GlaxoSmithKline Consumer Healthcare

The Directors are pleased to present the Annual Report on the business
 and operations of your Company and the audited accounts of the Company
 for the year ended 31st December, 2007.
 
 FINANCIAL RESULTS
 
                                                           (Rs. Million)
                                                    2007          2006
 
 Sales                                         13,955.05     12,101.88
 Profit before Depreciation,
 Amortisation and Tax                           2,886.14      2,332.74
 Less: Depreciation                               388.88        381.03
 Less: Amortisation of :
 - Patents and Trade Marks                         46.06         46.06 
 Profit before Tax                              2,451.20      1,905.65 
 Less: Provision for Tax
 - Current Tax                                    845.00        621.50
 - Deferred Tax                                   (67.86)       (35.33)
 - Adjustment of
 Previous Years                                    (0.19)        (0.25)
 - Fringe Benefit Tax                              47.50         50.40
                                                  824.45        636.32
 Profit after Tax                               1,626.75      1,269.33
 
 Previous year figures regrouped/reclassified 
 wherever necessary to
 conform to this years classification.
 
 Appropriations
 Dividends                                        504.67        420.56
 Corporate Dividend Tax                            85.77         58.98
 Transferred to General
 Reserves                                       1,036.31        789.79
                                                1,626.75      1,269.33
 Earnings Per Share                                38.68         30.18
 
 (Basic & Diluted)
 
 PERFORMANCE OF THE COMPANY
 
 The key objective for the year was to achieve an impressive top line
 growth while maintaining costs at lowest possible levels. Your Company
 is pleased to report 15.3% sales growth and 28.2% PAT growth for 2007
 over the previous year. It is heartening to note that this growth has
 been driven across all regions and major brands.
 
 2007 was a landmark year for Horlicks with sales of over Rs. 1000
 Crores. Clinically tested to make children Taller, Stronger &
 Sharper, Horlicks continues to grow stronger by the day.
 
 Top line growth continues to be supported by aggressive advertisement
 and various sales and marketing initiatives.  Your Company has taken
 several initiatives to reduce operating costs in the business. Your
 Company continues to operate with minimum trade pipelines, selling as
 per the market demands, and maintaining a very efficient supply chain.
 
 In order to maximize returns from idle cash, the Company during the
 year started to invest in the Debt Market. At the end of the year the
 total amount invested was Rs.2,978.35 Million. During the year the
 interest income has increased by Rs.119.5 Million.
 
 Profit before Depreciation, Amortisation and Tax as a percentage to
 sales has improved to 20.7% this year as against 19.3% in the previous
 year. During the year input costs of Raw Material, Packing Material and
 Finished Goods, as a percentage to sales, increased to 32.1% as against
 31.7% last year mainly due to higher input costs (particularly liquid
 milk and skimmed milk powder).
 
 DIVIDENDS
 
 The Directors consider the Interim dividend aggregating to Rs.12 per
 share declared, to be reasonable and commensurate with the results for
 the year ended 31st December, 2007 and do not recommend a final
 dividend for the year.
 
 RESERVES
 
 The total Reserves as on 31st December, 2007 stood at Rs.6,042.95
 Million representing an increase of 20.7% from last year.
 
 EXPORTS
 
 During the year, the Companys export earnings amounting to Rs. 696.66
 Million covering exports to Bangladesh, Myanmar, Sri Lanka, Middle
 East, Fiji, Mauritius, Nepal, Bhutan and other markets represented an
 increase -of 14.4 % over the previous year.
 
 RESEARCH AND DEVELOPMENT
 
 Research & Development function has been a key contributor to the
 excellent performance of your Company.  Besides being pivotal in
 fuelling innovation through a number of new product developments across
 all brands, it continues to provide the all-important operational and
 business support underlying the great performance and growth of the
 major brands. Several new product developments have been completed in
 2007 and some of those are lined up for launch in early 2008. A highly
 qualified and capable team of scientists as well as the state-of-the
 art R&D infrastructure have been major enablers for this performance.
 
 ISO CERTIFICATION
 
 Your Companys manufacturing facilities at Nabha, Rajahmundry and
 Sonepat continue to be certified to the latest version of OHSAS 18001,
 ISO 9001:2000 and ISO 14001:2004 by DNV, a leading International
 certification Company, whereas the Rajahmundry site has also been
 accredited with SA8000. Nabha and Sonepat production facilities have
 already been certified for HACCP (Hazard Analysis Critical Control
 Point for Food safety).
 
 Manufacturing/packing sites i.e. Pratap Health Foods Ltd.  at
 Hyderabad, Parsons Ltd. at Ghaziabad, Legacy Foods at Baddi, SDPL at
 Rajahmundry and SRDN at Guwahati have already been ISO 9001-2000
 certified by DNV.
 
 These certifications indicate our commitment in meeting, in a
 sustainable manner, Global Quality, Environment Health and Safety
 Standards
 
 INFORMATION TECHNOLOGY
 
 Your Company continues to be at the forefront of Information Technology
 having implemented two ERP packages. During the year, your Company has
 rolled out Global Helpdesk Programs. Further, your Company continued
 the web based Treasury operation integrating its Payments to vendors
 and Collections from customers centrally. Connected to all its business
 locations all over the country via satellite and terrestrial links, the
 Company is leveraging direct market information through its Wholesaler
 Automated project.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 Information required as per the Companies (Disclosure of particulars in
 the Report of the Board of Directors) Rules, 1988, is given in the
 Annexure to this Report.
 
 DIRECTORS
 
 Mr. Zubair Ahmed was appointed as the Managing Director w.e.f. 1
 January 2007 as the nominee of Horlicks Ltd. in place of Mr. Nicholas J
 Massey, whose nomination was withdrawn by Horlicks Ltd. with effect
 from that date.
 
 At the Annual General Meeting held on 27 April 2007, six Directors viz.
 Mr. Ashok Dayal, Mr. Kunal Kashyap, Mr. P. Dwarakanath, Mr. Praveen K
 Gupta, Mr. P. Murari and Mr. Subodh Bhargava were re-elected by the
 shareholders of the Company under the system of Proportional
 representation. Mr. Ian Mc Pherson, whose tenure as a Director ended at
 the Annual General Meeting held on 27 April 2007, chose not to be
 re-elected as a Director.
 
 Mr. Gautam K Chakraborty resigned as the Wholetime Director effective
 30 November 2007. In his place, Mr. Ramakrishnan Subramanian has been
 nominated by Horlicks Limited as Wholetime Director effective 1
 December 2007.
 
 The Board of Directors wish to place on record their sincere
 appreciation for the valuable advise and guidance rendered by Mr. Ian
 McPherson and Mr. Gautam K Chakraborty during their tenure as
 Directors.
 
 AUDITORS
 
 Messrs. Price Waterhouse, Chartered Accountants, who retire at the
 conclusion of the forthcoming Annual General Meeting and being
 eligible, offer themselves for re- appointment.
 
 HUMAN RESOURCE DEVELOPMENT
 
 As in the past years, the management continued to take a keen interest
 in Human Resource Development.  Harmonious industrial relations
 continued to prevail at all the units throughout the Company. The
 management continued to focus on Human Resource Development through
 in-house and external management development programmes and foreign
 assignments.
 
 ENVIRONMENT AND SOCIAL COMMITMENT
 
 Your Company, in its endeavour to serve the community, continues to
 contribute in and around the areas where it operates.
 
 Under program on Health & Education for Women at Sonepat, various
 activities included distribution of sewing machines, health camp and
 vocational training (stitching & embroidery) to the rural womenfolk for
 empowering them.
 
 During the year, both Nabha and Rajahmundry continued environment
 education programme to impact younger generation in local schools.
 Computers were donated to improve infrastructure in needy schools. Bus
 shelter has been constructed at Nabha for local residents.
 
 PARTICULARS OF EMPLOYEES
 
 Information as per Section 217 (2A) of the Companies Act, 1956, read
 with the Companies (Particulars of Employees) Rules, 1975, as amended
 from time to time, forms part of this Report. However, as per the
 provisions of Section 219{1 )(b)(iv) of the Act, the report and
 Accounts are being sent to all the members excluding the statement
 containing the particulars of employees to be provided under Section
 217 (2A) of the Act. Any member interested in obtaining such
 particulars may inspect the same at the Registered Office of the
 Company or write to the Company Secretary for a copy.
 
 MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 The Management Discussion and Analysis is reported in this Annual
 Report.
 
 ACKNOWLEDGEMENTS
 
 The Directors wish to extend their thanks and appreciation to all the
 employees of the Company at all levels, agents and other business
 associates for their commitment, dedication and respective
 contributions to the Companys operations during the year under review.
 
 The Directors would also like to acknowledge the valuable guidance,
 technical assistance and advice being received from the Associate
 Company in the U.K.
 
 Your Directors look forward to the future with confidence
 
                                        For and on behalf of the Board
 
                      S.J.Scarff         Zubair Ahmed    R. Subramanian
                        Chairman    Managing Director   Subodh Bhargava
                                                              Directors
 Place    :   Gurgaon
 Dated    :   January 29, 2008