Dabur India

The Directors have pleasure in presenting the 33rd Annual Report on
 the business and operations of the Company together with the Audited
 Accounts for the year ended 31st March, 2008.
 
 Financial Results
 
 Financial results are presented in Table 1.
 
 Tablel: Financial results
 
                                                     (Rs. crore)
                                               2007-08        2006-07
 
 Turnover (including other income)             2111.31        1616.94
 Profit before Tax                              365.18         284.22
 Add: Provisions of earlier                       0.68           0.23
 years written back                             365.86         284.45
 Less: Provision for Taxation - Current          40.57          31.52
 Provision for Taxation - Deferred                0.75          -2.66
 Provision for taxation - Fringe Benefit          7.08           3.28
 Provision for taxation for earlier year          1.54           0.36
 Profit after Tax                               315.92         251.95
 Add: Balance in Profit & Loss Account brought  229.15         175.00
 Forward from the previous year                     --             --
 Profit available for appropriation             545.07         426.95 
 
 Appropriation to:
 General Reserve                                 70.00         30.00
 Capital Reserve                                  0.40          3.35
 Interim Dividend -Paid                          64.80        122.13
 Final Dividend - Proposed                       64.80             0
 Corporate tax on Dividend                       22.02         17.13
 Transferred from merged entities                    0         25.19
 Balance carried over to Balance Sheet          323.05        229.15
 Total 545.07 426.95
 
 Dividend
 
 The Company had paid an interim dividend of 75% (Re.0.75 per share) on
 7th November, 2007. We are pleased to recommend a final dividend of 75%
 (Re.0.75 per share) for the financial year 2007-08. The aggregate
 dividend for the year will amount to 150% (Rs.1.50 per share) as
 against 175% (Rs.1.75 per share) on pre bonus share capital declared
 last year. The dividend payout ratio for the current year, inclusive of
 corporate tax on dividend distribution, is at 47.87%.
 
 Operations and Business Performance
 
 Kindly refer to Management Discussion & Analysis covered under
 Corporate Governance which forms part of this Report.
 
 Amalgamation of wholly owned subsidiary company with the Company
 
 During the year under review a wholly owned subsidiary company, Dabur
 Foods Limited was amalgamated with the company with effect from 1st
 April, 2007 on filing of the Order of Honble High Court of Delhi with
 the office of Registrar of Companies on 3rd March, 2008. The financial
 results of the erstwhile Dabur Foods Limited for the year 2007-08 are
 included in the financial results of the company for the Current year.
 
 Corporate Governance
 
 Dabur has always been committed to benchmark itself with global
 standards in all areas including appropriate standards for good
 Corporate Governance. An effective corporate governance system was put
 in place well before it was mandated by law.
 
 A separate section 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 Listing
 agreement with the Stock exchanges forms part of this annual report.
 
 Certificate of the CEO/CFO, inter alia, confirming the correctness of
 the financial statements, adequacy of the internal control measures and
 reporting of matters to the audit committee in terms of the clause 49
 of the Listing agreement with the Stock exchanges, is also enclosed as
 a part of annual report.
 
 Directors
 
 During the period Mr V C Burman, Chairman had resigned from the
 directorship and Chairmanship of the Company w.e.f. 23rd July, 2007.
 The Board places on record its gratitude for the valuable services
 rendered and guidance provided by Mr Burman during his tenure with the
 Company.
 
 Dr Anand Burman and Mr Amit Burman took over as Chairman and Vice
 Chairman of the Company, respectively. Further, Mr Mohit Burman was
 appointed as an additional non- executive Director from the promoter
 category. He shall hold office upto the date of ensuing annual general
 meeting of the company and being eligible, offer himself for
 appointment.
 
 At the ensuing Annual General Meeting Dr Anand Burman, Mr P D Narang
 and Mr R C Bhargava will retire by rotation and being eligible offer
 themselves for reappointment in terms of provisions of Articles of
 Association of the Company.
 
 The brief resume/details relating to directors who are to be
 appointed/re-appointed are furnished in the explanatory statement to
 the notice of the ensuing annual general meeting.
 
 Your directors recommend their appointment/ reappointment 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) That in the preparation of the annual accounts, the applicable
 accounting standards have been followed and no material departures have
 been made from the same;
 
 ii) That they had selected such accounting policies and applied them
 consistently and made judgements and estimates that are reasonable and
 prudent so as to give true and fair view of the state of affairs of the
 Company at the end of the financial year and of the profit of the
 Company for that period;
 
 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 Companys 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 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;
 
 1014953 equity shares allotted on 24th May, 2007.
 
 108027 equity shares allotted on 10 th August, 2007.
 
 16185 equity shares allotted on 14th November, 2007.
 
 Further, pursuant to merger of Dabur Foods Limited with the Company,
 w.e.f. 3rd March, 2008, the authorised share capital of Dabur Foods
 Limited, being Rs.20 crores, has been added with the authorised share
 capital of the Company as per Order of the Honble High Court of Delhi
 and subsequently the Company has applied to the
 
 Registrar of Companies, NCT of Delhi and Haryana to give effect to the
 increase in the authorized share capital of the company from Rs.125
 crores to Rs.145 crores.
 
 Auditors
 
 M/s G. Basu & Company, Chartered Accountants, Statutory Auditors of the
 Company retire at the conclusion of ensuing Annual General Meeting and
 being eligible offer themselves for reappointment as statutory auditors
 for the financial year 2008-09.
 
 Cost Auditors
 
 M/s Ramanath Iyer & Company, Cost Accountants were reappointed as Cost
 Auditors to conduct cost audit of the accounts maintained by the
 Company, in respect of its Formulations and Cosmetics & Toiletries
 products for the financial year 2008-09.
 
 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 2007-08. Consolidated sales grew by
 15.76% to Rs. 2,395.08 crores as compared to Rs. 2,069.05 crores in the
 previous year. Similarly, net profit after tax and after minority
 interest for the year at Rs. 333.92 crores is higher by Rs. 50.88
 crores as compared to Rs. 283.04 crores in the previous year.
 
 Internal Control System
 
 The Company has a proper and adequate internal control system to ensure
 safeguard and protection of all assets and that the transactions are
 authorised, recorded and reported correctly. The Companys internal
 control system comprises audit and compliance by in-house Internal
 Audit Division supplemented by internal audit checks from Price
 Waterhouse Coopers Private Limited, the Internal Auditors. The internal
 auditors independently evaluate the adequacy of internal controls and
 concurrently audit the majority of the transactions in value terms.
 Independence of the audit and compliance is ensured by the direct
 reporting of Internal Audit Division and Internal Auditors to the Audit
 Committee of the Board.
 
 Fixed Deposits
 
 During the year under review the Company has not accepted any fixed
 deposits from the public. However, as on 31st March, 2008 the Company
 had unclaimed deposits of Rs. 5.22 lacs due to 33 depositors. In
 addition to this an amount of Rs. 4.65 lacs Is outstanding as unclaimed
 towards interest accrued and due to depositors. During the year, the
 Company has deposited a sum of Rs. 1,51,893/- towards unclaimed
 deposits and interest in the Investors Education & Protection Fund.
 
 Nature of Business
 
 The company has entered into the high-growth organized retail market in
 India through its wholly-owned subsidiary, H&B Stores Limited under the
 Brand name newt/. Its first beauty, health and wellness retail store
 in India has already become operational. The subsidiary company plans
 to grow rapidly and mark its presence across India by opening around 30
 newu stores by the end of fiscal 2008-09.
 
 There has been no change in the nature of business of other subsidiary
 companies during the year.
 
 Subsidiaries
 
 During the year Dabur Foods Limited has ceased to be subsidiary of the
 Company due to its amalgamation with the Company.
 
 A new wholly owned subsidiary company H&B Stores Limited was
 incorporated in India to enter the high-growth organized retail market
 in India.
 
 As required under the provisions of Section 212 of the Companies Act,
 1956, a statement of the holding companys interest in the subsidiary
 companies is attached as Annexure 2 and form part of this, report.
 
 In terms of approval granted by the Central Government under Section
 212(8) of the Companies Act, 1956, copy of Balance Sheet, Profit and
 Loss Account, Report of the Board of Directors and the Report of the
 Auditors of the subsidiary companies have not been attached with the
 Balance Sheet of the Company.
 
 The Company will make available these documents/details upon request by
 any Shareholder of the Company or Subsidiary interested in obtaining
 the same. The Annual accounts of the Subsidiary Companies are also
 available for Inspection by the Shareholders at the 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 includes the financial Information of its
 Subsidiaries. The Financial Statements of each subsidiary shall also be
 available on Companys website www.dabur.com.
 
 The following information in aggregate for each Subsidiary are also
 being disclosed (a) capital (b) reserves (c) total assets (d) total
 liabilities (e) details of investment (except in case of investment in
 subsidiaries) (f) turnover (g) profit before taxation (h) provision for
 taxation (i) profit after taxation (j) proposed dividend. The said
 information is given in Annexure 3 and form part of this report.
 
 Auditors Report
 
 The observations of Auditors in their report read with the relevant
 notes to accounts in Schedule P are self-explanatory and do not require
 further explanation.
 
 Employees Stock Option Plan
 
 During the year 5,29,426 options in 6 tranches were granted to eligible
 employees of the Company in terms of Employees Stock Option Plan (Dabur
 ESOP 2000). During the year, 11,39,165 options were exercised by the
 employees after vesting. Accordingly, the Company made the allotment of
 10,14,953 equity shares on 24th May, 2007, 1,08,027 equity shares on
 10th August, 2007 and 16,185 equity shares on 14th November, 2007
 against the options exercised by the employees.
 
 The particulars of options issued under the said Plan as required by
 SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999 are appended as Annexure 4 and form part of this
 report.
 
 Particulars of Employees
 
 Particulars of employees as required under Section 217(2A) of the
 Companies Act, 1956 read with Companies (Particulars of Employees)
 Rules, 1975 as amended are given in Annexure 5 and form part of this
 report.
 
 Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings and outgo
 
 A.  Conservation of energy:
 
 a) Energy conservation measures taken:-
 
 Various energy conservation techniques were initiated at large scale
 and successfully implemented.
 
 Emulsion based fuel additives used to further improve steam generation
 efficiency and to save in Fuel & Maintenance cost.
 
 Power Capacitor Bank well maintained at all plants to get maximum
 benefits of Power. Factor. Strict control of Power Factor in the range
 of 0.99 to 0.997
 
 Falling Film Evaporator upgraded to improve Efficiency & Productivity.
 
 Use of increased Batch size and higher capacity Pulverizer to improve
 productivity.
 
 Reduction in Contract Demand load.
 
 Heating process of Guar Printing Products changed from Steam Boiler to
 T F Heater.
 
 Conventional Shrink Tunnels replaced with Energy efficient Heating
 Shrink Tunnels to low down the connected load.
 
 Re-scheduled operation of heavy electric loads in Non Peak Hours.
 
 Optimum use of Comfort AC in offices, incorporation of efficient AC
 Controls with Digital Temp controllers for saving energy.
 
 Multi Track (12) Form Fill Machines replaced in place of single track
 being used.
 
 P-20 Energy saver being used in Manufacturing area.
 
 Reciprocating Air Compressors replaced with Energy efficient Screw
 Compressors to reduce the connected power load.
 
 b) Additional investments and proposals, if any, being implemented for
 reduction of consumption of energy:-
 
 Additional investment of Rs.26 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.109 Lacs and thereby lowered the
 cost of production by the equivalent amount.  These measures have also
 lead to better pollution control, reduced maintenance time and cost,
 improved hygienic condition and consistency in quality and improved
 productivity.
 
 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 has recorded a growth of around 19% in Guar Gum export
 business from Rs.32 crores in the year 06-07 to Rs.38 crores in the
 year 07-08. 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.8 crores in the year
 06-07 to Rs. 12.30 crores in the year 2007-08. Ethnic business in USA
 has increased by 72% and reached to Rs.4.82 crores. Export of certain
 other products are also being planned for the US markets.
 
 International Business Division which houses Daburs overseas business
 through subsidiaries recorded an impressive sales growth of 25% from
 Rs.292 crores in 2006-07 to Rs.365 crores in 2007-08, contributing to
 13% of overall consolidated Daburs Business. The key strategic drivers
 for the growth have been:
 
 Sharply defined Brand portfolio strategy in sync with Companys brand
 architecture
 
 Localisation of product portfolio
 
 Geographical expansion
 
 The company has built 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 2.25 times over last year and is now an
 INR 68 crores franchise built from a negligible base over the last
 three years in the Arab belt.
 
 Following on the successful launch of Vatika Olive, the company
 launched another variant Vatika Cactus, extending the Vatika brand
 equity. Vatika Hair oils range has registered a 90% growth in value
 across the Middle East and North African region.
 
 The company had launched its new range of Dabur Vatika Naturals styling
 hair cream across the MENA region in mid-2006. The brand has gained a
 7.1% Volume MS and a 9.5% Volume MS in modern trade in Middle East
 despite aggressive competition from established brands.
 
 Implementing the open innovation strategy the company has outsourced
 Italian technology and launched a range of intensive hair treatment
 masks Vatika Naturals Hamam Zaith which has been a big success and has
 become a dominant brand in the portfolio just one year after launch.
 
 The key contributing markets to the international business growth have
 been GCC, Egypt, Nigeria, Iraq, Libya, Yemen, Jordan and Syria.
 
 GCC, the largest market in the International Business Division, has
 registered an impressive 32% growth fuelled by innovations and new
 product launches in the Hair Care and Oral Care business.
 
 Dabur Egypt Limited has yet again been one of the top performers of the
 International business with a 63 % year on year value growth. Vatika
 Naturals Styling Hair Cream range has been successfully launched in the
 Egypt market during the year.
 
 ii) Development of new markets for Products & Services
 
 The Company has increased its customer base within the territories of
 its existing China and USA export markets.
 
 Nigeria which had been identified as one of the key markets for future
 growth for Dabur in Africa, has more than doubled its turnover in 07-08
 aided with a slew of new product launches in the oral care and skin
 category.
 
 Following the Hub and Spoke model for manufacturing, UAE has been
 developed as a supply base for markets of GCC, Yemen, Iraq and Levant.
 Egypt is a supply base for markets such as Libya, Sudan, Morocco and
 Kenya.
 
 iii) Export Plans
 
 Exports of guar gum business have been targeted to increase by 18.42%
 from Rs.38 crores in the year 07- 08 to Rs.45 crores in the year 08-09.
 Plans for further increase in customer base and geographies has been
 envisaged. New products for paint and cosmetic industry are being
 developed for the export markets.
 
 Plans are under implementation for export of Fruit Pulps, concentrates
 and juices as well. Focus would be on export of branded products and to
 gradually scale-up business particularly for aseptically packed
 material.
 
 Private label and ethnic business in USA is expected to be enhanced by
 over 40%, by rising from current levels to Rs. 17.90 crores.
 
 Expanding its production base in the UAE to meet the increasing demand
 in the region, a new manufacturing facility has been set up on a green
 field site in the Emirates of Ras Al Khaimah.
 
 Dabur is also planning to more than double its manufacturing capacity
 in Egypt to cater to the growing needs of the North African markets for
 the next 3 years.
 
 A new manufacturing facility has been setup in Nigeria during 07-08
 with the installation of new toothpaste manufacturing equipment.
 
 Organic and inorganic growth will be pursued as usual in the coming
 years to gain economies of scale and thereby increase profitability.
 
 Total Foreign Exchange used during 2007-08: Rs. 2,150.37 lacs.
 
 Total Foreign Exchange Earned during 2007-08: Rs. 9,410.39 lacs.
 
 Group for interse transfer of shares
 
 As required 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 form part of this report.
 
 Operations Review
 
 For detailed operational review kindly refer to Management Discussion
 and Analysis covered under Corporate Governance, which forms part of
 this Annual Report.
 
 Environmental Review
 
 Dabur India has a declared Health, Safety and Environmental Policy,
 which has been circulated within the organization. The health, safety
 and environmental platform is well supported by the Safety Management
 Team at Corporate and manufacturing unit levels. There is regular
 interaction between Corporate and the manufacturing units on the health
 and safety policy.  Motivational training programmes were conducted by
 the HSE Corporate team which resulted,in educating / upgrading the
 employees on awareness front. The World Environment day on 5th June,
 National Safety day on 4th March, and Safety Week on 27th Feb, were
 observed with lot of enthusiasm in all the units.
 
 There were no environmental issues at any of the Dabur plants and the
 statutory compliance was in line with Governmental requirements.
 
 The Pollution Control parameters as defined by the State Pollution
 Control Board were totally adhered and effluent discharge level was
 well within the prescribed limits.  Air pollution has been tested from
 time to time and was in line with the requirement.
 
 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 Companys 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 ail around operational performance.
 
                                       For and on behalf of the Board
 
 New Delhi                                      (DR. ANAND BURMAN)
 30th April, 2008                                   CHAIRMAN