Dabur - 2008-2009 Annual Report

DABUR INDIA LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

To,
The Members,

Your Directors have pleasure in presenting the 34'' Annual Report on the
business and operations of the Company, together with the Audited Accounts
for the year ended March 31, 2009.

Financial Results:

Financial results are presented in Table 1.

Tablel: Financial results:

(Rs. in crore)
2008-09 2007-08

Turnover (including other income) 2439.23 2111.31

Profit before Tax 425.00 365.18

Add: Provisions of earlier years written back 0 0.68
425.00 365.86

Less: Provision for Taxation - Current 47.48 40.57

Provision for Taxation - Deferred (2.55) 0.75

Provision for Taxation - Fringe Benefit 6.51 7.08

Provision for taxation for earlier year 0.72 1.54

Profit after Tax 372.84 315.92

Add:Balance in Profit & Loss Account brought 323.23 229.15
forward from the previous year

Profit available for appropriation 696.07 545.07

Appropriation to:

General Reserve 90.00 70.00

Capital Reserve 0.01 0.40

Interim Dividend - Paid 64.88 64.80

Final Dividend - Proposed 86.51 64.80

Corporate tax on Dividend 25.73 22.02

Balance carried over to Balance Sheet 428.94 323.05

Total 696.07 545.07

Dividend:

The Company has paid an interim dividend of 75% (Re.0.75 per share) on
February 10, 2009. We are pleased to recommend a final dividend of 100%
(Re.1/- per share of Rupee one each) for the financial year 2008-09. The
final dividend, if approved by the members, will be paid to members within
the period stipulated by the Companies Act, 1956. The aggregate dividend
for the year will amount to 175% (Rs.1.75 per share of Rupee one each) as
against 150% (Rs.1.50 per share of Rupee one each) declared last year. The
dividend payout ratio for the current year, inclusive of corporate tax on
dividend distribution, is at 47.41%. Pursuant to the provisions of Section
205A (5) of the Companies Act, 1956, dividend for the year 2000-01 (final)
and 2001-02 (interim) which remained unpaid or unclaimed for a period of 7
years, amounting to Rs.1502250/-, has been transferred by the Company to
the Investors' Education and Protection Fund.

Operations and Business Performance:

Kindly refer to Management Discussion & Analysis and Corporate Governance,
which form part of this Report.

Acquisition of FEM Care Pharma Ltd.

With a view to increasing its market share in the fast-growing consumer &
personal care business, and strengthening its position in the industry, the
Company proposes to take over FEM Care Pharma Limited (FEM), a FMCG Company
listed on Bombay Stock Exchange, by acquiring controlling stake of 72.15%
from its existing promoters at a cost of Rs. 203.72 crore.

For this purpose, the Company has entered into a Share Purchase Agreement
with the existing promoters of FF.M. Further, as required under the
Securities and Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997, the Company is in the process of
acquiring from the public shareholders of FFM up to 2(1% of the fully
diluted voting capital of FFM at a price of Rs.800/- per share aggregating
lo Rs. 56.47 crore. In this regard, requisite Public Announcement has
already been released in newspapers and the Company had received the
clearance for Fetter o( Offer filed with SEBI and the Public offer will
open shortly.

FFM's portfolio of products include bleaches, hair removing cream and
liquid hand soaps, which are marketed under its flagship brand 'FFM'. FFM
also offers fabric care products under the brand name 'Bambi' and herbal
anti-wrinkle cream under the brand 'Botanica'.

Overall, the acquisition is expected to provide substantial revenue and
cost synergies to Dabur, and will be value accretive for its stakeholders.

Corporate Governance:

Dabur has always been devoted to adopting and adhering to the best
Corporate Governance practices recognized globally. The Company understands
and respects its fiduciary role and responsibility towards stakeholders and
the society at large, and strives hard to serve their interests, resulting
in creation of value and wealth for all stakeholders.

The compliance report on Corporate Governance and a certificate from
Auditors of the Company regarding compliance of the conditions of Corporate
Governance, as stipulated under Clause 49 of the Fisting Agreement with the
Stock Exchanges, is attached as Annexure 1' and forms part ot this annual
report.

Certificate of the CEO/CFO, inter alia, confirming the correctness of the
financial statements, compliance with Company's Code of Conduct, adequacy

of the Internal Control measures and reporting of matters to the Audit
Committee in terms of Clause49of the Fisting Agreement with the Stock
Exchanges, is also enclosed as a part of the Annual Report.

Directors:

During the period, H.H. Maharaja Gaj Singh had resigned from the
Directorship of the Company w.e.f. October 30, 2008. The Board places on
record its gratitude for the valuable services rendered and guidance
provided by HH Maharaja Gaj Singh during his tenure with the Company.

Mr Analjit Singh and Mr Albert Wiseman Paterson were appointed as
Additional Non-Executive Independent Directors on October 30, 2008. They
shall hold office upto the date of the ensuing Annual General Meeting of
the Company and, being eligible, offer themselves for appointment.

In terms of Article 103 and 104 of the Articles of Association of the
Company, Mr Sunil Duggal, Dr S Narayan and Mr P N Vijay will retire by
rotation at the ensuing Annual General Meeting, and being eligible, offer
themselves for reappointment in terms of the provisions ol Article 106 of
the Articles of Association of the Company.

The brief resumes of the Directors who are to be appointed/re-appointed,
the nature of their expertise in specific functional areas, names of
companies in which they have held directorships, committee memberships/
chairmanships, their shareholding etc., are furnished in the explanatory
statement to the notice of the ensuing Annual General Meeting.

Your Directors recommend their appointment/ re-appointment at the ensuing
Annual General Meeting.

Directors' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, the Directors
confirm:

i) Thai in the preparation of the annual accounts, the applicable
accounting standards have been followed and no material departures have
been made from the same;

ii) That they had selected such accounting policies and applied them
consistently, and made judgements and estimates that are reasonable and
prudent, so as to give true and fair view of the slate of affairs of the
Company at the end of the financial year, and of the profit of the Company
for that period;

iii) That they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

iv) That they had prepared the annual accounts on a going concern basis.

Change in Capital Structure and Listing of Shares:

The Company's shares are listed on the National Stock Exchange of India
Limited (NSE) and Bombay Stock Exchange limited (BSE) and are actively
traded.

In the year under review, the following shares were allotted and admitted
for
trading in NSE and BSE:-

- Equity shares allotted against the options exercised by employees
pursuant to Employees Stock Option Scheme of the Company;

* 939458 equity shares allotted on May 21,2008.
* 113818 equity shares allotted on August 7, 2008.

Auditors and their Report:

M/s G. Basu & Company, Chartered Accountants, Statutory Auditors of the
Company, will retire at the conclusion of the ensuing Annual General
Meeting and, being eligible, offer themselves for reappointment as
statutory auditors for the financial year 2009-10. The Company has received
a letter dated April 7, 2009 from them to the effect that their
reappointment, if made, would be within the limit prescribed under section
224(1B) of the Companies Act, 1956, and that they are not disqualified for
such reappointment within the meaning of Section 226 of the Companies Act,
1956.

The observations of the Auditors, together with the Notes to Accounts
referred to in the Auditors' Report, are self-explanatory and do not call
for any further explanation from the Directors.

Cost Auditors:

M/s Ramanath Iyer & Company, Cost Accountants, were re-appointed as Cost
Auditors to conduct cost audit of the accounts maintained by the Company,
in respect of the Formulations and Cosmetics & Toiletries products for the
financial year 2009-10.

Consolidated Financial Statements:

In compliance with the Accounting Standard 21 on Consolidated Financial
Statements, this Annual Report also includes Consolidated Financial
Statements for the financial year 2008-09.

Consolidated Turnover grew by 19.09% to Rs.2852.27 crore as compared to
Rs.2395.08 crore in the previous year. Similarly, net profit after tax and
after minority interest for the year at Rs.391.21 crore is higher by
Rs.57.10 crore as compared to Rs.334.11 crore in the previous year.

Internal Control System:

The Company has a well placed, proper and adequate internal control system,
which ensures that all assets are safeguarded and protected and that the
transactions are authorised, recorded and reported correctly. The Company's
internal control system comprises audit and compliance by in-house Internal
Audit Division, supplemented by internal audit checks from Price Waterhouse
Coopers Private Limited, the Internal Auditors. The Internal Auditors
independently evaluate the adequacy of internal controls and concurrently
audit the majority of the transactions in value terms. Independence of the
audit and compliance is ensured by direct reporting of Internal Audit
Division and Internal Auditors to the Audit Committee of the Board.

To further strengthen the internal control process, the Company has
developed a very comprehensive legal compliance manual called e-nforce',
which drills down from the CEO to the executive level person who is

responsible for compliance. This process is fully automated and generate
alerts for proper and timely compliance.

Fixed Deposits:

During the year under review, the Company has not accepted any fixed
deposits from the public, and as on March 31, 2009 the Company had no
unclaimed deposits or interest thereon due to any depositor. During the
year, the Company has repaid a sum of Rs. 194552/- towards unclaimed
deposits and interest thereon, and has deposited a sum of Rs.792744/-
towards unclaimed deposits and interest thereon in the Investors' Education
& Protection Fund, pursuant to the provisions of Section 205C of the
Companies Act, 1956.

Nature of Business:

There has been no change in the nature of business of the Company and any
of its subsidiary companies during the year.

Subsidiaries:

As required under the provisions of Section 212 of the Companies Act, 1956,
a statement of the holding company's interest in the subsidiary companies
is attached as Annexure 2' and forms part of this report.

In terms of approval granted by the Central Government under Section 212(8)
of the Companies Act, 1956, copies of Balance Sheet, Profit and Loss
Account, Report of the Board of Directors and the Report of the Auditors of
the subsidiary companies have not been attached with the Balance Sheet of
the Company The Company will make available these documents/details upon
request by any shareholder of the Company or subsidiary interested in
obtaining the same.

The annual accounts of the subsidiary companies are also available for
inspection by the shareholders at the Registered Office of the Company and
also that of its respective subsidiaries. However, pursuant to Accounting
Standard AS-21 issued by the Institute of Chartered Accountants of India,
Consolidated Financial Statements presented by the Company include the
financial statements of its subsidiaries. The Financial Statements of each
subsidiary shall also be available on Company's website www.dabur.com.

The following information in aggregate for each subsidiary is also being
disclosed (a) capital (b) reserves (c) total assets (d) total liabilities
(e) details of investment (except in case of investment in subsidiaries)
(f) turnover (g) profit before taxation (h) provision for taxation (i)
profit after taxation (j) proposed dividend. The said information is given
in 'Annexure 3' and forms part of this report.

Employees Stock Option Plan:

During the year, 563472 options in 4 tranches were granted to eligible
employees of the Company in terms of Employees Stock Option Plan (Dabur
ESOP 2000). During the year, 1053276 options were exercised by the
employees after vesting. Accordingly, the Company made the allotment of
939458 equity shares on May 21,2008 and 113818 equity shares on August 7,
2008, against the options exercised by the employees.

The particulars of options issued under the said Plan as required by SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are appended as 'Annexure 4' and forms part of this
report.

Particulars of Employees:

Particulars of employees as required under Section 217(2A) of the Companies
Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as
amended are given in 'Annexure 5' and forms part of this report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings
and Outgo

A. Conservation of energy:

a) Energy conservation measures taken:-

Various energy conservation projects were initiated at large scale and
successfully implemented. Consequently, the energy bill got reduced by
13.8% on absolute basis (from Rs.36 cr to Rs.31cr) between 2007/08 and
2008/09. This was despite a 8-9% volume increase in manufacturing and an
average increase of 11.7% in cost of key input fuels like HSD and Furnace
oil. Some of the key initiatives were as follows-

* Conversion of Oil Fired 6 TPH Boiler to Solid Bio Fuel Fired Boiler to
conserve energy and save environment.

* Combined ETP Facility, utilization of Organic Load (Herbs) through ETP to
generate Biogas which is burned in Boiler to conserve energy and save
environment.

* Retrofitting of pet coke boiler.

* Alternative fuel (Bio Diesel) used in Boilers.

* Replacement of Efficient Air Compressor - 'Nirvana' energy efficient Air
- Compressor installed to reduced Power consumption. Saving of around
20,000 units of Power on monthly basis.

* Shampoo Cold process for Energy Conservation.

* Process Change in Chyawanjunior conversion from Steam to Hot water for
energy conservation.

* Use of Centrifuge before Tray drier to reduce drying time in Bhasma by
70%.

* Synchronization of production load resulting in lower FO Consumption per
unit production.

b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy:-

* Additional investment of Rs.301.87 lac has been made during the year for
implementing further energy conservation measures at manufacturing plants.

c) Impact of measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods:-

* The energy conservation measures taken during the year have resulted into
yearly saving of approximately Rs.560 Lacs and thereby lowered the cost of
production. These measures have also lead to reduction in effluent, reduced
maintenance time and cost, improved hygienic condition and consistency in
quality and improved productivity.

d) Total energy consumption and energy consumption per unit of production
as per Form A

- Attached herewith as 'Annexure 6'

B. Technology Absorption:

Efforts made in technology absorption as per Form B is attached herewith as

'Annexure 7.'

C. Foreign Exchange earnings and outgo:

i) Activities and initiatives relating to exports;

The Company's key markets for international business are the Middle East,
North Africa, West Africa and South East Asian geographies, with sourcing
from plants located across these regions. The Company also has a private
label business in USA and UK, along with Guar gum exports, which takes
place from its Indian plants.

Export business:

The Company undertakes exports of Guar Gum and also undertakes private
label exports to UK and US from India.

The Company has recorded a growth of 26.2% in Guar Gum export business from
Rs.38 crore in the year 07-08 to Rs.48.27 crore in the year 08-09. Growth
has been registered by increasing the customer base by focussing on the
existing China and USA markets. Direct business with customers has been
increased and dependency on brokers reduced.

Private label business in USA has grown from Rs. 17.33 crore in the year
07-08 to Rs.27.62 crore in the year 2008-09. Export of certain other
products is also being planned for the US markets.

The Company's International Business Division, recorded an impressive sales
growth of 39.5% from Rs.376 crore in 2007-08 to Rs.525 crore in 2008-09,
contributing to 18.5% ot overall consolidated Dabur's Business.

Robust sales growth in international markets was possible due to:

- Sharply defined Brand portlolio strategy in sync with the Company's brand
architecture.

- Higher levels of localization.

- Leveraging the 'naturals wave' to market Dabur products.

- Geographical expansion.

The Company has built a strong and robust brand architecture with two mega
brands for international business across all geographies - Dabur and Vatika
and most of its offerings are under either of these two brands.

The Vatika franchise has grown by 73% over last year and is now a 1NR 136
crore franchise, built from a negligible base over the last three years in
the Arab belt.

Following on the successful launch of Vatika Olive & Cactus Oils, the
Company launched another two variants Vatika Almond & Vatika Coconut,
extending the Vatika brand equity. This range of Vatika Hair Oils has
registered a 101% growth in value across the Middle hast and North African
region.

The Company had launched its new range ot Dabur Vatika Naturals styling
hair cream, across the MENA region in mid 2006. The brand has gained 11.1%
Volume Market share (overall) and a 13.3% Volume MS (Modern Trade) in Saudi
Arabia, despite aggressive competition from established brands.

The Amla franchise has been extended to the Hair ('ream Category with the
launch ot Dabur Amla Hair Cream in February 09.

Implementing the open innovation strategy the Company had outsourced
Italian technology and launched a range of intensive hair treatment masks
Vatika Naturals Haiiuim Zaith, which has been a big success and has become
a dominant brand in the portfolio just two years alter launch.

The key contributing markets to the international business growth have been
CCC, Egypt, Nigeria, Algeria, Morocco, Libya, Yemen, Syria and South
Africa.

GCC, the largest market in the International Business Division, has
registered a strong 45.6%) year on year value growth fuelled by innovations
and new product launches in the Hair are and Oral Care business.

Dabur Lgypt Limited is one of the top performers of the international
business with 99.4% year on year value growth. Vatika Naturals Styling Hair
Cream range has established itself as a key brand in the category, with a
9.5% value share within two years of launch.

African Consumer Care Ltd., Nigeria, which has been identified as one of
the key markets for future growth for Dabur in Africa, has grown by 36%>
over the last year, aided by the growth of Dabur Herbal Toothpaste and
Dabur Herbal Gel in the Oral ('are category.

Asian Consumer Care Pvt. Ltd., Bangladesh, has performed well with a growth
of 36.7%) during the fiscal 2008-09. The growth has been led by increased
distribution penetration and locussed brand approach.

Dabur Nepal Pvt Limited, which generates sales of Rs.272 crore and is one
of the largest geographies in the international division recorded a steady
growth of 11.1%.

The new manufacturing facility which has been set up in the Emirates of Ras
-al-Khaima was commissioned during the year and has become one ot major
manufacturing locations for Dabur's International Business.

ii) Development of new markets for Products & Services:

A significant contributor to the growth of the division during FY09 was
geographical expansion, resulting from opening up of new markets with new
avenues for growth in Lebanon, Turkey, Algeria, Morocco, Mauritania and
China.

iii) Export Plans:

The focus, going forward, is to continue expanding the Company's presence
across these geographies and to exploit the opportunities that exist in the
neighbouring regions. Therefore, the Company would continue to invest in
brand building, manufacturing and infrastructure in order to capture the
opportunities that exist for the Company.

Total Foreign Exchange used during 2008-09: Rs.2572.56 lac.

Total Foreign Exchange Earned during 2008-09: Rs. 10987.39 lac.

Group for interse transfer of shares:

Pursuant to an intimation received from the Promoters, under Clause 3(1)
(e) of Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 persons constituting Group (within
the meaning as defined in the Monopolies and Restrictive Trade Practices
Act, 1969) for the purpose of availing exemption from applicability of the
provisions of Regulation 10 to 12 of aforesaid SEBI Regulations, are given
in the 'Annexure 8' attached herewith and forms part ot this report.

Operations Review:

For detailed operational review kindly refer to Management Discussion and
Analysis and the Report on Corporate Governance, which forms part of this
Annual Report.

Health Safety and Environmental Review:

Dabur India Ltd. has renewed its commitment towards Health, Safety and
Environment through its Policy, which focuses on People, Technology and
Facilities, supported by Management Commitment as the prime driver. A
Dedicated 'Safety Management Team' is working towards the prevention of
Man, Machine and Material incidents at the Corporate Unit level and to
educate and motivate the employees on various aspects on Health, Safety and
Environment through training program and seminars.

The Company is continuously monitoring its waste to ensure adherence to
pollution control norms within the prescribed limit. To maintain the ground
level water and commitment towards the society, Dabur has taken the
initiative to install the Rainwater harvesting which has shown a good
result in maintaining the ground water level.

Key Initiatives taken during the year.

* Revised Environment Policy has been launched with the commitment to
preserve the environment.

* Environmental Management Program has been taken by units on the concept
of Reduce, Reuse and Recycle.

* Carbon Foot Print Study undertaken at Unit level.

* Environmental Target has been taken to reduce the consumption of water
and energy.

* Environmental Monitoring carried out at unit level to check the impact on
the environment.

* Different Guideline and Standard Rolled out for implementation at unit
level and Focus on the training - on job and off job to minimize the TRFR
(Total Recordable Frequency Rate).

* Risk Assessment carried out at unit level for the operation.

* Installation of Fire Hydrant System in units as applicable.

* Emergency Preparedness plan is in place and the plan is audited through
mock drills.

* Health Check up for all employees carried out at unit level.

Quality Review:

We at Dabur are committed to the health and well being of every household
by ensuring safe and quality products. Our vision is the key driver to our
journey from good to great quality.

The Quality Assurance programme is based on stated Quality and Food safety
policy which are founded on an integrated documentation system of
Specifications, Standard Operating Procedures and Batch Production Records,
supported by validated equipment, processes and trained personnel.

All of our factories in India, Nepal and Ras-al-Khaima are fully equipped
with state of the art laboratories to ensure the best in class quality
control. All the facilities in India are GMP certified apart from ISO 9000
and ISO 2200 certification of Silvasa, Jammu and Alwar factories. Food
facilities at Nepal and Jalpaiguri are HACCP certified so as to ensure
complete food safety.

Quality Improvement of finished product is a key initiative as part of our
continuous effort to improve the delivered quality. The metrics of finished
product quality has moved from 4.3 sigma in 07-08 to 4.4 sigma during 08-09
resulting into an improvement of 27%.

The wing of corporate quality to ensure compliance and identify scope ot
improvements audits the full chain starting from supplier to distribution
including factories and market. A total of 105 audits have been carried out
during 08-09 including three market audits.

Awards & Recognitions:

Dabur has received many Awards and Accolades in recognition of its-
achievements at various levels. During the year Dabur bagged various Awards
and Recognitions in different categories and for different Brands. These
include:

For the Company

* Ranked amongst India's most innovative companies by Business Today-
Monitor Group Survey.

* Ranked 28th in the list of India's Top 50 Most Valuable (company) Brands
by Brand Finance.

* Ranked the Business Leader in FMCG-Personal care Category at the NDTV
Profit Business Leadership Award 2008.

* Listed among the super 100 of India Inc, prepared by Business India.

Its Brands

* Hajmola, one of the strongest brands in Dabur's Portfolio, has been
listed among the Top 18 Iconic Brands in India.

* Dabur India's fruit Juice brand 'Real' awarded the Reader's Digest Gold
Trusted Brand Award 2008 in the Food and Beverages Category.

* Dabur Brands-Hajmola, Dabur Amla and Vatika have debuted in the Economic
Times Brand Equity's Most trusted Brands 2008 list.

Its Chief Executive Officer:

* Mr. Sunil Duggal was named the best corporate leader of 2008 at the B&E
leadership and Excellence Awards, and also ranked among India's most
valuable CEOs by Business World.

Industrial Relations:

The Company maintained healthy, cordial and harmonious industrial relations
at all levels. The enthusiasm and unstinting efforts of employees have
enabled the Company to remain at the leadership position in the industry.
It has taken various steps to improve productivity across organization.

Acknowledgements:

Your Directors place on record their gratitude to the Central Government,
State Governments and Company's Bankers for the assistance, co-operation
and encouragement they extended to the Company. Your Directors also wish to
place on record their sincere thanks and appreciation for the continuing
support and unstinting efforts of Investors, Dealers, Business Associates
and Employees in ensuring an excellent all around operational performance.

For and on behalf of the Board

Place: New Delhi (DR. ANAND BURMAN)
Date : 29th April, 2009 CHAIRMAN

Auditors' Report on Corporate Governance :
Annexure T

To
The Members of
Dabur India Limited

We have examined the compliance of conditions of Corporate Governance by
Dabur India Limited, for the year ended March 31,2009, as stipulated in
Clause 49 of the Listing Agreement of the said Company with the stock
exchanges.

The compliance of conditions of Corporate Governance is the responsibility
of the Management. Our examination is limited to procedures, and
implementation thereof, adopted by the Company for ensuring the compliance
of the conditions of Corporate Governance.

It is neither an audit nor an expression of opinion on the financial
statements of the Company.

In our opinion, and to the best of our information and according to the
explanations given to us, we certify that the Company has complied with the
conditions of Corporate Governance as stipulated in the above mentioned
Listing Agreement.

We state that no investor grievance is pending for a period exceeding one
month against the Company, as per the records maintained by the
Shareholders/ Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the
future viability of the Company, nor the efficiency or effectiveness with
which the Management has conducted the affairs of the Company.

For G. BASU & CO.
Chartered Accountants

(S. Lahiri)
Partner

Place: New Delhi
Date : 29th April, 2009

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

Form of Disclosure of particulars with respect to Conservation of Energy

A. Power and Fuel Consumption:
2008-09 2007-08

1. Electricity

a) Purchased:

Units 30958858 29322821
Total amount (Rs.) 138562650 119940207
Rate per unit (Rs.) 4.48 4.09

b) Own (ieneration:

i) Through diesel generator:

Units 2029113 4785311
Unit per litre of diesel oil 2.78 3.00
Cost per unit (Rs.) 10.92 9.64
Total cost (Rs.) 22151084 46128393

ii) Through Steam Turbine/Generator
Units Nil Nil

Unit per litre of Fuel Oil Cost/Unit (Rs.)

2. Coal (specify quality and where used)
(Bio Briquettes/Ret Coke for steam
generation- Boiler):

Quantity (tonnes) 4103.86 Nil
Total cost (Rs.) 22319456
Average rate per tonne (Rs.) 5438.65

3. Furnace Oil:

Quantity (tonnes) 4536.92 7232.83
Total cost (Rs.) 127009100 181280160
Average rate per tonne (Rs.) 27994.58 25063.52

4. Others/internal generation:

HSD
Quantity (Kilo ltr) 369.64 265.22
Total cost (Rs.) 12125048 7663977
Average rate per Kilo ltr (Rs.) 32802.23 28897.11
LDO
Quantity (Kilo ltr) 357.86 221.05
Total cost (Rs.) 12362835 6388162
Average rate per Kilo ltr (Rs.) 34547.05 28898.65

B. Consumption per unit of production

The Company is engaged in production of variety of products, hence the
figures of consumption per unit ot production are not ascertainable.

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

Form of Disclosure of particulars with respect to Technology Absorption.

Research & Development:

1. Specific area in which R&D carried out by the Company:

The R&D focus remains on development of safe and efficacious products to
meet health and well-being needs of the consumers. In addition to new
technologies and formulation innovations, R&D has improved consumer value
of existing products through product cost reductions and packaging
innovations. The combined efforts ensured a strong product portfolio in all
categories including Ayurvedic, Health Care, Foods, Personal Care and Home
Care products. An important thrust within Ayurvedic area was expansion of
Agro-biotechnology to medicinal plants for quality enhancement of several
health care products. At the plant level R&D was also carried out for:

* Manufacturing Process of Malt Drink (Chyawan Junior)
* Herbal extraction process using a modified system
* Fast Hydration Gum for oil well drilling

2. Benefits derived as a result of the above R&D

a. Ayurvedic

The above R&D efforts have lead to the development of new and improved
products such as an Antacid Suspension, Honitus Lozenges (Honimint
flavour), Honitus Chewable Tablets for cough, and a new variant of Hajmola
tablets. These new products were qualified with clinical trials and
toxicity studies. Pudin Hara Active has been developed as an improved and
more effective version of Dabur Pudin Hara.

Besides the aforementioned products, the portfolio of Ayurvedic Classical
products has been enriched with Hajrool yahood Bhasama, Tapayadi lauh, and
Trayodasang guggulu for urinary disorders, anaemic conditions and
neurological disorders respectively.

All developments benefited from an integrated robust R&D process in raw
material specifications development, efficacy optimization and safety
assessment to ensure quality and performance of the products. As part of
continuous quality improvement, R&D has enabled effectively for commercial
scale farming of nine plant species that posed challenges in availability
and medicinal quality.

b. Foods:

Dabur Chyawan Junior that combined technologies from Ayurvedic and Food
competencies was launched to extend the reach of herbal nutrition to new
segments of consumers. The manufacturing cost of Chyawan Junior came down
by l/3rd & gross margins improved from 13% to 36%. Six fruit based
beverages for modern trade are ready for launch. The beverage set offers
Crisp Apple, Mango, Pulpy Orange, Orange Peach, Forest Fruit and Mixed
Berries. Trendy Apple based drinks for out of home consumption by young
adults are ready for market introduction in PET bottles.

R&D developed sensory attributes were deployed to ensure consumer
acceptance and taste improvement. Process development work for Honey was
improved for capacity enhancement and efficiency improvement at the
commercial level.

c. Home Care:

Home Care category R&D efforts resulted in an expansion of Dazzle range of
products to Floor Cleaner, Kitchen Cleaner and Silver Cleaner using two
novel technologies for dirt trapping and stain removal. In the toilet
cleaning segment, Sanifresh Extra Power was launched with higher active
content and new formulation for better performance and consumer value. The
mosquito repellent category added Advanced Odomos Naturals as a new
offering. A lower-cost Odomos product is in the last stage of readiness for
market. The newest introduction in air freshener category, Advanced Odonil
Gel, benefited from a new technology of superior perfume incorporation and
delivery.

d. Personal care:

The above R&D efforts lead to the development and launch of many new
products in categories of Oils, Hair, Skin & Oral Care e.g. -Vatika
enriched Almond Hair Oil, Amla Flower Magic Hair Oil, Vatika Antidandruff
Shampoo variants, Vatika Conditioners, Gulabari Cold Cream, Gulabari Spray,
Total Protect Shampoo, Babool Neem Toothpaste and Promise Red Gel. A
Calcium Fluoride Toothpaste was developed and launched in Nigeria. Many of
these product variants helped expand International Business.

3. Future plan of action:

a. Ayurvedic

Committed to the Health Care through Ayurvedic products, R&D is actively
developing safe and effective remedies for lifestyle ailments and other
niche areas like sugar-free products for weight conscious consumers. R&D
continues to develop new capabilities modern science offers to discover,
develop and optimize products for performance with the highest possible
safety profile. Ten new products are in the pipeline in several therapeutic
areas for next year.

b. Foods:

Delighting consumers with taste and value, while also providing nutrition,
energy and meal replacement continue to be the theme ot Real, Real Burrst
and Active brands. A substantial part of the R&D efforts is dedicated to
Chyawan Junior for taste enhancement and nourishment improvement through
herbal science. This cost sensitive category is also expected to benefit
from many cost savings projects and raw material alternatives development
in progress.

c. Home Care:

Much of the Home Care R&D focus will be on formulation in all categories to
offer consumers variants in forms that fit the lifestyle and amenities
available in a diverse population to increase penetration and consumption.
Hard surface cleaners will offer variants for new surfaces, and air care
category will expand into electrical diffusers and aerosols. Cost-effective
formulations will also be a major thrust of the R&D.

d. Personal Care:

Within Personal Care, both Hair and skin products will be expanded with
Ayurvedic ingredients as natural solution to beauty problems. New
methodologies and health science based techniques are in use to make the
new products more efficacious and safer for daily use. New technologies and
products are also in development for male grooming and Oral hygiene. R&D
formulators are ensuring regulatory compliance for timely introduction of
the Personal Care products in overseas business.

4. Expenditure on R&D (2008-09):

a) Capital Rs. 21.93 lacs
b) Recurring Rs. 209.04 lacs
c) Total Rs. 230.97 lacs

d) Total R&D expenditure as a
percentage of Total Turnover 0.095%

Technology Absorption, Adoption and Innovation:

1. Efforts, in brief, made towards technology absorption, adoption and
innovation:

Energy Conservation and Efficiency improvement:-

> Uniform heating in VTDs by hot water against earlier by steam.

> Using non-stick coating and formulation change Upgradation in
manufacturing

> Product improvement on sensory evaluation Waste Management

> Developed in house technology to convert the fruit waste in to organic
manure by using the Culture Lactobacilus burchi

> Fossil fuel replaced by Agro Waste Bio Briquettes in Steam Boiler Water
Management and Conservation

> Minimum use of water in process by preconcentration of herbal extracts
and reduction in concentration time.

> Improvement in water treatment plant through introduction of RO (Reverse
osmosis system) for DM water. Reutilization of Waste water from Pump seal
cooling and RO Reject water.

> Introduction of water efficient CIP system with Recycling of water in
fruit juice manufacturing.

Innovative packaging concept:

> Dabur Chywanprash

> Total shampoo pack - New Launch

> Almond Hair Oil Pack - New Launch

> Dandruff control shampoo- New Launch

> Amla Flower magic - New Launch

> Meswak Family Pack- Table Top Dispenser

> Odonil Gel - Round Pack

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

> 30% Reduction in Bulk wastage.

> Improved efficiencies and productivity.

> Resulted in cost saving of Rs.30 per kg for chyawan junior.

> Cleaner environment. No Flue gases through Waste burning.

> Saved through waste disposal and generated revenue through the sale of
organic manure.

> Improved hygiene conditions.

> Increased productivity.

> Improvement on water availability.

> Reduction in Water treatment cost.

> Minimising the use of water and hence better conservation of water.

> Decoration change with improved aesthetics.

> High lusture pigment based inks developed with Merck, Germany.

> Parallel development of alternate Indian ink source which helped to
generate the cost effective option.

> High value perception & added premiumness through use of Metallic Gold &
Red inks in the bottles & sachets.

> 2 component FT cap for ease of oil dispensing with pearlised master batch
for added premiumness.

> Unique & clutter Breaking shape in the shampoo category with excellent
sleeve design matching the shape of the bottle resulting in a very premium
looking pack.

> 3 layer metallised laminate structure for shampoo sachet for added
premiumness & high shelf impact.

> Unique & clutter Breaking shape in the Hair Oil Category with excellent
sleeve design matching the shape of the bottle resulting in a very premium
looking pack.

> Contemporary PP table top container for Meswak Toothpaste with three
toothbrush with new graphics to upgrade the brand significantly.

> With the Foil stamping on the front panel, gives distinctiveness from
competition.

3. Incase of imported technology (imported during the last 5 years reckoned
from the beginning of this financial year) following information may be
furnished:

a) Technology imported:

Odomos Coil manufacturing Technology from Malaysia

b) Year of import:

2006-07

c) Has technology been fully absorbed:

Yes

d) If not absorbed, areas where this has not taken place, reason therefore
and future plan of action:

N/A

Annexure '8'

Group for interse transfer of shares under clause 3(1) (e) of Securities &
Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997.

1. Mr Ashok Chand Burman
2. AC Burman HUF
3. Dr Anand Burman
4. Mrs Minnie Burman
5. Mr Aditya Burman
6. Mrs Shivani Burman
7. Ms Anisha Burman
8. Mr Vivek Chand Burman
9. Mrs Monica Burman
10. Mr Mohit Burman
11. Mr Gaurav Burman
12. Mrs Karima Burman
13. Ms Sujata Burman
14. V C Burman HUF
15. Mrs Asha Burman
16. Mr Amit Burman
17. Mrs Divya Burman
18. Master Adhiraj Burman
19. Ms Diya Burman
20. Mrs Gauri Tandon
21. Mr Sandeep Tandon
22. G C Burman HUF
23. Mr Pradip Burman
24. Mrs Meera Burman
25. Mr Chetan Burman
26. Mrs Pooja Burman
27. Master Kamran Burman
28. Ms Eishana Burman
29. Ms Devika Burman
30. Pradip Burman HUF
31. Mr Sidharth Burman
32. Mrs Indira Burman
33. Mr Saket Burman
34. Sidharth Burman (HUF)
35. A.B. Propmart Pvt. Ltd.
36. A.V.B. Finance Pvt. Ltd.
37. Acee Enterprises
38. Adbur Pvt. Ltd.
39. Amit Laboratories Pvt. Ltd.
40. Angel Softech Pvt. Ltd.
41. B R Bee Products Pvt. Ltd.
42. B.A. Holdings Pvt. Ltd.
43. Wrapster Foods Pvt. Ltd.
44. Burmans Finvest Pvt. Limited
45. Cavendish Hotels Private Limited
46. Chowdry Associates
47. Chunilal Medical Trust
48. Consortium Consumercare Pvt. Ltd.
49. Dabur Ayurvedic Specialities Ltd.
50. Dabur Foundation
51. Dabur GI Invest Corp
52. Dabur Invest Corp
53. Dabur Investment Corporation
54. M.B. Finmart Pvt. Limited
55. Dabur Pharmaceuticals Ltd.
56. Western Enterprises
57. Dr S.K. Burman Charitable Trust
58. Eastern Enterprises
59. Estate of Durga Prasad Makkar Trust
60. Excellent (India) Private Limited
61. Gyan Enterprises Private Limited
62. Interx Laboratories Private Limited
63. K.P.H. Dream Cricket Pvt. Ltd.
64. KBC India Private Limited
65. Lite Bite Foods Pvt. Ltd.
66. Malhotras Trading Company Pvt. Ltd.
67. Milky Investment & Trading Company
68. Moonlight Ranch Private Ltd.
69. Newage Capital Services Pvt. Ltd.
70. Prayag Commercial Private Limited
71. Elephant India Advisors Pvt. Ltd.
72. Puran Associates Private Limited
73. Ratna Commercial Enterprises Pvt. Ltd.
74. Sahiwal Inv. & Trading Company
75. Shree Investments Limited
76. Southern Enterprises
77. Sunshine India Pvt. Ltd.
78. Upvan Farms & Services Pvt. Ltd.
79. Vansh Holdings Pvt. Ltd.
80. Vertex Broadcasting Co. Pvt. Ltd.
81. VIC Enterprise Private Limited
82. Welltime Gold & Investments Pvt. Ltd.
83. Ayurvet Limited
84. Betteroption Estates Pvt. Ltd.
85. Burman Resorts Pvt. Ltd.
86. CNS Infotech (I) Pvt. Ltd.
87. Dabur Securities Pvt. Ltd.
88. Northern Herbal Farms Pvt. Ltd.
89. Windy Investments Pvt. Ltd.
90. Sanat Products Limited

Management Discussion and Analysis:

The economic well-being of any country and the spending power of its people
play an important role in defining the characteristics of its FMCG sector.
In India, for four consecutive years till 2008, it was a dream run for the
economy, with the Gross Domestic Product (GDP) recording an increase of
7.5%, 9.5%, 9.7% and 9% from fiscal 2004-05 to 2007-08. This prosperity
augured well for the people, with per capita income growing at 7.4% p.a.,
representing the fastest ever improvement in living standards over a four-
year period. The gross domestic savings rate too shot up from 29.8% to
37.7% during the period 2003-04 to 2007-08. The key growth drivers for this
period were agriculture, services, manufacturing, along with trade and
construction.

This phase of strong growth has been impacted in 2008-09 by one of the
worst economic crises witnessed in the history of the world. The banking
crisis which started in the US sub-prime property market triggered the
collapse of several large financial institutions, including banks, mortgage
and insurance companies. The crisis deepened further impacting other
sectors of the US economy and spreading beyond the boundaries of US as \
well. Global growth and output plummeted I leading to a sharp fall in asset
values across advanced and emerging economies, decrease in household wealth
and incomes and thereby putting downward pressure on consumer demand. These
problems were exacerbated by the volatile price of various commodities,
crude and mineral oil. While commodity and oil prices eased in the latter
part of the fiscal, the slowdown intensified with the US, Europe and Japan
sliding into recession.

Probably no economy of the world can emerge completely unscathed in such an
adverse global environment. India, although affected to a lesser extent,
has not been insulated from the global events. The credit and fiscal
markets in the country have tightened and asset markets have declined
sharply. The growth rate in its GDP has slowed down and the Central
Statistical Organization (CSO) of India has pegged GDP growth for Fiscal
2008-09 at 7.1 per cent, which would be the lowest in the last 5 years.

India's Industrial output has seen a major contraction with growth coming
down to 2.8% during April 2008-February 2009 as compared to 8.8% in the
corresponding period in the previous year. The year-on-year growth in bank
credit to the commercial sector slowed down to 16.9% during 2008-09,
compared with 203% in 2007-08. The year also saw a period of commodity-led
high inflationary environment, which was followed by an acute correction in
the commodity prices globally following the crash on the world financial
markets due to liquidity and demand concerns. Inflation in India measured
through Whole Sale Price Index (WPl) rose to as high as 12% during
September, 2008 before cooling oft to 0.26% by the end of March, 2009.

In these uncertain and bleak market conditions, your Company has posted one
of its strongest performances in the last 5 years, growing the Revenues by
183% and Net Profit by 17.5%. In fact, the growth in Net Profit excluding
the loss in the retail venture is 19.6%. The highlights of the Company's
performance in 2008-09 on a consolidated basis are:

* Consolidated Sales increased to Rs. 2834.1 crore in 2008-09 from
Rs.2396.3 crore in 2007-08, registering agrowth of 18.3%.

* Earnings before interest, depreciation, taxes and amortization (EBIDTA)
increased to Rs. 517.3 crore in 2008-09 from Rs. 443.3 crore in 2007-08,
registering growth of 16.7%

* Consolidated Profits After Tax (PAT) went up to Rs. 391.2 crore in 2008-
09 from Rs.332.9 crore, going up by 17.5%.

* Earnings per share (EPS) went up to Rs. 4.5 in 2008-09 from Rs. 3.8 in
2007-08.

The strength of the Company's business strategies and competence in
execution were demonstrated in its strong performance during 2008-09, when
it not only weathered the storm unleashed by the global economic meltdown
but successfully delivered consistent growth, quarter on quarter. The 18.3%
growth in Consolidated Sales was driven largely by increased volumes, which
accounted for almost three fourths of the total revenue growth. This has
been one of the highest growths recorded during the last 5 years with the
exception of 2005-06, the year in which growth was boosted by the Balsara
acquisition that added additional 10% to the topline. (See Chart A)

Chart A: Consolidated Sales and growth during last 5 years:

Year Sales Growth %
FY 05 14.7% 14.7%
FY 06 24.0% 24.0%
FY 07 18.3% 18.3%
FY 08 15.2% 15.2%

In spite of the highly uncertain market conditions and apprehensions of a
slowdown, the Company continued to drive its key strategic initiatives and
invest aggressively behind its brands and businesses during 2008-09.

Pursuing its strategy of inorganic growth through acquisitions that provide
significant cost and revenue synergies and enhance its market position, the
Company announced the acquisition of 72.15% of Fem Care Pharma Ltd (FCPL),
a leading player in the women's skin care products market, for Rs.203.7
crore in an all-cash deal. The process of regulatory approvals for the
acquisition, including an open offer for an additional 20% of the equity,
is underway and is likely to be completed in the first qarter of next
fiscal. The Company believes this acquisition will open new vistas of
growth in the fast-growing mainstream skin care segment and will accrue
significant cost and revenue synergies.

On the operational front, one of the major challenges faced during the year
was the significant inflationary environment fuelled by upward movement
of crude and agri-commodity-based raw materials. Due to this, inflation
touched a peak of 12-13% in September 2008 (See Chart B). Responding to
this challenge, the Company embarked on a number of proactive measures to
manage the cost pressures. An aggressive planning, forecasting and hedging
strategy on the one hand, and efficient management of cost on the other
helped curtail the impact of inflation. Calibrated price increases taken by
the Company also helped in protecting the operating margins and yet
maintain its strong volume-driven growth. While the Company increased the
prices of its products to pass on some of the increase in costs, these were
quite moderate as compared to the average price hikes in the industry. In
fact, the price increases taken by the Company were among the lowest in the
industry thereby ruling out the need for any roll back of prices post the
correction in input costs, which has been the case in some categories where
steep price increases of 15-25% were witnessed.

In addition to excellent material cost management, a series ot strategic
initiatives helped the Company deliver even in these difficult times.
Product innovation and superior packaging coupled with effective
communication initiatives and a host ot consumer activations enabled the
company drive double-digit growth across its categories. While many of
the Dabur offerings became more modern and contemporary with the
introduction of new packaging and look and feel, the portfolio remained
aligned to the Company's core strategy of offering brands and products on
the herbal and natural platform.

The national launch ot Dabur Chyawan Junior, a malt-based nutritional drink
incorporating the goodness of Chyawanprash, was one of the milestones in
this journey and also marked the Company's entry into the large and growing
Malted Food Drink (MFD) market with a unique and well-researched Product
offering. For the third year in a row, the Company's Vatika Shampoo brand
remained the fastest growing shampoo brand in the country with growth of
31.5%, significantly outperforming the category.

Dabur Amla Hair Oil, one of the largest brands in Dabur portfolio, posted
its best- ever growth ot 20.4% with its revenues crossing the Rs.300-crore
mark. The Company's international business reported strong growth of 40%
during the year increasing its contribution to 18.5% of total consolidated
sales from 15.7% in the previous year. Some of the other key achievements
during the year were:

* Successful extension of Gulabari brand to a range of skin care products
accelerating the brand's growth to over 40%.

* Dabur Red Tooth Paste, a unique toothpaste based on Ayurvedic knowledge,
became a Rs.100 crore brand within a period of 5 years of its launch.

* Consumer Health Division, Dabur's original and oldest business division
bounced back with strong 20% growth aided by aggressive OTC launches.

* The company entered the fast growing hard Surface Cleaners category with
the national launch of Dazzl floor and kitchen cleaners.

Rural India has been the key growth driver for the FMCG market during the
year.

Recognizing the huge growth opportunity residing in rural & small town
India, Dabur undertook specific initiatives to strengthen its rural
penetration. These included the roll-out of a rural-focused sales
initiative across eight key states that contribute to a majority of overall
rural sales, sprucing rural distribution reach, developing innovative
trade promotions, launching consumer activation programmes and introducing
special product packs for these markets.

These initiatives paid good dividends leading to a strong momentum in the
Company's rural markets. Lastly, one of the Company's biggest successes
during the year has been its operational excellence, which is evident in
its EBIDTA margins remaining at 18.3% vis-a-vis 18.5% in the previous
year. This has been a result of its unwavering focus on maximizing
efficiency in all its operations be it soureing, manufacturing, sales &
distribution, supply chain, advertising & media costs and other indirect
costs. With this, the company delivered a good growth in its Net Profit,
which increased by 17.5% for the consolidated business and by 19.6% after
excluding the losses on account of the newly launched retail venture.

Strategic Business Units:

The Company's business is structured in three strategically aligned
strategic business units:

* Consumer Care Division (CCD) which markets a wide range of products
across various consumer categories. This division accounted for 72.8% of
the Company's consolidated sales in 2008-09. (Refer Chart C)

* Consumer Health Division (CHD) which offers over-the-counter (OTC)
products, branded ethical and classical products based on the Ayurveda
platform. This Division accounted for 7.3% of Consolidated Sales in 2008-
09.

* International Business Division (IBD) which has made rapid strides and
become a key growth driver for the Company, With its business spread over
Middle East, North Africa, West Africa and South Asia, the division
contributed to 18.5% of the Consolidated Sales in 2008-09.

Dabur's product portfolio is spread over a good mix of less penetrated and
high growth categories. The Company's positioning on the 'health and
wellness' platform, backed by its ANH (Ayurvedic / Natural / Herbal)
platforms provides it a unique distinctiveness and consumer appeal. This,
combined with the Company's ability to create new categories and sub-
categories, make it uniquely positioned to capture lifestyle and
demographic changes-led growth in the FMCG space.

Chart C : Division-wise Consolidated Sales:

CCD 72.8%
CHD 7.3%
IBD 18.5%
Others 1.4%

Consumer Care Division (CCD):

Extension of existing brands to more subcategories and making more choice
available to consumers, coupled with increased focus on rural penetration,
was the key platform on which CCD leveraged its growth during 2008-09. The
division reported growth of 13.8%, supported by-strong performance across
various segments. The CCD business is divided into four key portfolios:
healthcare, personal care, home care and foods. These cater to a number of
consumer market segments including hair care, oral care, baby and skin
care, health supplements, digestives, home care and foods. Share of these
product segments in CCD sales is presented in Chart D.

Chart D : Category-wise share of CCD Sales:



Hair Care 13.3%
Oral Care 18.4%
HealtH Supplements 18.8%
Digestives & Candies 7.3%
Baby Oils & Skin Care 5.7%
Home Care 5.7%
Foods 31.3%

Health Care:

With a share of 44%, the Health Care segment continued to be the largest
contributor to CCD's sales during the fiscal, reporting impressive growth
across all its three categories: Health Supplements, Oral Care and
Digestives.

Health Supplements:

This category reported an 11.3% growth during 2008-09.

Dabur Chyawanprash, which is the flagship brand in this category, recorded
good gains in market share which went up from 62.3% in 2007-08 to 64.1% in
2008-09 (volume-share as per A C Nielsen). This was supported by a number
of initiatives taken to enhance the brand image and increase consumer
awareness. The key among them was enlisting a new brand ambassador, youth
icon M.S. Dhoni in addition to Amitabh Bachhan, coupled with the unveiling
of a new, modern and attractive packaging format that enhanced the
product appeal while retaining its traditional legacy.

Chyawan Junior, a malted food drink format (MFD) with the benefits of
immunity, was rolled out in the North, East and West regions. The product
performed well, gaining 1% share of the MFD segment in these key markets
in just three months of launch. This breakthrough product, which marked
Dabur's entry into the large Rs.1900 crore MFD market, will be one of the
avenues for bringing in new and younger consumers into the Chyawanprash
fold and expanding its franchise.

The sugar-free variant Dabur Chyawanprakash also performed well during the
year as consumer acceptance increased for this product. Dabur Honey, the
largest selling brand of honey in the country, continued its steady
performance on the back of its compelling anti-sugar, high nutrition
proposition. For the first time in the history of advertising the Amitabh
Bachchan-MS Dhoni combine was leveraged to take the Dabur Honey brand
campaign to a new level. The duo takes forward Dabur's message to 'Drop
Sugar & Switch to Dabur Honey' for a healthier life. To drive consumption
among kids, Dabur Honey tied up with Disney's popular character Winnie The
Pooh', which now features on the new trendy Dabur Honey Eazee Squeezy pack.
The Company also came out with a coffee table book on honey-based recipes
for everyday cooking to increase awareness about the product.

Taking its celebrity-endorsement strategy ahead, the Company signed a new
brand ambassador, cricketer Zaheer Khan for its Dabur Glucose campaign.
Epitomizing and exemplifying the ' Total Energy' (energy for the body and
for the mind) theme, Zaheer Khan is expected to add pace to the Company's
flagship energy drink marketing campaign. Introduction of reusable are and
the launch of two variants (Orange and Lemon) continued to ensure steady
growth for Dabur Glucose during the year and helped it maintain its market
share.

Oral Care:

This category reported a growth of 4.8% during the year with toothpastes
segment growing by 11.3%. After three quarters of sluggish growth during
fiscal 2008-09, resulting mainly from cost inflation leading to higher
product prices of select SKUs, Babool brand bounced back with a double
digit growth during the fourth quarter. The Company further enhanced the
brand offerings across various value price points, The Neem variant of
Babool, which was launched during 2008-09, gained share in the neem
toothpaste category.

A star performer in the toothpaste portfolio, Dabur Red Toothpaste reported
21.4% growth during the fiscal on the strength of effective communication
underlining its superior herbal formulation which is based on Ayurveda and
has been scientifically validated. With targeted advertising and extensive
school activation programmes, the brand's market share went up from 3.0% in
2007-08 to 3.3% during 2008-09 (source: A/C Neilsen Retail Audit Report).
The fact that \ the brand has touched the Rs. 100 crore mark within 5
years oflaunch further reinforces the product excellence and popularity.

An important development during the year was the re-launch of Meswak. On
the back of new packaging and communication that focused on the wonderful
properties of the herb that forms the core of the toothpaste, Meswak
recorded an impressive 17.2% growth in sales.

Red Toothpowder declined marginally albeit maintaining its market share.
The toothpowder category reported lower growth as usage patterns are
changing and consumers are opting tor toothpastes rather than toothpowders.
Dabur's oral care portfolio offers a variety of choices to the consumers to
upgrade to toothpastes and therefore is largely able to retain the
consumers in some or other oral care format.

Digestives:

The Digestives category reported growth of 11.8%. The three key offerings
in this category are Hajmola tablets - focusing on the ' tasty digestives'
theme; Hingoli - on gas relief; and Hajmola candy -on the tangy and spicy
taste. Growth in this category was supported by Hajmola tablets, which grew
by 13.7% and Hajmola candy, which reported a robust 17.9% increase for the
fiscal 2008-09.

The company launched a new campaign with the theme ' Hajmola kare khana
complete', which established Hajmola's post-meal connect and boosted growth
for the brand. Alongside, a consumer contact campaign to promote Hajmola
among dabbawalas, dhabas, hotels, restaurant chains, food courts etc.
emerged as an effective strategy to take the post-meal association further
& boost sales. As part of this initiative, the Company adopted 140 dhabas
on the five highways connected to Delhi and branded these dhabas, giving
them a new look and feel. Customers at these dhabas were served Hajmola as
the post-meal digestive. Dabur is now preparing to extend this initiative
to cover over 1000 dhabas across the country. Similar branding and sampling
initiatives were also undertaken with the dabbawallahs (tiffin carriers) in
Mumbai and branded food retail chains in Delhi-NCR. The Company is now
introducing a 50-paise sachet containing two Hajmola tablets, targeted
mainly at institutional consumers. The introduction of new variants like
Pudina and Nimbu continued to add excitement around the brand , and these
flavours have become hugely popular.

A host of advertising and promotion initiatives pushed up sales of Hajmola
Candy during the year. The ' audio candy' advertisement campaign was
particularly beneficial in promoting Hajmola Candy, especially among
children. Innovative marketing and tie-ups with kids' TV channels helped
boost the campaign further. A key initiative undertaken during the year
was school activation, which covered almost seven lac students in schools
across the country. Another key initiative was the introduction of Mega
jars that enabled Hajmola Candy to make its way forcefully back into large
retail outlets where it was previously being overtaken by local and other
brands.

Personal Care:

Comprising Hair Care and Baby & Skin Care, this portfolio is the second
largest contributor to CCD sales, with a 37 % share. During 2008-09, this
portfolio reported a strong 21.5% growth, of which significant growth came
out of higher volumes a considerable achievement given the intense and
challenging inflationary scenario in terms of the input costs that impacted
the FMCG industry during the year. Led by impressive growth across brands,
the Personal Care portfolio emerged as the fastest growing segment in CCD
duringtheyear.

Hair Care:

Hair tare segment recorded impressive growth of 22.8% during the fiscal
2008-09.

The star performer in the hair oil segment was the flagship brand Dabur
Amla hair oil, which reported a growth of 20.4%, while i Vatika hair oil
turned around from lackluster performance last year to report double-digit
growth. Anmol coconut oil reported strong growth during this period on
account of its focus on value segment in select geographies.

The strong growth in Amla Hair Oil was led by the brand's focus on
conversion of customers from loose mustard oil and a nu mber of custo
mer activation programmes were launched to bring more consumers into its
fold and enhance usage. The brand crossed Rs.300 crore in turnover and
ranks as one of the largest and fastest growing brands in the hair oil
tategory. The year also saw the introduction of Dabur Amla Hair Oil in a Re
1 sachet, a move that is expected to add further momentum to the brand's
growth.

The growth ofVatika Hair Oil was d riven by a total revamp, encompassing
qualitative change in the product, new packaging and a new communication
strategy, which saw i.5 lakh households being directly contacted on the new
platform of ' scientifically proven to be better than normal coconut oil.'
The growth in the oils segment happened despite a hike in prices, primarily
on account of a stronger leverage of the distribution reach and an
excellent price proposition, combined with a geographically segmented
strategy focusing on East and North India, where the market was previously
dominated by smaller discounted brands.

Light hair oil market represents an exciting growth opportunity with
category size estimated at around Rs. 500 crore. The Company staged an
entry into this sub category with the launch of two variants Vatika
Enriched Almond Hair Oil and Dabur Amla Flower Magic Flair Oil. These two
variants are being test marketed in select markets.

Vatika range of shampoos emerged as the fastest growing shampoo brand in
India for the third consecutive year reporting 31.5% growth. Its variants,
namely Henna Cream, Root Strengthening and Black Shine shampoos, performed
exceptionally well j adding significantly to the overall growth. \ Vatika
now has a market share of 6.8% (volume share as per A C Neilsen Audit
Report) as compared to 5.7% for the previous fiscal 2007-08.

With the anti-dandruff shampoos constituting more than one-third of the
total shampoo market in India, the Company sees great growth potential in
this category. As a step in this direction, the j Company created a new
sub-brand Vatika Dandruff control under which three anti dandruff shampoo
variants are being launched.

In order to continue the momentum and take the new initiatives forward,
the Company has signed Preity Zinta as the new brand ambassador. This is
expected to enhance the brands connect and saliency among the target
consumer segment.

Dabur marked its entry into the health shampoo segment by test marketing a
new product - Dabur Total Protect Health Shampoo. This product is
formulated with Ayurvedic herbs and provides a natural and healthy
alternative to consumers who are wary of using chemicals. The results of
the test market will determine the future strategy for this product.

Baby and Skin Care:

The Skin Care category saw impressive growth, with Gulabari brand crossing
the Rs.40 crore turnover mark, reporting a growth of 40.6%) during the
year.

Culabari's growth was driven by increasing sales of Gulabari rose water and
its extension into mainstream skin care with the introduction of new
products like Dabur Gulabari Moisturizing Cold Cream and Dabur Gulabari
Moisturizing Lotion. The introduction of Dabur Gulabari Premium Rose Touch
Face Freshener Spray - a breakthrough product in the Indian skin care
market - also contributed to the growth ofthe Gulabari franchise.

Skin care is a focus category tor Dabur, and moving forward, the Company
plans to widen its offerings in this market while continuing to build on
its Ayurvedic domain knowledge. The company is planning to launch a range
of premium Ayurvedic skin care products in the coming fiscal under a new
brand name, further strengthening its presence in this very attractive &
high growth market.

These initiatives coupled with the acquired Fem portfolio would give the
Company a sizeable presence in the skin care market in the coming years.

Dabur Lai Tail which is a key player in the baby massage oil segment
reported strong growth of 19.6% backed by various consumer promotion
activities. The product's efficacy was also proven through an independent
clinical trial that rated Dabur Lai Tail as the most effective massage oil
for height and weight growth for infants. The study noted that Dabur Lai
Tail offers twice faster rate of height and weight growth among infants as
compared to no massage at all.

Some smaller brands in the baby care portfolio such as Dabur Janam Ghunti
and Gripe Water were transferred to Consumer Health Division (CHD) for
enabling better focus and channel synergies.

Home Care:

Dabur is a significant player in the evolving and under penetrated Home
Care category in India. Home Care portfolio, which came into the Dabur fold
with the acquisition of Balsara in 2005, has a share of 5.7% of CCD
revenues. The portfolio registered a growth of9.7% during 2008-09.

The portfolio comprises of 3 categories:

Air Care, Mosquito Repellants and Surface Cleaners.

In the Air Care category, the Company provides a range of products under
the Odonil brand. The Company launched Ail-Freshener Gels in this segment
during the year. The brand, though faced with increasing competition from
other players as well as private labels, continues to build its equity and
strengthen loyalty with its consumers.

In the personal applicator Mosquito Repellant Cream category, Dabur's
Odomos is a market leader with 84% share. As part of its efforts to offer
consumers a wider choice, the Company has, during the course ofthe year,
expanded the Odomos range with the introduction of a convenient spray
format and a new value added format, christened Odomos Naturals. Odomos
Naturals comes with the goodness of citronella (a natural mosquito
repellent) and aloe vera. Odomos is now certified by Indian Medical
Association (IMA) as safe for use on skin and being highly effective
against disease causing mosquitoes.

The year also saw Dabur enter the floor and kitchen cleaners market with
the national launch of Dazzl. Two new products - a disinfectant Floor
Cleaner and an antibacterial Kitchen Cleaner-were introduced under the
Dazzl brand. Popular television bahu Smriti Irani has been roped in as the
celebrity endorser for the brand.

Dazzl has already garnered a 5% share of the non-phenyl, branded floor &
kitchen cleaner market. Dazzl Floor Cleaners are available in Floral, Lemon
and Pine fragrances.

Dabur operates in another segment of the surface cleaning market with
Sanifresh, a specialized toilet cleaner. The focus was on winning the
consumer value equation through selective advertising, improved product,
and providing a better deal to the consumer. A new brand Ambassador,
popular TV star, Saakshi Tanwar was signed on for the brand. Scale
formation in toilets due to hard water in many parts of India is a big-
problem. Towards solving this problem, Sanifresh Extra Power was soft-
launched during the year as the most powerful toilet cleaner. All these
initiatives resulted in more than 30% growth for this brand. Our third
brand in the surface cleaning category, Odopic dish cleaner, also
registered double digit growths.

Foods:

Foods division, which was merged with CCD during 2008-09 is now fully
integrated with the consumer care division and contributes 13.3% to the CCD
sales, This segment comprises mainly fruit beverages under the Real & Activ
brands and culinary additives under the Hommade brand. The foods business
recorded a growth of 14.4% for the year, riding on the plank of health &
wellness and established superiority.

The growth was driven by a 14.9% increase in the Real and Activ range of
fruit juices, while the Hommade brand also recorded a strong growth of
19.6%.

The category achieved this growth despite a month-long shut down at its
plant in Nepal, which led to supply disruptions and hence some loss of
sales. However, the Company has taken appropriate steps to build a backup
plan in case such events re-occur in the future and has built additional
manufacturing capacities in India.

On the marketing front, the Company successfully aligned its Activ range of
fruit juices to its health & wellness' strategy through a new ' No Sugar'
campaign. A new Weekend' campaign to promote various flavours of Real was
launched during the year which was quite effective in increasing awareness
about its range and variety. In an effort to further sharpen the brand
positioning of Real fruit juice range, the company has launched a
campaign focusing on ' fruit power' and what it means for consumers,
especially children. The Company also launched a new flavour Apple
Nectar' under Real to leverage the growing preference for this variant.

The Dabur culinary range offered under the Hommade brand is performing
quite well and the Company is now looking at expanding the range and
getting it listed on more and more counters. With increasing consumption of
Ready to Cook products and ingredients, the Company sees good potential in
this category going forward.

International Business Division:

The division, which has been transformed from being a small operation into
a multi-location business spreading through the Middle East, North Africa,
West Africa and South Asia, grew by 39.9% during the year and emerged as
the fastest growing division of the Company.

The division's performance was supported by strong volume-led growth as
well as price increases undertaken to offset the impact of high inflation
on input costs during the year.

This acceleration in growth of IBO led to its contribution to Dabur's
consolidated revenue going up to 18.5% for FY09 from 15.7% a year ago.

The key categories accelerating the division's growth are Hair
Creams, Toothpastes, Hair Oils and Conditioners. is pertinent to mention
that the brand architecture in the Company's overseas markets remains
similar to that in India, though the products sold under these brands are
customized and modified to the requirements of these markets.

A significant contributor to the division's growth during 2008-09 was
geographical expansion, resulting from opening up of fresh markets like
Lebanon, Turkey, Algeria, Morocco and Mauritania that offer new avenues for
growth.

The division's topline growth was boosted by robust performances in key
geographies like (ICC. Egypt. Nigeria and Bangladesh. (ICC, which is one of
the Company's key markets, grew by 46% during the year as a result of
excellent offtakes witnessed in the Vatika Hair Oil Iranchise, and also
high growth in Vatika Naturals styling hair cream.

Egypt, which has emerged as another key geography, doubled itself with a
growth of 99% during the fiscal with strong performances from Vatika
Hair C'ream and Vatika Oli velite Hair Oil.

Nigeria, which is predominantly an Oral Care market for ]HI'), delivered a
strong 36% growth tor the year. Brands that delivered strong performances
during the year in this market were Dahur Herbal Toothpaste and Dahur
Herbal (ie. Asian Consumer Care, Bangladesh, performed exceedingly well,
reporting a growth of 56%) during the fiscal. The growth was led by
increased distribution \penetration and focused brand approach.

Nepal which is one of the key markets in the Indian subcontinent,
recorded a steady growth of 11 %. The Pakistan operations were, however,
impacted by the political uncertainty prevailing in the country. The year
saw the division continuing to pursue an aggressive new product
development strategy, marked by a slew of product launches. The Amla
franchise, which has been strong in the Hair Oil domain, was extended to
the Hair Cream Category with the launch of Dabur Amla Hair Cream. The
division also launched several attractive shampoo variants and hair
conditioners.

The Company is now looking at expanding to other parts of Africa, taking
Fast Africa in the first phase, followed by West and South. The Company's
vision is to become one of the biggest FMCG companies in North Africa and
the Middle East region.

Consumer Health Division (CHD):

The Consumer Health Division, comprising a range of healthcare products
that provide Ayurveda-based solutions for health related issues, continued
to be a key focus area for the Company during the year. With both the OTC
(Over the Counter) and Classical product categories continuing to drive the
Company's CHD business, the focus on consolidation of the business that was
initiated during the previous year con tinned.

As with other Ayurvedic products of the Company, this division also saw
extensive visibility campaigns undertaken across key-markets on the plank
of ' Asar Dikhta 1 lai'. The Company's campaign to promote Ayurveda as a
healthy and natural way to good health and good life, as validated by
scientific principles, gave dividends and the year 2008-09 turned out to he
a strong growth year lor this division.

During the year under review. CHD registered 18.9% growth, with both, the
hthical & OTC portfolio doing well across the range driven by packaging
upgradation, mass media activities and a whole range of on ground consumer
activations including Dahur Ayurvedic Health Camps.

With Juhi Chaw la as its brand ambassador, the Women's Health portfolio
comprising Dashmularishta and Ashokarishta did well growing by 13.2%' and
14.2% respectively. The newly launched Dabur Active Blood

Purifier also gained market share in this segment.

Other new products launched during the year - Dabur Super Thanda Tail and
Dabur Active Antacid evoked a good market response. Dabur Badam Tail,
launched during the previous year, recorded 20.6% growth, with sales
touching about Rs. 6 crore in the second year of its launch.

The Honitus franchise in this segment grew 13.6% during 2008-09 with new
variants Mulethi Power and Honey Mint, adding to the brand portfolio.

Some of the brands from digestives & baby care portfolio in CCD have been
shitted to CUD towards the latter part of the year to provide them with
better distribution alignment and better brand focus. Focused marketing
and distribution eftorts helped boost growth for the transferred brands -
Hingoli,Janam Ghunti, Pudinhara, Sat Isab Gol, Gripe Water - which almost
uniformly recorded a 20% growth during the year and continue to be
systematically integrated into the CHD portfolio.

Going ahead, the Company plans to further add to the OTC portfolio
through introduction of new Ayurvedic products in modern, ready-to-use
formats and re-packaging and re-launch of existing products, coupled with
extensive above- the-line marketing activities.

Sales & Distribution:

Continued focus on improving penetration, increasing product availability
and a realignment of the distribution framework were the key highlights of
the Company's sales and distribution strategy during 2008-09.

Significant investments to strengthen market presence, through activation
programmes targeted at key urban channels and rural markets, was a major
initiative aimed at strengthening the sales and distribution system, that
today covers 25 lakh retail outlets across the country.

Further, the integration of Dabur Foods with Consumer Care Division gave
the Foods portfolio access to platforms of strategic channel activation
programmes created by CCD, besides providing scale and cost benefits to
enable greater reach and efficiency tor the Foods portfolio.

Going forward, the Company is revamping its sales structure by dividing its
toot soldiers into three locus groups of Home & Personal Care, Healthcare
and Foods. This division is being effected in 100 key markets, which have
been identified as high- growth business markets. This restructuring is
aimed at creating focus groups within the Company's sales force and the
sales personnel with the Company's stockist, to enable them to sell
products more efficiently and effectively. Christened DARE 2, this
initiative is expected to further empower the Dabur sales force and create
greater bandwidth to beat any potential slowdown in the market.

Wholesale trade plays a crucial role in ensuring that Dabur brands reach
the most in accessible term rain in a highly cost-effective manner. During
the year, the activation programme for wholesale trade was extended to
350 towns covering almost 30% of the CCD business during the year,
resulting in increased brand availability across markets.

Special market activation initiatives, including the Dabur Parivaar'
programme was rolled out for the Grocery Trade during the year. Under this
scheme, the Company adopted and nurtured top 10,000 stores across the
country, providing a strong platform for building brand awareness and
consumer activation. This initiative sought to build long-term
relationships with grocery stores by offering them special discounts and
rewards, as well as merchandizing solutions to strengthen shell presence
and create customized displays.

In order to combat the widening turbulence in the modern retail market and
sustain growth in this scenario, the Company has developed a comprehensive
strategy focused on share gains in key categories, The thrust was on the
creation of a distinct identity for Dabur brands - core being its\herbal
expertise - that is relevant for shoppers. Building an effective servicing
and activation system to address complexities ot multiple formats and
supply chain configurations were critical elements of this approach.

The Company also widened its presence in the rural markets - which have
been resilient to the slowdown - to further build on its already strong
small town and rural franchise presence. The Company rolled out a special
rural focused sales initiative across eight key states - UP, Punjab, MP,
Chhattisgarh, Bihar, West Bengal, Maharashtra and Gujarat - that contribute
to approximately 70% of the rural potential. Rural distribution reach was
stepped up in these states by penetrating into villages with population
under 3,000. Under this initiative, Held resources were significantly
increased in the high potential districts of these states to increase
contact frequencies and improve coverage by over 30%. The rural trade
opportunity was also leveraged through Dabur Apiunio, I.akslmu l.aao
programme for the sub stockist network in these focus states.

Besides, a dedicated sales training initiative - ASTRA - was also launched
in order to enhance the quality of field execution. The programme is aimed
at managing channel complexities with respect to sales and distribution and
is undertaken through 'train the trainer' programme using 75 professional
actors to train more than 2,000 channel partners across the country. The
Astra training consultancy module has been created in five vernacular
Indian languages - Bengali, Tamil, Telugu, Malayalam and Kannada.

During the year, the Company also significantly enhanced the foot print of
its transaction software 'Drishti' for stockists, integrating the real
time market information into its IT network. The Drishti foot print now
covers almost 70% of business and is helping the Company improve field
efficiencies and quality of decision-making in sales, while also helping
it reduce costs.

Development of a comprehensive IT package 'MITR', integrating all aspects
of the modern trade channel, has also been rolled out to enable tracking of
service levels and prioritizing investments. Technologies like SMS
enterprise solutions have been harnessed to provide field teams with real
time information on sales updates and stock status, thereby improving
efficiencies.

The Retail Business - new:

In March 2008, Dabur had launched a chain of health and beauty retail
stores under the neww brand. During the year, the Company opened 9 stores
in the Delhi NCR region and South India. However, the organized retail
industry went through a severe crunch with slowdown in offtake and
financial pressures leading to closure of a few players. Also, the
continued churn in retail has seen many players put their expansion plans
on hold. This has brought the sector to a standstill with new store
rollouts coming to a halt and most retail chains looking at rationalization
of stores to improve business viability. Dabur's retail venture has also
been impacted resulting in lower than expected sales velocity. Moreover,
due to high prevailing rental costs it was decided to postpone some of the
store openings till a more opportune time. Although the initial experience
indicates that specialized health and beauty retailing has good long-term
potential and will gain currency with revival of this sector, the Company
has slowed down the pace of expansion keeping in view the turmoil in the
industry. In addition, the Company is fine tuning filestore format,
location strategy and renegotiating the rental costs in line with the
decline in real estate prices. All this is expected to lead to a quicker
break even at store level and reduce the loss incurred by the business.

Operations:

Dabur's businesses have a strong back-end support in Procurement,
Manufacturing, Research & Development and Human Resource management, all
of which witnessed several key initiatives to boost performance during the
year.

Procurement:

Controlling costs in the prevailing inflationary scenario was one of
the biggest challenges faced by the Company during the year under review.
The Company effectively tackled this challenge on the strength of its
strategic futuristic planning, use of calibrated hedging mechanisms and re-
sourcing initiatives.

One of the key factors that enabled the Company to keep costs under control
was the short and medium-term planning programme that ensured regular
forecasts from its team of strategic planners within each division and
department. Three-month forecasts on the industry scenario were provided by
these planners to the brand teams for taking effective measures to combat
inflation.

Concurrently, the creation of a Dabur Inflation Basket focusing on
the commodities most relevant to the Company's operations helped maintain
Mtd manage costs effectively. The Dabur Inflation Basket, which was linked
to WPI, helped the Company come out with actual Inflation figures that
enabled it to plan ahead in a more focused manner.

Participation in the Futures lixchange also helped prepare the Company
adequately against inflationary trends. Apart from incorporating more
commodities, the Company enhanced its activity on this front by
participating on international exchanges for procurement required in its
International Business Division.

Manufacturing:

Domestic:-

Dabur has 11 production facilities in India, out of which two main units
are at Baddi (Himachal Pradesh) and Pantnagar (Uttaranchal); and seven
factories which are located at Sahibabad (Uttar Pradesh), Jammu, Silvassa,
Alwar, Katni, Narendrapur and Pithampur. The Hoods business is serviced by
manufacturing facilities at Newai; (Rajasthan) and Siliguri (West Bengal).

Capacity expansion & facility tip-gradation: During the year, the Company
scaled up its operations in its Pantnagar facility and expanded sourcing
in both Pantnagar and Baddi. It increased capacity considerably for
production of Oral Care, Shampoo, Hair Oils, Creams and Lotions and Health
Supplements. The Company is i also in the process of expanding its
Clucose facilities at Uttaranchal.

In the fruit juice segment, the Newai (Rajasthan) facility, which was
an acquired unit, has witnessed doubling of volumes through increase in
capacity of the sterilizer.

International Footprint:

Since water in the region was scarce, the Company went in tor extensive
conservation and recycling of water and also got sanction from the state
government tor drawing more water. De-bottlenecking of some of the
manufacturing systems also contributed in a big way to capacity
enhancements at this facility.

Environment protection: A key thrust area at the manufacturing facilities
was environment protection, with structured initiatives undertaken to
control carbon emissions. The Company, after extensive screening of several
agencies, has tied up with a reputed consultant to stud) carbon greenhouse
gas emissions at three of its sites, namely Pantnagar, Baddi and Newai.

Efficiency enhancement: The Company continued to improve productivity at
all its manufacturing locations through various cost reduction Mid energy
saving initiatives. In Baddi, the Company initiated Total Productivity
Management (TPM) principles through an external consultant, moving towards
increased automation and multi-operator concept.

A number of cost reduction and process improvement projects were undertaken
to reduce costs in manufacturing of a number ol products. The Company also
implemented alternate fuel technologies for steam generation at its units
at Sahibabad and Katni.

In the future, the Company plans to set up new manufacturing facilities at
Baddi, Himachal Pradesh to cater to its future growth requirements in
addition to expanding its facilities at other locations.

International Operations:

During 2008-09, the Company expanded its capacities in IBD with the
commencement of operationsat Ras ahkhaimah in the CAR, enabling it to re
organize its operations in the Middle Last. The timely commissioning of
this plant helped support the Company's strong growth in IBO. During the
year, the Company also started its Nigeria operations by relurbishingan
acquired unit for the oral care segment.

Hgypt is an important destination for the Company with strong growth coming
from this market. The manufacturing facilities in I gypt have been expanded
and enhanced to meet the future growth requirements. Further, to service
the growing Hgypt market, the Company plans to set up another greentield
facility by 2010-11. The Hgypt facilities, catering to North Africa and
parts of Hast and Central Africa (Comesa region), will locus on manufacture
of Hair Care products, along with some Oral Care products.

Nepal turned out to be a significant contributor to the Company's growth
despite the political turmoil in the country. The focus in Nepal was on
getting more out of the existing assets, which was managed through improved
efficiencies and de-bottlcnccking. Despite a niontli-long strike, political
uncertainty and severe power cuts, which resulted in both energy and labour
costs going up significantly, the Company managed to increase production
volumes in Nepal.

R&D and Innovation:

At Dabur, R&D lies at the heart of everything the Company does. From
strengthening the Company's presence in the herbal niche, to innovating on
newer and differentiated herbal and natural products spanning newer
categories; from making a 3000-year old science contemporary to suit the
needs and aspirations of today's modern and urban consumers through path-
breaking packaging and product proposition, to scientifically validating
the widespread benefits of science for increasing acceptance of the
Company's products, R&D's role is axiomatic.

In terms of product and packaging innovations, the Company
successfully developed new variants in Hajmola, a new range of surface
cleaners, new variants in shampoo, a range of natural conditioners and
light hair oils, new packaging for Meswak toothpaste, Amla Hair Oil in
sachet format, new OTC products such as Harde Goli, Honitus chewable
tablets and Antacid.

Up-gradation of quality was another focus area and the Company's thrust was
on measuring and monitoring quality end-to-end - from suppliers to
marketing. Several products were repackaged and upgraded to better designs
and formats during the year as part of this exercise. These included Odonil
Cel, Chywan Junior pack, Meswak, Gulabari, fight Hair oil (Amla Flower
Magic & Vatika Fnriched Almond Hair Oil),Re hairoil sachets.

Human Resources:

People always have been, and shall continue to be, central to Dabur's
growth store. Always at the forefront in terms of employee engagement and
HR initiatives, the Company is continually investing in the development of
its human resources through a series of employee-friendly measures aimed at
talent acquisition, development, motivation and retention. Dabur's new
rewards programme for employees - Applause' - seeks to reward employees
in various categories like the Rising Star (best newcomer), Honours Club
(employee of the year), Trailblazer (employee of the year) and Eureka (for
the best idea generation).

Besides, spot awards are also given to recognize employees at any time
for demonstration of actions, which are innovative, save cost, promote
team spirit, institute new initiatives and raise standards of performance.
The rewards, presented at the annual L'tsav function, go beyond cash and
include goodies like LCD TV, Period, music system as well as Black
Berry handsets. Employees are also given a citation and other rewards.

With this system ol employee rewards, the Company's game plan is to
increase employee engagement levels and create more employee touch points
and opportunities to recognize talent, both on a formal and informal basis.

The company had also rolled out the 'Astra' programme, as detailed earlier.
Besides, a new programme was launched in March 2009 to address the business
complexities arising out of the increasing number of products. SKUs by
bringing a category focus into the organization, for which about 100
personnel were recruited.

A key MR initiative at Dabur is internal communication. Apart from
Intranet, each manufacturing facility and regional office has its own
newsletter, with a local language component. Also, annual scholarships are
given to children of employees under the Dabur protsahan programme as a
part of which 197 children were awarded scholarships.

In its overseas offices, the Company achieved a significant milestone in
the staffing of its Ras-L Khaimah factory, which was designed tor two
shifts but had to be expanded to include three shifts soon after operations
started.

The Company believes in total transparency and has put in place a number of
formal and informal processes to get employee feedback, along with a system
of holding a bi-annual survey.

A vibrant culture, average employee age of 31-32 years, direct recruitment
from some of the top B-schools in the country under the Young Managers'
Development Program and Conduct of Competency Development Centres for
elevation are some of the other important MR initiatives of the Company. As
of 31 March 2009, the company employs 4,222 people in various parts of its
business.

Industrial Relations:

The Company has an excellent track record of industrial relations, which,
by and large, remained good during the year. Though events outside the
Company's control impacted industrial relations in the Nepal facility, this
did not affect the performance, with the unit, in fact, delivering good
growth and output.

Corporate Social Responsibility:

As a responsible corporate citizen, the Company has put in place several
initiatives to fulfill its social responsibility and contribute actively to
the growth of the society.'these have been covered in detail in a
separate section of this report.

Financial Review (on a consolidated basis):

The Company reported healthy growth and profitability during 2008-09. Table
I below provides the abridged profit and loss account for the Company on a
consolidated basis.

Table 1: DIL's Abridged Profit and Loss Statement, on a consolidated
basis:

(Rs.crore)
2008-09 2007-08 Changes

Sales 2834.1 2396.3 18.3%
Other Operating Income 25.6 24.0 6.8%
EBIDTA 517.3 443.3 16.7%
Depreciation 49.2 42.1 16.9%
Interest 23.2 16.8 38.1%
PBT 444.9 384.4 15.7%
PAT (afterminority interest) 391.2 332.9 17.8%

With the strategic and operational initiatives outlined hereinabove, the
Company increased its Consolidated Sales by 18.3% to Rs. 2834.1 crore in
2008-09 from Rs. 2396.3 crore in 2007-08.

While the environment remained quite inflationary for most part of the
year, the Company was able to mitigate the impact of inflation and maintain
its EBIOT'A margin at 18.3% in 2008-09 as compared to 18.5% in 2007-08 (See
Table 2). In fact the KBIDTA margin for the core 'MCG business after
excluding the loss of the retail venture touched 18.9%(SeeTable3).

Tabic 2: Key financial ratios of DIL, on a consolidated basis:

(Rs.crore)
2008-2009 2007-08

EBIDTA/Sales 18.3% 18.3%
PAT /Sales 13.8% 13.9%
ROCE 38.8% 47.6%
RONW 48.4% 55.3%

During the year, the Company announced the acquisition of 72.15% of Fem
are Pharma Ltd (FCPI.) for Rs. 203.3 crore in an all-cash deal. This
amount has been deposited in an escrow account on which the beneficial
interest is accruing to the transferors. The acquisition process including
the open offer for additional 20% of FCPL's equity is under way and post
the completion of this process. FCPL will become a subsidiary of Oil.
Therefore the OH, hnancials for EY2008-09 do not include the sales and
profitability of FCIL As the funds have already been deposited in the
escrow and the corresponding returns are not yet accruing to the Company,
the ROCE of the company was impacted. However the ROCE will improve once
the acquisition of FCPL gets completed and its profits get consolidated
with DIE. The acquisition has been funded out of internal accruals of the
Company.

The ROCE was also impacted to some extent by the Retail Venture which has
been set up under H&B Stores Limited, a 100% subsidiary of DIL. 2008-09 was
the first full year of operations tor this business. As the venture is at
an initial stage, the subsidiary incurred a loss of Rs. 17.9 crore during
the year. Excluding the impact of Retail the profitability and financial
ratios of the core FMCCI were even better which are presented in Table
3 below:

Tabic 3: Key financial ratios of DIL, excluding Retail.

(Rs.crore)
2008-2009 2007-08

EBIDTA/Sales 18.9% 18.8%
PAT /Sales 14.5% 14.2%
ROCE 42% 47.8%
RONW 50.6% 55.2%

The net working capital of the company was at 18.4 days of sales as
compared to 6.4 days in 2007-08. However this increase was on account of
surplus cash to the extent of Rs. 100 crore excluding which the net
workingcapital was at 5.5 days of sales.

The Company declared a total dividend of 175% for the financial year 2008-
09 which translates into a payout ratio of 45% of consolidated net profit.

Internal Control Systems:

Dabur has a robust internal audit and control system manned and managed by
qualified and experienced people. Price Water house Coopers is the
internal auditor for the company and its subsidiaries.

The Company follows Standard Operating Procedures (SOPs) that are in line
with the best global practices, and have been laid down across the process
flows, along with authority controls for each activity.

Dabur has also introduced the COSO framework for internal controls and
adequacy of internal audit. Under this framework, various risks facing
the Company are identified and assessed routinely across all levels and
functions, and suitable control activities are designed to address and
mitigate the significant risks.

The internal audit department reports to the Audit Committee ot the Board
of Directors, which recommends control measure from time to time. To read
the report of the Audit Committee on internal control and adequacy, refer
to the section on Corporate Governance ot the Annual Report.

Risk Management:

Dabur like any other enterprise having national as well global business
interests, is exposed to business risks which may be internal as well as
external. In the broadest sense, we define risk as the eventuality of not
achievingoui financial, operative, or strategic goals as planned. To ensure
our long-term corporate success, it is therefore essential that risks be
effectively identified, analyzed and then mitigated by means ot appropriate
control measures. We have a comprehensive risk management system in place,
which enables us to recognize and analyze risks early and to take the
appropriate action. This system is implemented as an integral part ot our
business processes across the entire Dabur operations and includes
recording monitoring, and controlling internal enterprise business risks
and addressing them through informed and objective strategies.

The risk management system is spearheaded by the Chief Risk Officer (CRO)
of the Company, who is responsible for, and ensures, effective risk
management both risk identification and mitigation. A team of risk officers
at each Company location supports the CRO. Each employee is entitled to
identify risk and report it to the concerned risk officer, who in turn
reports it to the CRO.

The risks are reported in the Risk Register and classified in terms or
their impact and probability to occurrence. The Risk Register is an
invcntoi'y of risks affecting Dabur, and covers various functions like
marketing, operations, regulatory affairs, finance and human resource
development. The risks are further mapped in terms of mitigation action to
be taken and the people who are responsible for taking such actions. The
Risk Register is reviewed periodically by senior management and is
presented to the Audit Committee on a quarterly basis.

One of the key risks faced by the company in todays scenario is continued
economic slowdown and deterioration of macro economic indicators which can
impact the spending power of consumers and put pressure on their incomes
and consumption. A poor monsoon, it it happens, can impact rural incomes
and dampen rural consumption and spends. Increase of imitation / fake
products and brands cm hamper our growth. Any unexpected changes in
regulatory framework pertaining to fiscal benefits and health related
issues which may impact parts of our business or profitability is one of
risks faced by the company.

However the Company is well aware of these risks and challenges and has put
in place mechanisms to ensure that they are managed and mitigated with
adequate timely actions.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the
Company's objectives, projections, estimates and expectations may be
'forward looking statements' within the meaning of applicable laws and
regulations. Actual results may differ substantially or materially from

those expressed or implied. Important developments that could affect the
Company's operations include a downward trend in the domestic FMCC
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.

Sustainability Report:

At Dabur, environment and nature is the lifeline of our business. With a
portfolio of Ayurveda and nature-based products, conservation of nature &
natural resources is deep rooted in our organizational DNA, and in every
aspect of our ever-growingbusiness.

We, at Dabur, have not merely incorporated the concept of sustainability
into the core of our business but have, in fact, expanded it to encompass
our aspirations and responsibilities to the society and to the environment.
It is this concept that inspires us to optimize our business performance to
tackle the new and growing challenges of environment and technology.
Technology Absorption, along with Health, Safety and Environment
Protection.

Conservation of Energy:

The year 2008-09 was a landmark one for Dabur in terms of the various
energy conservation measures undertaken by the Company. Successful
implementation of various energy conservation projects led to a 13.8%
reduction in the Company's energy bill. What was noteworthy was the fact
that this reduction has come despite an 8-9% volume increase in
manufacturing, and an average 11.7% increase in cost of key input fuels and
improve hygiene conditions & productivity.

C) Technology Absorption;

During the year, Dabur has also made continuous efforts towards technology
absorption and innovation, which have contributed towards preserving
natural resources. These efforts include:

* Minimum use of water in process by pre-concentration of herbal extract
and reduction in concentration time

* Uniform heating using hot water as against steam earlier, resulting in
30% reutilization of waste water from pump &, seal cooling and RO reject
waste-water management Introduction of water efficient CIP system with
recycling of water in fruit juice manufacturing.

* Development ot in-house technology to convert fruit waste into organic
manure by using the culture Lactobacilusburchi Simultaneously, the Company
undertook a series ot innovative packaging concepts, relating to
distinctive repackaging of some of the top brands and launch of new
products in unique cost-effective packs.

As a result, the Company achieved a host ot significant benefits in terms
of product improvement, cost reduction, product development, import
substitution, cleaner environment and waste disposal, amongst others.

Health Safety & Environmental Review:

Renewing the commitment to Health Safety and Environment, Dabur has
formulated a policy focusing on People, Technology and Facilities. A
dedicated 'Safety Management Team' has also been put in place to work
towards the prevention of untoward incidents at the corporate and unit
level, besides educate &' motivate employees on various aspects of Health,
Safety and Environment.

The Company is also continuously monitoring its waste in adherence with the
pollution control norms. In pursuance of its commitment towards the
society, efforts have also been initiated to conserve and maintain the
ground water level. The efforts include implementation of rainwater
harvesting, which has deliveres encouraging results and has put the company
on the path to becoming a Water- Positive Corporation.

Dabur also initiated a Carbon Foot Print Study at the unit level with an
aim to become a carbon positive Company in years to come.

At Dabur, we are committed to sustainable development throughout our
diverse operations. And, we will strive to translate the good intentions
into concrete and lasting results, contributing to the ultimate good of the
society.