The Directors have the pleasure of presenting the 46th Annual Report
 and Audited Accounts of the Company for the year ended June 30, 2010.
 
 FINANCIAL RESULTS
 
                                             (Figures in Rs. crores)
 
                                            2009/10       2008/09
 
 Sales including Excise                         914           773
 
 Net Sales (less excise duty)                   903           773
 
 Profit before tax                              234           232
 
 Profit after tax                               180           179
 
 Proposed Dividend plus tax thereon              85            85
 
 Transfer to General Reserve                     18            18
 
 Balance carried forward                        278           201
 
 BUSINESS ENVIRONMENT
 
 The global economy is gradually emerging from the throes of the
 meltdown of 2008 and the fundamentals appear to be reasonably good.
 However, challenges do remain. As per published studies consumer
 sentiment is highest in India. India ranks second in the Nielsen Global
 Consumer Confidence survey released on January 7, 2010-an indication
 that recovery from the economic slowdown is faster in India with
 consumers willing to spend more. This recovery has helped your Company
 register yet another successful year.
 
 BUSINESS PERFORMANCE
 
 Your Company delivered strong business results in the year under
 review. The sales at Rs.914 crores are higher by 18% versus the sales of
 Rs.773 crores in the previous financial year. The Feminine Hygiene
 business continues to grow in higher double digits with all the
 variants of Whisper sanitary napkins showing a healthy growth. While
 Whisper Choice the variant in the popular segment is helping your
 Company grow volume shares, the growth of Whisper Ultra in the premium
 segment has helped add to value shares.  Similarly, the Healthcare
 business has also shown sales growth of 11% behind increased sales of
 Vicks VapoRub and Vicks Inhaler. Overall, the Company continued to
 focus on driving persuasive and consumer-meaningful innovations backed
 by distribution expansion and remarkable advertising support thereby
 recording a valuable growth across all areas of business.
 
 While the sales have grown by 18%, the Profit Before Tax (PBT) at Rs.234
 crores is up only by 1% vs. last years PBT of ^232 crores. This is
 primarily due to increased market investments and expenses in the last
 quarter of the year under review, such as increase in the advertising
 and promotion expenses in general, the launch of Whisper Choice Ultra
 in particular, the start-up expenses on new manufacturing lines and the
 unexpected levy of excise duty by the 2010 Union Budget.
 
 During the year under review, the Company earned Profit after Tax (PAT)
 of Rs.180 crores which is also marginally up as compared to last years
 PAT of Rs. 179 crores.
 
 Healthcare Business
 
 Healthcare business at Rs.381 crores (vs. last years Rs.344 crores) posted
 a growth of 11% this year across Vicks VapoRub, Vicks Cough Drops,
 Vicks Action 500 and Vicks Inhaler thereby consolidating the market
 leadership in its respective categories. This growth was driven by a
 combination of product initiatives and increased investment behind
 proven equity building advertising.
 
 Vicks VapoRub had a record year posting the highest ever market share.
 The growth in the brand was driven primarily through continued focus
 and augmented media spends on the successful blanket of warmth
 advertising and on our ongoing strategy of upsizing consumers to drive
 consumption - viz. the timely promotions on jars which help in
 encouraging consumers to purchase larger packs.
 
 The Vicks Cough Drops business had an excellent year, with the brand
 growing at 15%. The growth was driven by launch of a Jumbo drop, to
 cater to the top unmet demand of the category. This was accompanied by
 new attractive packaging and a higher media reach behind remarkable
 advertising support.  The growth was further supported by an initiative
 to drive awareness of flavors via relevant touch points such as radio
 and wall-painting, which led to a further increase in consumption.
 
 Our modest shipments on Vicks Action-500 during the year were driven by
 the overall slow down in the cold tablets category. During the second
 half of the financial year, your Company invested in superior
 advertising support for the product and saw the business respond
 immediately. We will however continue promoting the benefits of the
 product and expanding its distribution to ensure robust growth of Vicks
 Action-500 in the year ahead.
 
 Vicks will continue to innovate to ensure it stays the most trusted
 cough and cold care amongst consumers in India.
 
 Feminine Hygiene Business
 
 Feminine Hygiene business recorded yet another year of high growth with
 sales at Rs.532 crores (vs. last years Rs.428 crores) translating to a
 growth of 24%. Your Company has delivered the highest sales and share
 growth for P&G across the globe, with Whisper increasing its market
 share and Whisper Ultra being the largest value share brand in the
 market. This growth is driven, both by increase in distribution amongst
 non-users and consumption amongst users.
 
 During the year under review, a number of initiatives were designed to
 win with the consumers needs across segment.
 
 The top-tier consumers were delighted by the magical absorbency
 promised by Whisper Ultra, and the launch of Whisper Choice Ultra in
 Februrary 2010 with its ultra offerings fascinating the mid-tier
 consumers. Whisper Choice Ultra priced at Rs.30 for 6 pads addresses the
 barrier that the mid-tier consumer faces and provides her a chance to
 experience gel technology protection - a unique superiority of the
 product now at a far more affordable cost than before.
 
 Your Company continued its disproportionate focus on the Point of
 Market Entry consumer. The Whisper school program reached a total of
 2.4 million menstruating girls across private and government schools,
 which is a 15% increase versus the previous year. At the same time, by
 constantly innovating to meet the consumers needs, Whisper ensured
 that the top-tier brand Whisper Ultra was sampled in the more urban
 schools, and the more economical mid-tier Whisper Choice in the
 upcountry schools.  Not only did the program reach out to more
 potential consumers, but it also increased its depth by reaching out to
 lower tier towns. With the launch of Whisper Choice Ultra, the school
 program will be leveraged to sample this winning proposition to all
 government school girls.
 
 In addition to the robust and time-tested School Girls Program, your
 Company continued to expand its direct-to-home selling program across
 the country. The top-tier program reached 0.75 million consumers in
 their homes, which is a 147% increase as against the previous year. The
 Whisper Choice program, first initiated in Tamil Nadu, made it a most
 preferred brand of the consumers with the highest volume share in the
 state. This program was expanded to 6 other states, reaching 1.9
 million consumers and creating trial among 1.4 million of these
 consumers.
 
 DIVIDEND
 
 The Directors are pleased to recommend a dividend of ^22.50 for each
 equity share of Rs.10/- each for the financial year ended June 30, 2010.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Shiksha: 
 
 P&Gs philosophy of purpose-inspired growth is about continuing to
 touch and improve the lives of more people, more completely. Our
 purpose not only inspires us to make products people love, but also
 fuels our readiness to touch and improve lives in the times of need -
 which we do through our Corporate Social Responsibility (CSR) programs
 such as Shiksha.
 
 Shiksha, our signature CSR program has in its 6th year helped improve
 the lives of over 150,000 children across 602 communities with a
 donation of over Rs.5 crores. This year, Shiksha moves onto a new vision
 of creating tangible, visibly long-lasting impact through the building
 of Shiksha schools across the country that offer quality education to
 children in need. Over the last 6 years, P&G has already been helping
 bring to life over 100 schools via either building them (near our
 plants), supporting them through Non-Government Organizations (NGOs),
 working with Army Wives Welfare Association schools, or reactivating
 Government schools through our work with NGO partner CRY. This year we
 hope that the building of Shiksha schools will lead to far more
 children being able to access quality education.  After all, 
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors Responsibility Statement, it is
 hereby confirmed:
 
 (i) that in the preparation of the annual accounts for the financial
 year ended June 30, 2010, 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 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, 2010, 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.
 
 MANAGEMENT & PERSONNEL
 
 The growth over the past few years demonstrates the core strengths of
 our employees to stay reality-based, embrace change and proactively
 influence the course of business. The Directors are confident that
 employees are up to the challenge and thank them for their continued
 trust and support.
 
 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(1
 )(b)(iv) of the Act, the Report and Accounts are being sent to the
 shareholders of the Company excluding the statement of particulars of
 employees under Section 217(2A) of the Act. Any shareholder interested
 in obtaining a copy of the said statement may write to the Secretarial
 Department at the Registered Office of the Company.
 
 DIRECTORS
 
 Mr. R. A. Shah, Director, retires by rotation and being eligible,
 offers himself for re-appointment.
 
 The Directors recommend his re-appointment.  Mr. Shah needs no
 introduction to the shareholders.  Mr. Shah has been one of the founder
 Directors of your Company.
 
 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 received the approval of the Central Government for
 re-appointment of M/s. Ashwin Solanki & Associates, Cost Accountants,
 to conduct the cost audit of drug formulations for the year ended June
 30, 2011.
 
 CONSERVATION OF ENERGY ETC.  INFORMATION
 
 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, forms part of this Report.
 
 TRADE RELATIONS
 
 The Directors wish to thank the retailers, wholesalers, distributors,
 suppliers of goods & services, clearing and forwarding agents and all
 other business associates and acknowledge their efficiency and
 continued support in promoting such healthy growth in the Companys
 business.
 
 ACKNOWLEDGEMENT
 
 We are grateful to The Procter & Gamble Company, USA and Procter &
 Gamble Asia Pte Limited, Singapore for their invaluable support in
 terms of access to the latest information/knowledge in the field of
 Research & Development for products, ingredients and technologies;
 timely inputs to exceptional marketing strategies; and the goodwill of
 its world-renowned trademarks and superior brands. We are proud to
 acknowledge this unstinted association that has vastly benefited the
 Company.
 
                                       For and on behalf of the Board
 
 Mumbai                                                    R. A. Shah
 
 August 18, 2010                                             Chairman