Marico

The Boardof Directors (Board) is pleased to present the Twentieth
 Annual Report of your Company, Marico Limited, for the year ended March
 3T, 2008 (the year under review, the year or FY08)
 
 In line with the requirements of the Listing Agreement with the Bombay
 Stock Exchange and the National Stock Exchange, your Company has been
 reporting consolidated results - taking into account the results of its
 subsidiaries. This Discussion therefore covers the financial results
 and other developmentst during April 07 - March 08 in respect of Marico
 Consolidated comprising- Domestic Consumer Products Business under
 Marico Limited in India, International Consumer Products Business
 comprising exports from Marico Limited and operations of its overseas
 subsidiaries and Hair Care and Skin Care Solutions Business of Kaya in
 India and overseas and Sundari LLC overseas. The consolidated entity
 has been, in this discussion, referred to as Marico or Group or Your
 Group.
 
                                                            Rs. Crore
                                                   Year ended March 31,
                                                   2008           2007
 
 Sales and Services                               1906.7        1556.9
 Profit before Tax                                 205.0         150.1
 Profit after Tax                                  169.1         112.9
 Sales and Services                               1568.8        1371.7
 Profit before Tax                                 173.3         150.8
 Less: Provision for Tax for the current year       19.2          16.6
 Profit after Tax for the current year             154.0         134.2
 Less: Provision for Deferred Tax Liability / 
 (Deferred Tax Asset)                               19.5          15.8
 Less: Excess income tax provision of earlier 
 years written back                                  6.2
 Less Fringe Benefit Tax                             3.6           3.0
 Less: Minimum Alternative Tax (MAT) Credit        (12.5)         (6.9)
 Profit after Tax                                  143.4         116.1
 Add :Surplus brought forward                       69.6         191.4
 Profit available for Appropriation                212.9         307.5
 
 Appropriations:
 Distribution to shareholders                       39.9          40.7
 Tax on dividend                                     6.8           5.7 
                                                    46.7          46.4
 Transfer to Capital Redemption Reserve            180.0
 Transfer to General Reserve                        14.3          11.6
 Surplus carried forward                           151.9          69.5
 Total                                             212.9         307.5
 
 Your Company Distribution policy has aimed at sharing your Companys
 prosperity with its shareholders, through a formal earmarking /
 disbursement of profits to shareholders.
 
 Marico has; identified acquisitions as one of its avenues to pursue
 growth. Since April 2005, the Group has consummated 7 acquisitions
 including two each in India, Bangladesh and Egypt. During FY08, your
 Company completed the acquisition of the consumer products division of
 EnaJeni Pharmaceuticals, marking an entry into South Africa. As part of
 its growth agenda, Marico would continue to explore new acquisition
 opportunities. These would call for additional funding.
 
 As indicated last year, your Company intends to be more conservative in
 the quantum of dividend payout in the near future.
 
 Your Companys, distribution to equity shareholders during FY08
 comprised the following: First interim dividend of 13.5 % on the equity
 base of Rs. 60.90 Crore Second interim (dividend of 15% on the equity
 base of Rs. 60.90 Crore Third Interim dividend of 37% on the equity
 base of Rs. 60.90 Crore
 
 The total equity dividend for FY08 at 65.5% is thus the same as that
 paid during FY07. The total dividend (including dividend tax) was Rs.
 46.7 crore (28% of the group Profit After Tax (PAT)).
 
 An Annexure to this Report contains a detailed Management Discussion
 and Analysis, which, inter alia, covers the following:
 
 * Industry structure and development
 
 * Opportunities and Threats
 
 * Risks and Concerns
 
 * Internal control systems and their adequacy
 
 * Discussion on financial and operational performance
 
 * Segment-wise performance
 
 Outlook
 
 In addition, a Review of Operations of your Company has been given in
 this report.
 
 Marico turned in a revenue of Rs. 1907 crore during FY08. At 22%, it
 was another year of healthy growth over the previous year.  This
 comprised 17% organic growth accompanied by 5% inorganic growth. All
 its businesses, those of consumer products in India, international
 business and Kaya skin solutions contributed to the overall growth.
 
 Together with this topline increase, the bottomline recorded a growth
 of 50%. Profit After Tax (PAT) during the year was at Rs. 169 crore as
 against Rs. 113 crore in FY07. The financial for FY08 include certain
 extraordinary items (exchange gain on loan repayment Rs. 10.6 crore, an
 additional charge on account of accelerated depreciation Rs. 4.3 crore
 and profit on sale of the Sil business Rs. 10.6 crore. Had it not been
 for these items, the PAT would have been Rs. 155 crore, a growth of 27%
 over FY07 (extraordinary items excluded from the comparable figure in
 the previous year).
 
 During the year, Marico extended its record of year to year quarterly
 growth.
 
 The 30th consecutive Quarter of growth in Turnover and
 
 The 34th consecutive Quarter of growth in Profits
 
 The Company has demonstrated steady growth on both the topline and
 bottomline. Over the last 5 years, they have grown at a Compounded
 Annual Growth Rate of 21% and 30% respectively.
 
 In October 2007, Marico acquired consumer division of Enaleni
 Pharmaceuticals Limited (Enaleni), through purchase of 100% shares in
 Enaleni Pharmaceuticals Consumer Division (Pty) Ltd (EPCD), an Enaleni
 subsidiary, via MaricoSouth Africa Consumer Care (Pty) Limited, a
 wholly owned subsidiary of Marico. The name of EPCD has since been
 changed to Marico South Africa (Pty) Limited (MSA). The Durban-based
 MSA, is present across segments such as Hair Relaxers, After Care-Hair
 Food, Hair Conditioners and OTC Health Care. MSAs current annualised
 turnover is about Rs. 53 crore comprised largely of 3 brands, viz.
 Caivil in the premium ethnic Hair Care, Black Chic in VFM (Value For
 Money) Hair Care and Hercules in OTC Health Care.
 
 In the consumer products business, the flagship brand, Parachute
 Coconut Oil grew by 10% in volume over the previous financial year. The
 focus segment of the hair care range (Parachute Jasmine, Parachute
 Advansed, Shanti Amla Badam, Nihar Naturals and Hair & Care being the
 key elements) grew by 16% in volume. In the Premium Refined Oils
 market, Saffola, the Companys second flagship, grew by 22% in volume
 during the year.
 
 In order to generate additional sources of growth in the coming years,
 Marico as an FMCG company must create a healthy pipeline of new
 products. During the year your Company launched new prototypes. These
 included Saffola Diabetics Atta Mix, a functional food that aids sugar
 management and Saffola Active, a refined oil blend of refined rice bran
 oil and refined soya oil. Parachute - Advansed Starz is a range of Hair
 Care products for kids and Maha Thanda marks Marico entry into the
 cooling oils segment.
 
 The Companys processed food business which was carried on under the
 brand Sil was divested to Scandic Food India Private Limited
 (Scandic), the Indian subsidiary of the Danish business house, Good
 Food Group A/s. The divestment which was made on a slump sale basis
 pursuant to shareholders approval obtained through postal ballot during
 the year, included the manufacturing facility at Saswad (Saswad
 facility), near Pune and assimilation of the employees at Saswad
 facility by Scandic.  Your Company would, however continue to
 distribute Sil range of products for Scandic for one year.
 
 Marico and Indo Nissin Foods Ltd (INFL) have mutually decided to end
 their distribution alliance. Marico had been distributing the Top Ramen
 range of products for INFL, a subsidiary of Nissin Foods of Japan, in
 India, since 1998. When Marico entered into the alliance with INFL, it
 had a turnover of about Rs. 500 crore. This was supported by an
 extensive distribution network which the affiance partners sought to
 leverage Since then, Marico has grown its own business more than three
 times. The Company would like to focus its energies on distribution of
 brands from Its own stable. The two companies agreed to end the
 existing distribution agreement with effect from April 1, 2008.
 
 Maricos overall international business grew by 59%, while its organic
 growth over FY07 was 21%. In its traditional markets, namely the Middle
 East and Bangladesh, Maricos International PMCG business continued to
 grow and record share gains. The Egyptian brands, Fiancee and Hair Code
 are performing as per expectations. They achieved a turnover of about
 Rs. 88 crore during the year
 
 In November 2007, Marico entered the fast growing South African ethnic
 hair care and health care market through the acquisition of Enaleni
 Pharmaceuticals Consumer Division (Pty) Ltd, since renamed as Marico
 South Africa (Pty) Limited. The process of integration of the business
 is underway.
 
 Kayas skin care business achieved revenue of Rs. 100 crore during
 FY08, a growth of 34% over FY07 This growth has been delivered roughly
 In equal measure through new clinics, volume increase from existing
 clinics and price increases. During FY08, Kaya added 18 clinics, making
 the chain 65 clinic strong (56 in India end 9 in the Middle East). In
 the Middle East, Kaya extended its services beyond UAE by opening
 clinics in the Sultance of Oman and the Kingdom of Saudi Arabia.
 
 In order to enhance the product revenue stream, Kaya began prototyping
 the shop in shop model through kiosks. The response from this
 experiment was good and the company has commenced expansion to other
 locations.
 
 In June 2007, Marico launched Kaya Life offering holistic weight loss
 Solutions. The feed back received from customers is positive. At
 present, Kaya life has three centres in Mumbai.
 
 Investment exposure in Sundari LLC
 
 In line with the Operating Agreement with its joint venture partner,
 Shantih LLC, Marico has exercised its call option to raise its stake in
 its subsidiary Surtdari LLC (Sundari) from 75.5% to 100%. With effect
 from October 23, 2007, Sundari has become a wholly owned subsidiary
 (WOS) of Marico.
 
 Sundaris business however, continued to post operating losses in FY08
 as the business expanded and it chose to invest in brand building. The
 building blocks are now in place and it is expected that with the right
 mix of brand building initiatives and new product launches, the
 business would progress towards achieving break-even in the next couple
 of years. However, in view of the accumulated losses in Sundaris
 books, your Board has considered it prudent to provide for diminution
 in the value of Maricos investment in Sundari by making a provision of
 Rs. 9.37 crore (around 25% of Maricos exposure In Sundari as on March
 31,2008) in the current year. However, as Sundari is now a WOS of
 Marico, the provision does not impact the consolidated results of
 Marico Group as a whole.
 
 Marico Employees Stock Option Scheme 2007
 
 Marico, in pursuance of shareholders approval obtained on November 24,
 2006, formulated and implemented an Employees Stock Option Scheme (the
 Scheme) for grant of Employee Stock Options (Options) to certain
 employees of the Company and its subsidiaries. The Corporate Governance
 Committee of the Board of Directors is entrusted with the
 responsibility of administering the Scheme and in pursuance thereof,
 the Committee has granted 89,96,000 Options (as at March 31, 2008)
 comprising about 1.48% of the current paid up equity capital of the
 Company. Additional information on the Scheme as required by Securities
 and Exchange Board of India (Employees Stock Option Scheme and
 Employees Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines) is
 annexed and forms part of this report.
 
 None of the Non-Executive Directors (including Independent Directors)
 have received Options in pursuance of the above Scheme. Likewise, no
 employee has been granted Options, during the year, equal to or
 exceeding 0.5% of the issued capital (excluding outstanding warrants
 and conversions) of the Company at the time of grant.
 
 The Companys Auditors, M/s. Price Waterhouse, have certified that the
 Scheme has been implemented in accordance with the SEBI Guidelines and
 the resolution passed by the members at the Extra-Ordinary General
 Meeting held on November 24,2006.
 
 Resignation of Company Secretary
 
 Mr. Vinod Kaushal, Company Secretary of the Company resigned from the
 post of Company Secretary and Compliance Officer of the Company with
 effect from the close of working hours on November 02,2007. The process
 of recruiting a suitable candidate possessing the required
 qualification for the post Company Secretary and Compliance Officer is
 in progress.
 
 Mr. Vinod Kamath, Chief - Finance & IT of the Company, has been
 appointed as the Compliance Officer of the Company with effect from
 Nove/nber 0X3,2007, to comply with various provisions of the Listing
 Agreement and other and other relevant statutes.
 
 Application to the Central Government for exemption from including
 Balance Sheets of the subsidiary companies
 
 Your Company had applied to the Central Government under Section 212(8)
 of the Companies Act seeking an exemption from attaching copies of the
 Balance Sheet, Profit and Loss Account, Directors Report and Auditors
 Report of its subsidiary companies.
 
 In terms of the approval granted by the Central Government vide order
 No. 47/137/2008-CL-lll, copies of the Balance Sheet, Profit and Loss
 Account, Reports of the Board of Directors and Auditors of the
 subsidiary companies have not been attached to the Balance Sheet of the
 Company. However, the statement required under section 212 of the
 Companies Act, 1956 is attached.  The Company will make these documents
 / details available upon request by any member of the Company
 interested in obtaining the same and same would also be made available
 on its website. The Consolidated Financial Statements prepared by the
 Company pursuant to Accounting Standard AS-21 issued by the Institute
 of Chartered Accountants of India, include financial information of its
 subsidiaries.
 
 PUBLIC DEPOSITS
 
 There were no outstanding public deposits at the end of this or the
 previous year. The Company did not accept any public deposits during
 the year,
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act), the
 Directors confirm that:
 
 In preparation of the Annual Accounts of your Company, the Accounting
 Standards, laid down by the Institute of Chartered Accountants of
 India, from time to time, have been followed.
 
 Appropriate accounting policies have been selected and applied
 consistently, and reasonable and prudent judgements and estimates have
 been made so as to ensure that the accounts give a true and fair view
 of the state of affairs of your Company as at March 31, 2008 and the
 profits of your Company for the year ended March 31, 2008.
 
 Proper and sufficient care has been taken for maintenance of
 appropriate accounting records in accordance with the provisions of the
 Act for safeguarding the assets of your Company and for preventing and
 detecting frauds and other irregularities.
 
 The annual accounts have been prepared on a going concern basis.
 
 The observations of the Auditors in their report to the Members have
 been adequately dealt with in the relevant notes to the accounts. Hence
 no additional explanation is considered necessary.
 
 A report on Corporate Governance has been provided as a separate part
 of this Report.
 
 DIRECTORS
 
 Mr. Nikhil Khattau, Mr. Jacob Kurian and Ms. Hema Ravichandar,
 Directors of the Company, retire by rotation as per Section 256 of the
 Act and being eligible offer themselves for re-appointment.
 
 ADDITIONAL STATUTORY INFORMATION
 
 Information under Section 217(1)(e) of the Act read with the Companies
 (Disclosure of Particulars in the Report of the Board of Directors)
 Rules, 1988 is annexed and forms part of this report. Information
 pursuant to Section 217(2A) of the Act read with the Companies
 (Particulars of Employees) Rules, 1975, as amended by the Companies
 (Particulars of Employees) Amendment Rules, 1999 forms part of this
 report. Although in accordance with the provisions of Section 219(1)
 (b)(iv) of the Act such information has been excluded from the report
 and accounts sent to the Members, any Member desirous of obtaining this
 information may write to the Compliance Officer at the Registered
 Office of the Company.
 
 AUDITORS
 
 M/s. Price Waterhouse, Chartered Accountants and Statutory Auditors of
 the Company retire at the ensuing Annual General Meeting and have
 confirmed their eligibility for re-appointment.
 
 Aneja Associates, a Chartered Accountant Firm, has been associated with
 your Company as its Internal Auditor. They have been partnering your
 Company in the area of risk management and internal control systems.
 Your Company has re-appointed Aneja Associates as its Internal Auditor
 for the financial year 2008-09.
 
 ACKNOWLEDGEMENT
 
 The Board takes this opportunity to thank all its employees for their
 dedicated service and firm commitment to the goals of the Company. The
 Board also wishes to place on record its sincere appreciation for the
 wholehearted support received from shareholders, distributors, bankers
 and all other business associates, and from the neighbourhood
 communities of the various Marico locations. We look forward to
 continued support of all these partners in progress.
 
                                    On behalf of the Board of Directors
 
 Place : Mumbai                          HARSH MARIWALA
 Date  : April 24, 2008              Chairman and Managing Director