488 2,003 1,290

Directors' fee 3 2 5 4

Auditors' remuneration 3 11 16 15

Donation 42 130 115 195

Contribution to scientific research expenses 170 218 425 324

Provision for Contingent Liability 100 0 100 0

Loss on sale of Fixed Assets 11 0 12 0

Total 8,994 6,551 17,402 13,031

2.21 a. Pension of relative of deceased director Rs. 15.75 (previous period 15.75).

b. Pension of retired director Rs. 30.65 ( previous period 34.12)

2.22 During the period, company has disposed of its Foreign Branch to one of its foreign subsidiary at net book value of

assets and liabilities.

Schedules


28

Particulars Consumercare Business Consumer Health Business Others Unallocated Dabur India Ltd.

Current Previous Current Previous Current Previous Current Previous Current PreviousPeriod Period Period Period Period Period Period Period Period Period

RevenueRevenueRevenueRevenueRevenueExternal Sales 72392 54472 7930 7052 2134 1691 82456 63215Inter-segment salesTotal RevenueTotal RevenueTotal RevenueTotal RevenueTotal Revenue 7239272392723927239272392 5447254472544725447254472 79307930793079307930 70527052705270527052 21342134213421342134 16911691169116911691 8245682456824568245682456 6321563215632156321563215

ResultResultResultResultResultSegment result 18507 13490 1993 2105 18 21 20518 15616Unallocated corporate expenses 6950 6075 6950 6075Operating profitOperating profitOperating profitOperating profitOperating profit 1850718507185071850718507 1349013490134901349013490 19931993199319931993 21052105210521052105 1818181818 2121212121 (6950)(6950)(6950)(6950)(6950) (6075)(6075)(6075)(6075)(6075) 1356813568135681356813568 95419541954195419541Interest expense (Net Of Interest Income) 257 329 257 329Income Tax(Current + Deferred) 1846 1123 1846 1123Profit from ordinary activitiesProfit from ordinary activitiesProfit from ordinary activitiesProfit from ordinary activitiesProfit from ordinary activities 1850718507185071850718507 1349013490134901349013490 19931993199319931993 21052105210521052105 1818181818 2121212121 (9053)(9053)(9053)(9053)(9053) (7527)(7527)(7527)(7527)(7527) 1146511465114651146511465 80898089808980898089Extraordinary loss:uninsured earthquake damage to factoryNet profit 18507 13490 1993 2105 18 21 (9053) (7527) 11465 8089Other informationOther informationOther informationOther informationOther information As on As on As on As on As on As on As on As on As on As on

30/9/06 31/3/06 30/9/06 31/3/06 30/9/06 31/3/06 30/9/06 31/3/06 30/9/06 31/3/06Segment assets 29536.00 28704 6212.00 7012 2749 3999 38497 39715Unallocated corporate assets (1331) 5514 (1331) 5514Total assetsTotal assetsTotal assetsTotal assetsTotal assets 2953629536295362953629536 2870428704287042870428704 62126212621262126212 70127012701270127012 27492749274927492749 39993999399939993999 (1331)(1331)(1331)(1331)(1331) 55145514551455145514 3716637166371663716637166 4522945229452294522945229Segment liabilities 9011 2366 419 578 (110) 331 9320 3275Unallocated corporate liabilities (4495) 454 (4495) 454Total liabilitiesTotal liabilitiesTotal liabilitiesTotal liabilitiesTotal liabilities 90119011901190119011 23662366236623662366 419419419419419 578578578578578 (110)(110)(110)(110)(110) 331331331331331 (4495)(4495)(4495)(4495)(4495) 454454454454454 48254825482548254825 37293729372937293729Capiltal EmployedCapiltal EmployedCapiltal EmployedCapiltal EmployedCapiltal Employed 2052520525205252052520525 2633826338263382633826338 57935793579357935793 64346434643464346434 28592859285928592859 36683668366836683668 31643164316431643164 50605060506050605060 3234132341323413234132341 4150041500415004150041500Depreciation 454 422 61 57 90 84 390 362 995 925Non-cash expenses other than depreciation 416 122 416 122

Secondary segmentSecondary segmentSecondary segmentSecondary segmentSecondary segmentAs the company also exports, the secondary segment for the company is based on the location of customers's. Out of the total

sales of Rs. 82456 (63215), the export sales is of Rs. 3399 (2119) and domestic sale is 79057 (61096)

2.23 Information pursuant to AS - 17 issued by ICAI:

Schedules




2.24 Exchange Gain works out to Rs.91.76 (previous period Rs.76.17) net of gain which has been credited to Profit & Loss account.

2.25 Consequent upon change in valuation of inputs from FIFO basis to weighted average method, value of closing inventories

have come down by Rs. 19.79 with consequent decline in profit by said amount, impact herein not being material, the

figures of earlier periods have not been recast to make them comparable with current period.

2.26 Quarterly figures appearing in condensed Profit & Loss Account and break-up there for in Schedule –A are not based on

audited figures.

2.27 Figures of earlier period/year have been rearranged in terms of current period grouping as and when necessary.

29


AUDITORS’ REPORT

The Board of Directors,The Board of Directors,The Board of Directors,The Board of Directors,The Board of Directors,

Dabur India Limited,Dabur India Limited,Dabur India Limited,Dabur India Limited,Dabur India Limited,

We have audited the attached condensed consolidated balance sheet of Dabur India Limited group, as at 30th September 2006

and also the condensed consolidated profit and loss account and the consolidated cash flow statement for the half year ended

on that date annexed thereto.

These financial statements are the responsibility of the Dabur India Ltd.’s management and have been prepared by the

management on the basis of separate financial statements and other financial information regarding components. Our

responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting principles used and significant estimates made by the management,

as well as, evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for

our opinion.

We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs.8066 lacs

as at 30th September, 2006, the total profit of Rs. 763.73 lacs and cash flows amounting to Rs.4.79 lacs for the half year then

ended. These financial statements and other financial information have been audited by other auditors, whose reports have

been furnished to us, and our opinion is based solely on the report of other auditors.

We report that the condensed consolidated financial statements have been prepared by the Dabur India Ltd.’s management in

accordance with the requirements of AS-21 on consolidated financial statement and AS-25 on Interim Financial reporting

issued by the Institute of Chartered Accountants of India.

Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other

financial information of the components, and to the best of our information and according to the explanations given to us, we

are of the opinion that the attached condensed consolidated financial statements give a true and fair view in conformity with

the accounting principles generally accepted in India:

a) In the case of the condensed consolidated balance sheet, of the state of affairs of Dabur India Ltd. group as at 30th

September, 2006.

b) In the case of the condensed consolidated profit and loss account, of the profit of Dabur India Ltd. group for the half year

ended on that date; and

c) In the case of the consolidated cash flow statement, of the cash flows of Dabur India Ltd. group for the half year ended

on that date.

For G Basu & CoG Basu & CoG Basu & CoG Basu & CoG Basu & Co


S.LAHIRIS.LAHIRIS.LAHIRIS.LAHIRIS.LAHIRI

Partner

New DelhiNew DelhiNew DelhiNew DelhiNew Delhi Membership No. 51717

31st October, 2006

Auditor’s Report to Consolidated Financials


30


I.I.I.I.I. Sources of FundsSources of FundsSources of FundsSources of FundsSources of Funds1. Share Capital 5,741 5,7332. Reserves and surplus 35,664 43,9733. Minority interests 479 5464. Loan funds

(a) Secured loans 12,036 8,080(b) Unsecured loans 3,385 2,353

5. Deferred tax liability 1,921 1,715TotalTotalTotalTotalTotal 59,22659,22659,22659,22659,226 62,40062,40062,40062,40062,400

II.II.II.II.II. Application of FundsApplication of FundsApplication of FundsApplication of FundsApplication of Funds1. Fixed Assets A-2.14

(a) Tangible fixed assets 55,029 43,095(b) Intangible fixed assets 4,303 271Gross Block (a+b) 59,333 72,149Less: Depreciation 22,250 20,903Net Block 37,083 51,246

2. Investments 3,119 4,2133. Deferred Tax Assets 138 1324. Currents assets, loans and advances A-2.15

(a) Inventories 33,385 21,278(b) Sundry debtors 15,345 7,435(c) Cash and bank balances 5,330 5,117(d) Loans and advances 15,046 13,302Sub Total (4)Sub Total (4)Sub Total (4)Sub Total (4)Sub Total (4) 69,10869,10869,10869,10869,108 47,13247,13247,13247,13247,132

5. Less: Current liabilities and provisions A-2.16(a) Liabilities 37,672 30,281(b) Provisions 15,434 13,329Sub Total (5) 53,106 43,610Net current assets (4-5) 16,002 3,521

5. Miscellaneous expenditure to the extent 2,884 3,287not written off or adjustedTotalTotalTotalTotalTotal 59,22659,22659,22659,22659,226 62,40062,40062,40062,40062,400 Accounting policies & notes to accounts Accounting policies & notes to accounts Accounting policies & notes to accounts Accounting policies & notes to accounts Accounting policies & notes to accounts AAAAA

Condensed Consolidated Balance Sheetas at 30th September, 2006






New Delhi

31st October, 2006

Consolidated Balance Sheet

31



1 Sales A-2.17 103,964 88,224

2 Other Income 1,555 558

TotalTotalTotalTotalTotal 105,519105,519105,519105,519105,519 88,78288,78288,78288,78288,782

3 (Increase)/Decrease in Stock in Trade A-2.18 (9,516) (3,877)

4 Consumption of Materials A-2.19 41,248 33,658

5 Purchase of Finished Goods 12,262 7,512

6 Excise Duty 1,658 1,727

7 Salaries, wages and other staff costs 8,347 6,802

8 Advertising & Sales Promotions 11,777 10,592

9 Other expenditure A-2.20 22,063 18,836

10 Operating cash profit before interest & Tax 17,680 13,532

11 Interest 956 868

12 Depreciation 1,612 1,475

13 Miscellaneous expendiutre written off 416 122

14 Profit from ordinary activities before tax 14,696 11,067

1515151515 Net Profit before TaxNet Profit before TaxNet Profit before TaxNet Profit before TaxNet Profit before Tax 14,69614,69614,69614,69614,696 11,06711,06711,06711,06711,067

16 Provision for Taxation:

- Current 1,649 977

- Fringe Benefit 189 172

- Deferred 200 200

1717171717 Net Profit after TaxNet Profit after TaxNet Profit after TaxNet Profit after TaxNet Profit after Tax 12,65812,65812,65812,65812,658 9,7189,7189,7189,7189,718

18 Minority Interest (29) (210)

1919191919 Net Profit for the periodNet Profit for the periodNet Profit for the periodNet Profit for the periodNet Profit for the period 12,68712,68712,68712,68712,687 9,9289,9289,9289,9289,928

20 Earning per share:

1. Basic earning per share (in Rs) 2.21 1.73

2. Diluted earning per share (in Rs) 2.19 1.72


Condensed Consolidated Statement of Profit & Loss Accountfor the six months period ended 30th September, 2006






New Delhi

31st October, 2006

Consolidated Profit and Loss Account


32

Rupees in lacsParticulars For the period ended For the period ended

30th Sept. 2006 30th Sept. 2005Cash Flow from Operating ActivitiesCash Flow from Operating ActivitiesCash Flow from Operating ActivitiesCash Flow from Operating ActivitiesCash Flow from Operating Activities

Net Profit Before Tax And Extraordinary Items 14,697 11,067Add:Depreciation 1,612 1,475Loss On Sale Of Fixed Assets 12 81Provision For Contigent Liability 196 0Miscellenous Exp. Written Off 416 122Miscellenous Exp. Written Off (Included In Director Remun.) 191 132Interest 914 869

3,342 2,67918,039 13,746

Less:Dividend Received 0 0Profit On Sale Of Investment 349 27Profit On Sale Of Assets 431 33

780 60Operating Profit Before Working Capital Changes 17,259 13,686Working Capital Changes:Increase/(Decrease) In Inventories 12,107 8,597Increase/(Decrease) In Debtors 7,048 664Decrease/(Increase) In Trade Payables (6,654) (5,421)Increase/(Decrease) In Working Capital 12,502 3,840Cash Generated From Operating ActivitiesCash Generated From Operating ActivitiesCash Generated From Operating ActivitiesCash Generated From Operating ActivitiesCash Generated From Operating Activities 4,7564,7564,7564,7564,756 9,8469,8469,8469,8469,846Interest Paid 940 900Tax Paid 1,435 1,584Corporate Tax On Dividend 804 603

3,179 3,087Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A)Cash Used(-)/(+)Generated For Operating Activities (A) 1,5771,5771,5771,5771,577 6,7606,7606,7606,7606,760Cash Flow From Investing ActivitiesPurchase Of Fixed Assets (2,184) (3,485)Sale Of Fixed Assets 561 330Purchases Of Investment Including Investment In Subsidiaries (44,642) (21,241)Sale Of Investments 46,085 25,958Dividend Received 0 0Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B)Cash Used(-)/(+)Generated For Investing Activities (B) (179)(179)(179)(179)(179) 1,5621,5621,5621,5621,562Cash Flow From Financing ActivitiesProceeds From Share Capital & Premium 8 4Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities (529) (404)Repayment(-)/Proceeds(+) From Short Term Loans 4,484 4,567Repayment (-)/Proceeds(+) From Deposits 46 56Repayment(-)/Proceeds(+) From Other Unsecured Loans 987 (2,626)Payment Of Other Advances (405) (2,110)Payment Of Dividend (5,776) (4,298)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C)Cash Used(-)/+(Generated) In Financing Activities (C) (1,185)(1,185)(1,185)(1,185)(1,185) (4,811)(4,811)(4,811)(4,811)(4,811)Net Increase(+)/Decrease (-) in cash & cash equivalents (A+B+C) 213 3,511Cash And Cash Equivalents Opening Balance 5,117 1,473Cash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing BalanceCash And Cash Equivalents Closing Balance 5,3305,3305,3305,3305,330 4,9844,9844,9844,9844,984

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




Consolidated Cash Flow Statement

33


1. ACCOUNTING POLICIES1. ACCOUNTING POLICIES1. ACCOUNTING POLICIES1. ACCOUNTING POLICIES1. ACCOUNTING POLICIES

1.1 Body Corporate under Consolidation

The Consolidated Financial Statement relates to Dabur India Limited (the parent company) and Dabur Foods Ltd. (wholly

owned subsidiary company incorporated in India) Dabur International Ltd., (wholly owned body corporate incorporated

in Isle of MAN), Dabur (U.K.) Ltd. (a subsidiary body corporate incorporated in British Virgin Island 100% stake wherein

is held by Dabur International Ltd.), Dabur Nepal Pvt. Ltd. (a subsidiary body corporate incorporated in Nepal, 97.5%

stake wherein is held by Dabur International Ltd.), Pasadensa Foods Ltd. (a wholly owned subsidiary company incorporated

in India, 100% stake wherein is held by Dabur Foods Ltd.,), Dabur Egypt Ltd. (a wholly owned subsidiary body corporate

incorporated in Egypt, 76% & 24% of stake wherein are held by Dabur (U.K.) Ltd. and Dabur International Ltd.

respectively), Asian Consumercare Pvt. Ltd. (a subsidiary body corporate incorporated in Bangladesh, 76% stake wherein

is held by Dabur International Ltd.), Weikfield International (UAE) (a subsidiary body corporate incorporated in UAE,

38.41% stake wherein is held by Dabur International Ltd. which has control of composition of board of directors of

the former being raison d’etre of subsidiary status) and African Consumer Care Ltd ( a subsidiary body corporate

incorporated in Nigeria, 90% stake wherein is held by Dabur International Ltd & 10% stake is held by Dabur U.K. Ltd.)

and Asian Consumer Care Pakistan Ltd ( a subsidiary body corporated in Pakistan Ltd, 99.99% stake wherein is held by

Dabur International Ltd.).

1.2 Significant Accounting Policies

Accounting policies and principles of consolidation followed herein remain in terms of same applied in consolidated

financial statements for the year ended 31st March 2006, except inventory valuation.

22222. NOTES TO ACCOUNTS. NOTES TO ACCOUNTS. NOTES TO ACCOUNTS. NOTES TO ACCOUNTS. NOTES TO ACCOUNTS2.1. All amounts in the financial statements are presented in Rupees Lacs, except for those specifically stated otherwise.

2.2 Contingent Liabilities:

I. In respect of claims not acknowledged as debts towards:

a) civil suits filed by others Rs. 255 (previous year Rs.339)

b) claims by employees Rs. .01 (previous year Rs. .01).

II. In respect of letters of credit Rs. 2122 (previous year Rs. 3272).

III. In respect of Bank Guarantees executed Rs. 2771 (previous year Rs. 2934).

IV. In respect of Sales Tax under appeal Rs.1286 (previous year Rs. 1292).

V. In respect of excise duty disputes pending with various judicial authorities Rs. 2656 (previous year Rs. 2799).

VI. In respect of Corporate Guarantees furnished Rs. 15149 (previous year Rs. 14760).

VII. In respect of Income Tax under appeal Rs. 320 (previous year Rs. 174).

VIII. Estimated amount of contract remaining to be executed on Capital Account (net of advances) Rs.396 (previous year Rs. 451).

Considering the remote possibility of outflow in respect of above no provision is deemed necessary as envisaged in

AS 29 issued by ICAI.

Information pursuant to AS 29 issued by ICAI

i. During the period, Rs. 196 ( Previous year Rs. NIL) has been provided against disputed liabilities of excise duty

formerly not being accounted for on the ground of contingent liability in respect of amount for which expected

cash outflow is reliably estimable within the meaning of relevant standards.

ii Opening balance against such provision aggregate Rs. 89.08 which includes disputed liabilities on account of VAT,

Sales tax and Entry tax amounting to Rs. 61.64, Rs. 26.15 & Rs. 0.29 respectively.

iii. No part of such provision has been utilized during the period.

iv. Provisions are made herein for high & medium risk oriented issues as a measure of abundant precaution .Future

period in which expected cash out flow is going to mature is not readily forcastable..

SCHEDULE A: Accounting Policies & Notes to Accounts

Schedules to Consolidated Financials


34

2.3 Related Party Disclosures:

2.3.1 Related parties where control exists:

Associate/Joint Ventures:

ACI Ltd. Bangladesh

Weikfield Product Co. Pvt. Ltd

2.3.2 Other related parties in transaction with the body Corporates under Consolidation

2.3.2.1 Key Management Personnel and relatives of such personnel:

Director Relatives

Pradip Burman R C Burman

Chetan Burman

Dr Anand Burman A C Burman

Amit Burman Asha Burman

P D Narang -

Sunil Duggal -

Sanjay Sharma -

T.K. Gupta -

Siddharth Burman -

Rukma Rana -

2.3.3 Enterprises over which Key Management Personnel and their relatives are able to exercise significant influence:

Miracle Commercial Enterprises Pvt. Ltd

Wakarusa Laboratories Pvt. Ltd.

Welltime Housing & Finance Ltd.

2.3.4 An enterprise owned by any director of DIL/Subsidiary:

Welltime Housing & Finance Ltd.

2.4 Related Party transactions

Related Party Transactions as on 30.09.2006

Associates Key Relatives Total Outstanding

Management Of Key As On

Personnel Management 30.09.2006

PersonnelSale of Goods 298 - - 298 -

(749) (-) (-) (749) (56)Rent Paid 9 18 - 27 -

(3) (14) (-) (17) (-) Interest Paid - 4 - 4 -

(-) (2) (-) (2) (-) Repayment of Loans Given(Instl.Recd) - - - - -

(4) (-) (-) (4) (-) Remuneration/Exg./Pension - 482 46 528 -

(3) (388) (62) (453) (-) Royalty Paid 6 - - 6 (6)

(3) (-) (-) (3) (3) Sale of Asset - - - - -

(-) (-) (6) (6) (-)


35


2.5 Since external and internal sources of information do not provide for any indication for impairment of fixed assets for

parent company based on cash generating unit concept, recoverable values of assets have not been determined for the

period as authorized by clause 6, AS-28 issued by ICAI. Regarding other companies/body corporates under consolidation,

the exercise of test of impairment conducted by management revealed absence of any provisioning exigency in this

connections.

2.6 Deferred tax liability has been provided on estimated basis.

2.7 Liabilities in respect of retirement benefits to employees, which includes gratuity, leave salary and superannuation

fund, have been provided for on estimated basis by body corporates..

2.8.1 The parent company has paid the final dividend @ Re. 1.00 i.e. 100% (previous period Rs. 1.50 i.e. 150%) per equity

share (having face value of Re 1/- each) for the financial year 2005-06 (previous year 2005-06) aggregating Rs. 57 crores

(previous period Rs. 43) excluding tax on dividend on 12th July 2006, (previous period on 20th July, 2005).

2.8.2 Board of Directors of parent company has declared interim dividend @ Re. 1.00 i.e. 100% (previous period Rs. 1.50 i.e.

150%) for the period , the amount of interim dividend working out to Rs. 6546 (previous period Rs. 4902) including

incidence of tax thereon.

2.9 During the period 724982 (previous period 199489) equity share of Re 1/- each have been allotted to the employees

upon their exercise of stock option.

2.10 58,94,379 (previous year 6691484) equity shares of Re.1/- each are outstanding under “Employees Stock Option Scheme”

as on 30th September, 2006.

2.11 Investment at half-year end includes Rs.3011 (previous year Rs. 4,087) towards current investment carried at lower of

cost and market value. Remaining investments, being long term in nature, have been valued as per disclosure made in

preceding annual financial statement.

Two wholly owned subsidiaries namely, Balsara Home Products Ltd and Besta Cosmetics Limited and one subsidiary

namely Balsara Hygiene Products Ltd. have been merged with parent company, with effect from April 01, 2006. These

companies were consolidated with the parent company on the basis of their separate financial statements in immediately

proceeding financial year. In terms of the scheme of merger Goodwill amounting to Rs. 16163.76 Lacs being the value

of investment of parent company in their subsidiaries over their net assets, have been adjusted against share premium

amount Rs. 5835.36 and balance against general reserve. Minority interest in these companies has been liquidated by

way of issue of 63,336 number of equity shares of parent company of Re 1/- each, the difference between the face value

of shares and the minority interest met by way of capitalization of general reserve.

2.12 Information (to the extent applicable) pursuant to AS 19 issued by ICAI:-

The future minimum lease payment under non-cancelable operating lease

30.09.2006 30.09.2005

Not later than 1 year 18 10

Later than 1 year not later than 5 years 8 8

Later than 5 years Nil Nil



36

2.13 Information pursuant to AS 24 on discontinued operations:

Particulars Hair Oil Baddi MSY Unit Baddi

1 Discontinued since March, 04 Nov, 2000

2 Segment the operation of the Unit relates to in Consumer Care Division Consumer Care Divisionfinancial statement

3 Carrying amount of total assets 33.37 28.35(33.37) (28.35)

4 Carrying amount of total liabilities 4.21 0.01(4.21) (0.01)

5 Profit from ordinary activities 0.00 0.00(0.00) (0.00)

6 Income Tax expenses 0.00 0.00(0.00) (0.00)

7 Gain on disposal of assets 0.00 0.00(0.00) (0.00)

8 Cash flow from discontinued operations:

Operating activities 0.00 0.00(0.00) (0.00)

Investing Activities 0.00 0.00(0.00) (0.00)

Financial Activities 0.00 0.00

(0.00) (0.00)

Note: 1. Figures in brackets are for previous year

2. Part of fixed assets belonging to discontinued operations under reference has been used for new plants set

up in relevant premises. Such assets have been left out of the purview of ‘3’ above.

2.14 Fixed Assets

Particulars Gross Block Depreciation Net Block

As at Addi- Adjust- As at As at For the Adjust- As at As at As at

31.3.06 tions ment 30.9.06 31.3.06 Period ment 30.9.06 30.9.06 31.3.06

Freehold land 781 0 0 781 0 0 0 0 781 781

Leasehold land 865 44 0 909 46 5 0 50 859 819

Building,roads & culvert 15278 673 49 15901 4316 257 25 4548 11354 10962

Plant & machinery 27327 1323 196 28454 11434 888 151 12171 16283 15894

Vehicles 3343 148 11 3480 2094 168 10 2251 1229 1250

Furniture & off equipment 2077 192 113 2156 1005 106 53 1058 1098 1072

Computers 3064 56 41 3079 1640 101 28 1713 1366 1424

Patents * 1,113 0 0 1,113 370 63 0 433 680 742

Live stock 0 0 0 0 0 0 0 0 0 0

Capital work in progress 1476 215 467 1225 0 0 0 0 1255 1476

Goodwill * 16995 1403 16164 2235 0 26 0 26 2209 16995

Total 72319 4054 17041 59333 20905 1614 267 22250 37084 51415

* Intangible Asset


37


Rupess in Lacs

Particulars As at 30.09.2006 As at 31.03.2006

2.15 Current Assets, Loans and Advances

Current assetsCurrent assetsCurrent assetsCurrent assetsCurrent assets

Inventories: 33385 21278

- Raw materials 8145 7753

- Packing materials, stores and spares 6547 4821

- Stock in process 3446 1402

- Finished goods 15247 7302

Sundry debtors (unsecured) 15345 7435

Cash and bank balances 5330 5117

Loans and advances (unsecured, considered good) 15046 13302

Loans & advances to subsidiaries 0 0

Loans & advances to others 70 0

Security deposit with various authorities 3545 1660

Advance payment of tax 7577 5914

Advances to suppliers 2341 2084

Advances to employees 362 324

Balance with excise authorities 351 435

Other advances recoverable in cash or in kind or for 799 2884

value to be received

2.16 Current Liabilities and Provisions

Current liabilities: 37672 30282

Acceptance 6588 9088

Creditors for goods 9345 7395

Creditors for expenses and other liabilities 20385 13272

Advances from customers 1136 274

Interest accrued but not due on loans 37 63

Deposits - others 4 55

Investor education and protection fund to be credited by:

- unpaid dividend 165 121

- unpaid matured public deposit 7 8

- interest accrued on public deposit 5 6

Provisions : 15434 13329

For dividend 5741 5733

For corporate tax on proposed dividend- 805 804

For staff welfare 861 755

For Contigent Liability 196 -

For leave salary 106 122

For taxation 7725 5915



38

Rupess in Lacs

Particulars For the six months For the six months

ended 30.09.2006 ended 30.09.2005

2.17 Sales

Sales 103964 88224

Domestic sales less returns 93274 80911

Export sales 10690 7313

2.18 (Increase)/decrease in stock in trade

Adjustment of stocks in process and finished goods:

- Opening stock 8748 9433

Stock in process 1506 814

Finished products 7242 8619

- Closing stock 18264 13310

Stock in process 3446 1166

Finished products 14818 12144

Increase(-)/decrease in stock in process and finished goods -9516 -3877

2.19 . Consumption of Materials

Raw material consumed 24533 21560

i) Opening stock 7227 7590

ii) Add: purchases 25430 23915

iii) Less: closing stock 8124 9945

Packing material consumed 16715 12098

i) Opening stock 4243 3018

ii) Add: purchases 18622 13445

iii) Less: closing stock 6150 4365TotalTotalTotalTotalTotal 4124841248412484124841248 3365833658336583365833658

2.20 . Other expenditure

Power and fuel 1947 1726

Stores & spares consumed 747 458

Repairs & maintenance 433 402

Processing charges 409 139

Rent 554 510

Rates and taxes 172 37

Insurance 195 199

Sales tax 7756 6966

Freight and forwarding charges 3614 2976

Commission, discount and rebate 818 571

Travel and conveyance 1144 1036

Legal and professional 450 441

Telephone, fax expenses 259 258

Security expenses 114 76

General Expenses 2635 2343

Directors' fee 5 4


39


Rupess in Lacs

Particulars For the six months For the six months

ended 30.09.2006 ended 30.09.2005

Auditors' remuneration 30 26

Donation 126 195

Contribution to scientific research expenses 485 353

Bad debts 56 28

Provision for Contingent Liabiity 100 -

Loss on sale of Investment 1 9

Loss on sale of Fixed Assets 12 81

Total 22063 18836

2.21 Information pursuant to AS - 17 issued by ICAI:


Particulars Consumer Care Consumer Health Foods Others Unallocated Dabur India Ltd.Business Business

Current Previous Current Previous Current Previous Current Previous Current Previous Current PreviousPeriod Period Period Period Period Period Period Period Period Period Period Period

RevenueRevenueRevenueRevenueRevenue

External Sales 81212 69932 7930 7052 12687 9549 2135 1691 103964 88224

Inter-segment sales

Total RevenueTotal RevenueTotal RevenueTotal RevenueTotal Revenue 8121281212812128121281212 6993269932699326993269932 79307930793079307930 70527052705270527052 1268712687126871268712687 95499549954995499549 21352135213521352135 16911691169116911691 103964103964103964103964103964 8822488224882248822488224

ResultResultResultResultResult

Segment result 19599 14998 1993 2105 1358 1173 19 21 22969 18297

Unallocated corporate expenses 7317 6362 7317 6362

Operating profitOperating profitOperating profitOperating profitOperating profit 1959919599195991959919599 1499814998149981499814998 19931993199319931993 21052105210521052105 13581358135813581358 11731173117311731173 1919191919 2121212121 (7317)(7317)(7317)(7317)(7317) (6362)(6362)(6362)(6362)(6362) 1565215652156521565215652 1193511935119351193511935

Interest expense (Net Of Interest Income) 956 868 956 868

Interest income

Income Tax(Current + Deferred) 2039 1349 2039 1349

Profit from ordinary activitiesProfit from ordinary activitiesProfit from ordinary activitiesProfit from ordinary activitiesProfit from ordinary activities 13581358135813581358 11731173117311731173 1919191919 2121212121 (10312)(10312)(10312)(10312)(10312) (8579)(8579)(8579)(8579)(8579) 1265712657126571265712657 97189718971897189718

Minority Interest 29 210 29 210

Net profitNet profitNet profitNet profitNet profit 13581358135813581358 11731173117311731173 1919191919 2121212121 (10283)(10283)(10283)(10283)(10283) (8369)(8369)(8369)(8369)(8369) 1268612686126861268612686 99289928992899289928

Other informationOther informationOther informationOther informationOther information As on As on As on As on As on As on As on As on As on As on As on As on30/9/06 31/3/06 30/9/06 31/3/06 30/9/06 31/3/06 30/9/06 31/3/06 30/9/06 31/3/06 30/9/06 31/3/06

Segment assets 35850 37612 6212 6517 11619 12190 3188 3345 56869 59664

Unallocated corporate assets (526) (552) (526) (552)

Total assetsTotal assetsTotal assetsTotal assetsTotal assets 3585035850358503585035850 3761237612376123761237612 62126212621262126212 65176517651765176517 1161911619116191161911619 1219012190121901219012190 31883188318831883188 33453345334533453345 (526)(526)(526)(526)(526) (552)(552)(552)(552)(552) 5634356343563435634356343 5911259112591125911259112

Segment liabilities 11900 8751 419 321 8010 7841 67 (416) 20396 16497

Unallocated corporate liabilities (2574) (3804) (2574) (3804)

Total liabilitiesTotal liabilitiesTotal liabilitiesTotal liabilitiesTotal liabilities 1190011900119001190011900 87518751875187518751 419419419419419 321321321321321 80108010801080108010 78417841784178417841 6767676767 (416)(416)(416)(416)(416) (2574)(2574)(2574)(2574)(2574) (3804)(3804)(3804)(3804)(3804) 1782317823178231782317823 1269312693126931269312693

Capiltal EmployedCapiltal EmployedCapiltal EmployedCapiltal EmployedCapiltal Employed 2395023950239502395023950 2886128861288612886128861 57935793579357935793 61966196619661966196 36093609360936093609 43494349434943494349 31213121312131213121 37613761376137613761 20482048204820482048 32523252325232523252 3852038520385203852038520 4641946419464194641946419

Depreciation 619 566 83 76 255 233 123 113 532 487 1612 1475

Non-cash expenses other than depreciation 416 122 416 122

Secondary Segment

As the company also exports, the secondary segment for the company is based on the location of customers's . Out of the total sales of Rs. 103964 (88224)., the export salesis of Rs. 10690 ( 7313) and domestic sale is 93274 ( 80911)


40

2.22 Employees benefit scheme of the company are of the nature deferred benefit plan and deferred contribution plan

within the meaning of revised AS-15 issued by ICAI. Additional condition laid down under AS-15 (revised) will be complied

with at the closing of the financial year.

2.23 Figures of earlier period/year have been rearranged in terms of current period grouping as and when necessary.






New Delhi

31st October, 2006


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