Procter and Gamble Hygiene and Health Care

1.  We have audited the attached Balance Sheet of Procter & Gamble
 Hygiene and Health Care Limited (the Company) as at June 30, 2009,
 and also the Profit and Loss Account and the Cash Flow Statement for
 the year ended on that date annexed thereto. These financial statements
 are the responsibility of the Companys management. Our responsibility
 is to express an opinion on these financial statements based on our
 audit.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements.  An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of
 Section 227 of the Companies Act, 1956, we enclose in the Annexure, a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 (i) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (ii) In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 (iii) The Balance Sheet, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) In our opinion, the Balance Sheet, Profit and Loss Account and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub-section (3C) of Section 211 of
 the Companies Act, 1956;
 
 (v) On the basis of written representations received from Directors as
 on June 30, 2009 and taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on June 30, 2009
 from being appointed as a Director in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 Significant Accounting Policies and notes thereon, give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 (a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at June 30, 2009;
 
 (b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure referred to in paragraph 3 of the Auditors Report on the
 Accounts of Procter & Gamble Hygiene and Health Care Limited
 
 In our opinion and according to the information and explanations given
 to us, the nature of the Companys business / activities during the
 year are such that clauses vi, xii, xiii, xiv, xv, xvi, xviii, xix and
 xx of para 4 of the said Order are not applicable to the Company.
 
 1.  In respect of its fixed assets:
 
 a.  The Company has maintained proper records showing full particulars,
 including quantitative details and situation of its fixed assets.
 
 b.  Some of the fixed assets were physically verified during the year
 by the management in accordance with a programme of verification, which
 in our opinion provides for physical verification of all the fixed
 assets at reasonable intervals. The discrepancies noticed on such
 verification were not material and have been properly dealt with in the
 books of accounts.
 
 c.  The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company,
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 2.  In respect of its inventories:
 
 a.  As explained to us, inventories were physically verified by the
 management at reasonable intervals during the year.
 
 b.  In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 c.  In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on verification
 between physical stocks and book records.
 
 3.  In our opinion and according to the information and explanations
 given to us, the Company has not granted or taken any loan secured or
 unsecured to / from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and nature of its business with regard to
 purchases of inventory and fixed assets and for the sale of goods and
 services.  During the course of our audit, we have not observed any
 major weaknesses in such internal control systems.
 
 5.  In respect of contracts or arrangements entered in the register
 maintained in pursuance of section 301 of the Companies Act 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 a.  The particulars of contracts or arrangements referred to in Section
 301 that needed to be entered into the register, maintained under the
 said section have been so entered.
 
 b.  Where each of such transactions (excluding loans reported under
 paragraph 3 above) is in excess of Rs 5 lakhs in respect of any party,
 the transactions have been made at prices which are prima facie
 reasonable having regard to the prevailing market prices at the
 relevant time, except that reasonableness could not be ascertained
 where comparable quotations are not available having regard to the
 specialized nature of some of the transactions of the Company.
 
 6.  In our opinion, the Company has an adequate internal audit system
 commensurate with the size and the nature of its business.
 
 7.  We have broadly reviewed the books of account and records
 maintained by the Company in respect of manufacture of formulations,
 pursuant to the order made by the Central Government for the
 maintenance of cost records under Section 209(1) (d) of the Companies
 Act, 1956 and are of the opinion that prima facie, the prescribed
 records have been made and maintained. We have, however, not made a
 detailed examination of the records with a view to determining whether
 they are accurate or complete. To the best of our knowledge and
 according to the information and explanations given to us, the Central
 Government has not prescribed the maintenance of cost records for any
 other product of the Company.
 
 8.  In respect of statutory dues:
 
 a.  According to the information and explanations given to us, the
 Company has been generally regular in depositing undisputed statutory
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income Tax, Sales-tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty, cess and any other material statutory
 dues with the appropriate authorities during the year.
 
 b.  According to the information and explanations given to us, details
 of disputed income tax, excise duty, sales tax and custom duty dues
 which have not been
 
 deposited as on June 30, 2009 on account of dispute are given below:
 
 Sr.  Name of the  Amount under    Period to which the  Forum where 
 No.  Statute      dispute not yet amount relates       dispute is 
                                                        pending
                   deposited.
                  (Rs. in Lakhs)
 
 1   Sales Tax       947.66      1997-98 to 2005-06    Appellate 
                                                       Authorities
                     247.79      1990-96, 1996-97,
                                 2001-02 and 2002-03   Tribunal
                      13.89      1990-91 to 1997-98    High Court
     Sub-total      1209.34
 2   Custom Duty     178.55      1992-93               Joint Director
                                                       Ceneral
                                                       of Foreign Trade
     Sub-total       178.55
     Grand total    1387.89
 
 The above excludes disputed unpaid excise demands of Rs. 459.60 lakhs
 raised by the authorities on third parties with whom the Company has
 business transactions/ contractual obligations.
 
 There were no disputed dues remaining unpaid in respect of income tax,
 service tax, wealth tax and cess during the year.
 
 9.  The Company does not have any accumulated losses as at the end of
 the financial year. The Company has not incurred cash losses during the
 financial year covered by our audit and the immediately preceding
 financial year.
 
 10.  During the year, the Company has not taken any loans from
 financial institutions or banks or debenture holders and hence the
 question of default in repayment of dues does not arise.
 
 11.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that the funds raised on short term basis have, prima facie, not been
 used during the year for long term investment.
 
 12.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 was noticed or reported during the year.
 
                                         For DELOITTE HASKINS & SELLS 
                                                Chartered Accountants
 
                                                          K. A. Katki
 Mumbai,                                                      Partner
 August 27, 2009                                Membership No. 038568