DIRECTORS'' REPORT TO THE MEMBERS
 
 The Directors have pleasure in presenting their Twenty-Seventh Annual
 Report together with the Audited Accounts for the Financial Year ended
 June 30, 2011.
 
 FINANCIAL RESULTS
 
                                              (Figures in Rs. Crores)
 
                                       2010-11     2009-10
 
 Sales (less excise duty)              1056.86      852.48
 
 Other Income                            33.56       21.18
 
 Profit before tax &
 exceptional items                      133.97      212.76
 
 Profit after tax                        86.15      137.09
 
 Transfer to General Reserve              8.62       13.71
 
 Proposed dividend plus tax
 thereon                                 56.81       57.00
 
 Balance carried forward                294.28      282.55
 
 DIVIDEND
 
 Your Directors are pleased to recommend, subject to the approval of the
 Members, a dividend of Rs. 15 per Equity Share of Rs. 10 each,
 amounting to Rs.48.88 crores, for the Financial Year ended June 30,
 2011.
 
 operations
 
 Your Company achieved healthy sales growth during the Financial Year
 ended June 30,2011. The total sales (net of excise) at Rs. 1057 crores
 are up by 24% when compared to Rs.852 crores of the previous year. The
 sales in all the three business segments have grown with Oral Care,
 Personal Grooming and Portable Power all growing in double digits. Your
 Directors are pleased with these solid results that are driven by a
 continued focus on the consumer, robust innovation and distribution
 expansion.
 
 Profit Before Tax (PBT) for the year under review is Rs.134 crores as
 against Rs.213 crores last year. Profit After Tax (PAT) for the year
 under review is Rs.86 crores as against Rs. 137 crores last year. This
 decline represents choices made to deliver growth via category
 acceleration and defend heavy competition.  Your Directors are of the
 opinion that we continue to have significant opportunity for long term
 growth by upgrading men from traditional Double Edge blades to superior
 modern shaving systems. This requires multi-year investments in
 Capital, Advertising & Promotion and Overheads. Your Directors expect
 to sustain the strategy given evolving consumer demographics and
 competitive dynamics.
 
 PERSONAL GROOMING
 
 MachS, our premium Blades & Razors brand posted a strong double digit
 growth. This was aided by the successful launch of the Gillette Mach3
 Turbo Sensitive razor, aimed at the consumers having sensitive skin
 thus enabling more consumers to experience the ultimate comfort of
 Mach3. During the year under review, Mach3 distribution increased by
 70,000 stores throughout India. The high double digit growth in Razor
 sales versus year ago, was on account of powerful marketing campaigns
 and razor placement programs.
 
 The Shave India Movement introduced in January 2011 to launch the Mach3
 Turbo Sensitive razor generated unprecedented brand awareness and trial
 for the product. As a result of this, consumer awareness level has gone
 up as compared to previous Fiscal. This also helped create a
 significant digital interaction (duplicated) through popular social
 networking sites.
 
 The personal care category of the male grooming business includes
 pre-shave/post-shave products (shaving cream and gel) and deodorants.
 This category has performed very well with exceptional volume growth
 over the previous year.
 
 Gillette Guard, the Entry Level system that was designed specifically
 for the consumers of low income market, in October 2010 continued to
 grow the consumer base of Gillette systems. The volume sales of Guard,
 after its successful launch, is more than the combined volume sales of
 Vector and Mach3 razors. Guard became the number one system razor (unit
 off-take) in just the second month of its launch.  Guard has also
 become the fastest distributed B&R brand with a impressive distribution
 reach.
 
 The double edged blades'' business recorded an excellent value growth in
 double digits led by Gillette Wilkinson Sword.  Thus, the entire
 Gillette Male Grooming portfolio witnessed a strong growth across
 brands.
 
 Gillette India wins an Effectiveness Lion and 2 silver Lion at Cannes
 Ad Fest:
 
 Your Company''s campaign Women Against Lazy Stubble has yet again won
 an Effectiveness Lion at the Cannes Ad Festival this year. This year''s
 campaign
 
 - Shave India Movement - Shave Sutra also won 2 silver Lion''s at Cannes
 Ad Festival.
 
 ORAL CARE
 
 Oral-B toothbrushes had a strong year with strong double digits growth.
 This was driven by robust performance of its products across price
 tiers following fundamental brand building activities.
 
 Oral-B continues to grow across tiers. Strong Cross Action family
 promotions have helped Oral-B continue to grow in the super premium
 tier segment.  Oral-B 123 and Classic continue to lead our growth in
 the premium tier by providing superior propositions to the consumer.
 Oral-B Shiny Clean further helped strengthen its position in the
 mid-tier segment. Multiple initiatives were undertaken to expand Oral-B
 distribution, which also resulted in the Brand being widely available
 to the consumers across India.
 
 Oral-B, which is the No. 1 toothbrush brand most Dentists use
 themselves Worldwide, [Based on surveys of a representative worldwide
 sample of Dentists carried out for P&G] continued its partnership with
 Dentists across India, to promote oral health awareness for yet another
 year through its Smile India Movement initiative. This campaign helped
 in improving the lives of consumers by offering them a free dental
 checkup close to their residence simply on the purchase of an Oral-B
 toothbrush.
 
 PORTABLE POWER
 
 During the year under review Duracell has registered strong growth
 while growing the alkaline segment and has been able to successfully
 trade up consumers from lower priced zinc batteries. Base brand
 building activities are designed to grow your brand''s equity and
 availability.  We expect that in the coming year Duracell will be able
 to leverage consumer habit changes behind strong high drain device
 penetration gains, where Duracell has a right to win. With increasing
 power needs, Duracell has strong growth potential to gain value and
 share from Zinc.
 
 MANUFACTURING
 
 Your Directors have pleasure to inform you that during the year under
 review, Bhiwadi and Baddi plants continued to perform at record levels.
 Our new initiative called Integrated Work System (IWS), has helped
 enhance overall factory/people capability. As a result, plants
 delivered outstanding performance in all key measures such as Safety,
 Quality, Productivity, Cost etc. During the Financial Year your
 Company''s Plants delivered highest ever volume with a flawless customer
 service.
 
 In our pursuit of delivering best quality product to consumers, Bhiwadi
 plant achieved 95% Quality Assurance Capability in the Company''s QA
 system audit.
 
 Your Directors also have the pleasure to inform you that the Baddi
 plant implemented a major initiative of local production of Machi
 razors which is now resulting in cost savings on being exported to
 European Market.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Shiksha: 
 
 P&G''s focus on purpose-inspired growth drives us to not only serve our
 consumers with superior product propositions, but also truly touch and
 improve the lives of more consumers, more completely by contributing
 towards the communities we operate in. This commitment is the purpose
 behind our Corporate Social Responsibility initiatives ''Shiksha'' and
 the Whisper School Program,'' that help children from lesser-privileged
 backgrounds access their right to health and education.
 
 P&G''s flagship Corporate Social Responsibility Program ''Shiksha'' is an
 integral part of our global philanthropy program - Live, Learn &
 Lhrive, which currently reaches out to over 50 million children
 annually. Now in its 7th year, Shiksha enabled over 280,000
 lesser-privileged children with access to good quality education by
 supporting sustainable and critical assets of schools. By the end of
 fiscal year 2011, Shiksha will be supporting over 140 schools by
 interventions such as reactivating defunct Government schools, building
 new schools or enhancing education infrastructure at existing schools.
 Since its inception in 2005, Shiksha has made a cumulative donation of
 over Rs.22 crores towards helping children on the path to better
 education. This is a result of the support from our consumers who
 participated in the Shiksha movement by buying P&G brands in the months
 of April, May and June 2011 and enabling P&G to contribute a part of
 the sales towards the cause. During the Financial year ended June 30,
 2011 alone, P&G India closed Shiksha with the largest-ever contribution
 of Rs.5.6 crores in association with its partner NGOs, namely Save the
 Children India, Child Rights & You (CRY), Army Wives Welfare
 Association (AWWA), Round Table India (RTI), amongst others.  Each of
 Shiksha''s NGO partners focuses on a critical approach towards
 education, with NGO Round Table India specializing in building
 educational infrastructure and supporting schools across India, NGO
 Save the Children laying emphasis on the girl child via supporting the
 government''s Kasturba Gandhi Balika Vidhyalayas, and the NGOs AWWA and
 NWWA serving the unique educational needs of differently-abled children
 of Naval and Army Officers'' families. These activities together help
 Shiksha further its motto '' viw $fem wt wiw tfkm'' and help us touch and
 improve the lives of our consumers.
 
 ENVIRONMENTAL SUSTAINABILITY
 
 Environmental sustainability is embedded in our Purpose, Values,
 Principles, and our business. In order to improve lives, now and for
 generations to come, we ensure that our products, packaging and
 operations are safe for employees, consumers and the environment. We
 ensure this with a focus on technologies, processes and improvements
 that matter for the environment. The manufacturing technologies we use
 are low emission and generate almost 60% less emission than the local
 norms. We are committed to achieving the P&G global 2012 goal of 20%
 reduction of our footprints. Compliance is an integral part of our
 business strategy - All our product and formulations comply with Global
 and Indian regulatory requirements.
 
 We aim at reducing waste at every step of the supply chain, with a
 robust system that targets zero waste, including product shelf life. We
 seek to develop Sustainable Products, with an improved environmental
 profile.
 
 Moreover, we ensure environmental friendly practices at our sites:
 These include reduction in power consumption, optimal water consumption
 and eliminating excess use of paper by increasing the use of scanning.
 A good example is the hydro-electric energy being used at our plant in
 Baddi with efforts underway for extending this to other sites.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956 (the Act), with respect to the Directors'' Responsibility
 Statement, it is hereby confirmed:
 
 (i) that in the preparation of the Annual Accounts for the Financial
 Year ended June 30, 2011, the applicable Accounting Standards had been
 followed along with proper explanation relating to material departures;
 
 (ii) that the Directors had selected such accounting policies and
 applied them consistently and made judgments and estimates that were
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the Financial Year and of the
 profit or loss of the Company for the Financial Year under review;
 
 (iii) that the Directors 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 the Directors had prepared the accounts for the Financial
 Year ended June 30, 2011, on a going concern basis.
 
 CORPORATE GOVERNANCE
 
 A separate report on Corporate Governance along with the Auditors''
 Certificate on its compliance is annexed to this Report.
 
 DIRECTORS
 
 Mr. Subhash Bansal, Whole-time Director ceased to be a Director with
 effect from May 31, 2011 consequent to his attainment of superannuation
 from the services of the Company. The Board places on record deep
 appreciation for the contributions made by Mr. Bansal during his
 tenure.
 
 Mr. A. Poddar and Mr. Jyoti Sagar retire by rotation at the ensuing
 Annual General Meeting, and being eligible, offer themselves for
 re-appointment.
 
 Ms. Nayantara Bali was appointed as an Additional Director on the Board
 of the Company with effect from August 26, 2011. As an Additional
 Director she holds office upto the date of the ensuing 27th Annual
 General Meeting. A notice under Section 257 of the Companies Act, 1956
 has been received from a Member proposing her candidature as a Director
 of the Company liable to retire by rotation along with a deposit of Rs.
 500/-.
 
 The brief resumes of Mr. A. Poddar, Mr. Jyoti Sagar and Ms. Nayantara
 Bali and the details of the Directorships held by them in other
 Companies are given in the Corporate Governance section of the Annual
 Report.
 
 Appropriate resolutions for the appointment/ re-appointment of the
 aforesaid Directors are being moved at the ensuing Annual General
 Meeting, which the Board recommends for your approval.
 
 AUDITORS
 
 The Auditors, M/s. Deloitte Haskins& Sells, Mumbai, Chartered
 Accountants (Registration No. 117366W) retire and offer themselves for
 re-appointment.
 
 COST AUDITORS
 
 Your Company has re-appointed M/s. Ashwin Solanki & Associates, Cost
 Accountants, to conduct the cost audit of drug formulations for the
 Financial Year ended June 30, 2012. The Company has received the
 necessary Central Government approval for the re-appointment of Cost
 Auditor.
 
 CONSERVATION OF ENERGY & FOREIGN EXCHANGE
 
 The information, in accordance with the provisions of Section 217(i)(e)
 of the Companies Act, 1956, read with the Companies (Disclosure of
 Particulars in the Report of Board of Directors) Rules, 1988, regarding
 conservation of energy, technology absorption and foreign exchange
 earnings and outgoings, are attached as Annexure to this report.
 
 HUMAN RESOURCE DEVELOPMENT
 
 Your Company has continued to focus on building employee capability and
 commitment, critical for sustaining business growth and profitability.
 Competence enhancement initiatives to lead and manage change, develop
 team and to coach individuals have led to higher levels of employee
 productivity. The culture of innovation has been strengthened by
 building innovation skills and the processes to facilitate developments
 and successful implementation of new ideas.
 
 Your Directors wish to place on record their appreciation for the
 strong contribution made by employees who have through consistent and
 highly motivated performance enabled your Company to achieve these
 results.
 
 The information as per Section 217(2A) of the Companies Act, 1956 (Act)
 read with the Companies (Particulars of Employees) Rules 1975 forms
 part of this Report. As per the provisions of Section 219(l)(b)(iv) of
 the Act, the Report and Accounts are being sent to the Members of the
 Company excluding the statement of particulars of Employees under
 Section 217(2A) of the Act. Any Member interested in obtaining a copy
 of the said statement may write to the Compliance Officer at the
 Corporate Office of the Company.
 
 ACKNOWLEDGEMENTS
 
 Your Directors wish to place on record their appreciation of the
 services rendered by its suppliers, distributors, wholesalers,
 retailers, clearing and forwarding agents and all other business
 associates and acknowledge their efficiency and continued support in
 producing such healthy growth in the Company''s business.
 
                                      For and on behalf of the Board
 
                                                        S. K. Poddar
 
                                                            Chairman
 Mumbai
 
 August 26, 2011