Dabur Foods Limited Audited Balance Sheet and Profit & Loss Accounts for the year ended 31st

March 2005

Contents
Page

Director’s Report

1

Auditor’s Report

4

Balance Sheet

7

Profit and Loss Account

8

Schedules

9

Accounting Policies and Notes to Accounts

15

Statment of Cash Flow

21

DIRECTOR’S REPORT
To, The Members, Dabur Foods Ltd. Your Directors have pleasure in presenting the 8th Annual Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31st March, 2005.

BUSINESS PERFORMANCE AND FINANCIAL RESULTS:
Your Company registered another year of fantastic performance in 2004-05 by growing sales by 51% and tripling profit. The business crossed the landmark of Rs.100 crs sales mark. The business recorded a turnover of Rs.130.14 crores and profit after tax of Rs.5.25 crores. The key highlights of performance are: • • • Real Juice strengthened market leadership position and also crossed the Rs 100 crs balance sheet sales mark. Strong growth from new product launches and exports. The line extensions of Hommade also continued to drive the growth.

The primary growth drivers of your business were its two fruit juice brands ––“Real” and”“Real Activ”. Real grew by 40 per cent and Real Activ recorded an even more impressive growth of 43% during 2004-05. During the year your Company repositioned its offerings to put in place a well-segmented product strategy. Your Company now has three distinct brands across the fresh fruit juice category. Activ’s new identity, which has now become distinct from the Real brand, has been brought out in its new contemporary and trendy packaging. The Activ range now has five flavours including the two new additions – Mixed Fruit Cucumber Spinach Juice and Mixed Fruit Beetroot Carrot Juice. Expanding it’s portfolio, your company launched a new innovative brand to tap an emerging consumer need. While Real continues to be the offering in the medium segment with growth thrust provided by continuously launching new flavours, the economy end of the portfolio consists of “Coolers”. These drinks are based on traditional Indian formulations, which have a cooling effect on the body. They were launched in 3 flavours — Watermelon, Pomegranate and Aam Panna. The Hommade brand grew by 41% in 2004-05. This brand offers a range of cooking pastes, tomato puree, coconut milk and has recently test marketed a soup concentrate. Besides the retails channel, the product is extensively distributed in the food services channel, dominating this channel by making it available in the best hotels, restaurants, airlines and several institutions like business houses to Indian army. In the current year, a separate brand called Nature’s Best has been created for institutional sales and it consists of products like ketchup and corn powder. There was impressive growth in sales of honey to institutions, which is done in special 1 kg packs Dabur Foods’ multi-fruit processing facility at Siliguri, West Bengal under the name of its wholly owned subsidiary – Pasadensa Foods Limited became fully operational during the year. The plant produces pulp and concentrates and has brought the Company a step closer to achieving full backward integration and realising the resultant cost efficiencies. The plant meets the stringent requirements of the Codex Alimentarius Commission Guidelines, the Recommended International Code of Practices and the General Principles of Food Hygiene. In 2004-05, Dabur Foods acquired a new facility near Jaipur for manufacturing fruit juices. The plant currently has manufacturing facilities for 200 ml packs. This facility will be upgraded to manufacture 1 litre and 200 ml packs of ‘Real’ brand of fruit juice and also the ‘Coolers’ range of products. With this acquisition, the Company will be able to de-risk its business by considerably reducing its reliance on the Nepal plant.

FINANCIAL RESULTS
Particulars Turnover Profit before Tax Less: Provision for Tax- current Profit after Tax Loss Brought Forward Balance carried over to Balance Sheet Amt. (Rs. in‘lacs) 13014.72 570.26 44.71 525.55 (2006.83) (1481.28)

Dabur Foods Limited • Annual Report 2004-05

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DIRECTOR’S REPORT (Contd...)

DIRECTOR‘S 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) ii) that in the preparation of the annual accounts for the financial year ended 31st March, 2005, the applicable accounting standards had been followed along with proper explanation relating to material departures; that the directors had selected such accounting policies and applied them consistently and made judgements 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; 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. that the directors had prepared the accounts for the financial year ended 31st March, 2005 on a ‘going concern’ basis.

iii)

iv)

AUDIT COMMITTEE:
The Audit Committee comprises of Mr. V C Burman, Mr. Amit Burman and Mr. P D Narang, all non-executive Directors with Mr. V C Burman as its chairman. The role, terms of reference and the authority and powers of the Audit Committee are in conformity with the requirements of the Companies Act, 1956.

REMUNERATION COMMITTEE:
The remuneration Committee comprises of Mr. Charanjit Mohan, Mr. Sunil Duggal and Mr. P D Narang, all non-executive independent Directors. The role, terms of reference and the authority and powers of the Remuneration Committee are in conformity with the requirements of the Companies Act, 1956.

DIRECTORS:
In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Amit Burman and Mr. P D Narang, Directors retire by rotation and being eligible offer themselves for re-appointment.

AUDITORS:
M/s. Jhalani & Company, Chartered Accountants, New Delhi, Statutory Auditors of the Company will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

ENERGY CONSERVATION AND TECHNOLOGY ABSORPTION:
The Company had no production /manufacturing unit during the year under review, hence the requirement relating to conservation of energy and Technology Absorption are not applicable.

FOREIGN EXCHANGE EARNINGS AND OUTGOING:
Your company has expanded it’s exports portfolio and presence. In addition to exporting branded product under Real brand name your company also achieved a significant business in bulk pulp exports in the year 2004-05. The branded business expanded into Saudi Arabia and Yemen. The bulk pulp exports was taken with a view to build expertise, and learning to build a base to export produce out of its subsidiary -Pasadensa Foods facility. In the current year, your company exported mango & guava pulp to countries in the Middle East. Given the strong foundation laid in export, your company will work towards expanding it presence to other countries in the Asian and European markets in both the branded and bulk pulps exports. The Company had the following Foreign Exchange earnings and outgo during the year. Outgoings by way of import of Raw materials. Earnings on account of exports Rs.93.38 Lac Rs.513.47 lac

Dabur Foods Limited • Annual Report 2004-05

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DIRECTOR’S REPORT (Contd...)

FIXED DEPOSITS:
The Company has not accepted Fixed Deposits pursuant to section 58A of the Companies Act, 1956.

SUBSIDIARIES:
As required by the provisions of section 212 of the Companies Act, 1956, the audited accounts together with Directors Report and Auditors Report of the subsidiary Company are appended and forms part of the Annual Report. The statement pursuant to Section 212 of the Act is attached and forms part of this report.

PARTICULARS OF EMPLOYEES :
During the year under review no employee of the Company was in receipt of remuneration exceeding the limits as laid down under section 217 (2A) of the Companies Act, 1956. Therefore, the information as required under section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975 is not being given.

ACKNOWLEDGEMENT:
Your Directors would like to express their grateful appreciation for the continued support and co-operation received from the Customers, Dealers, Bankers, Government authorities and shareholders. They also wish to place on record their appreciation for the dedication and hard work put in by the employees of the Company at all levels.

For and on behalf of the Board
Ghaziabad 22nd April, 2005 Amit Burman Director P D Narang Director

Annexure 1 to director’s report
Statement Pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies
(Figures in Rupees)

1 2

Name of Subsidiary Holding Company’s Interest

Pasadensa Foods Ltd 50,00,000 Equity Shares of Rs. 10 each fully Paid-up

3 4 5

Extent of Holding Subsidiary Financial Year Ended Net aggregate amount of subsidiaries Profit/(Loss) not dealt within the holding company’s accounts : (I) For the financial year of the subsidiaries (II) For the previous financial year of the subsidiary since they become the holding company’s subsidiary

100% 31st March, 2005

Rs. (2,87,76,260) Rs. (16,20,597)

6

Net aggregate amount of subsidiaries Profit/(Loss) dealt within the holding company’s accounts : (I) For the financial year of the subsidiaries (II) For the previous financial year of the subsidiary since they become the holding company’s subsidiary

Rs. 31,79,474 Rs. 15,53,425

Dabur Foods Limited • Annual Report 2004-05

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AUDITOR’S REPORT

To The Members, Dabur Foods Ltd. We have audited the attached Balance Sheet of Dabur Foods Limited as at 31st March,2005 and also the Profit and Loss Account of the company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. (1) We conducted our audit in accordance with 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.

(2) As required by Companies (Auditor’s Report) Order,2003 [as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004] issued by the 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 paragraph 4 and 5 of the said Order. (3) Further to our comments in the Annexure referred to above, we report that: (a) We have obtained all the information and explanations, which, to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account have been kept as required by law so far as appears from our examination of those books;

(c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; (d) In our opinion, the profit and loss account, balance sheet and the cash flow statement comply with the Accounting Standards specified by the Institute of Chartered Accountants of India, referred to in Section 211 (3C) of the Companies Act, 1956,to the extent applicable. (e) On the basis of representation received from the directors as on 31st March 2005, and taken on records by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2005 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act 1956. (f) In our opinion and to the best of our information and according to the explanation given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and also give a true and fair view in conformity with the accounting principals generally accepted in India. (i) (ii) (iii) in the case of balance sheet, of the state of affairs as at 31st March,2005; in the case of the profit & loss account , of the Profit for the year ended on that date; and in the case of the cash flow statement, of the cash flows for the year ended on that date.

FOR JHALANI & CO. Chartered Accountants V.K. Jhalani Partner (Membership No.:82691) Ghaziabad 22nd April, 2005

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Annexure to paragraph (2) of our report of even date on the account of Dabur Foods Limited, for the year ended 31st March 2005
1. (a). The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. (b). The management has carried out a physical verification of most of its fixed assets during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account. (c). In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year. 2. (a). During the year, the inventories have been physically verified by the management except for inventory lying with third parties which have been confirmed by the parties. In our opinion, the frequency of verification is reasonable. (b). In our opinion and according to the information and explanation given to us, the procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c). On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account. 3. (a). According to the information and explanations given to us, the company has granted unsecured loans to one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs.875 Lacs and the amount outstanding at the year end is Rs.800 Lacs. (b). According to the information and explanation given to us, the rate of interest and the other terms & conditions are prima facie not prejudicial to the interest of the company. (c). According to the information and explanation given to us the loan granted is in the nature of the demand loan and there is no stipulation regarding repayment of loan. The interest on has been regularly received. (d). In view of comments made in subclause ( c ) above, the clause pertaining to the overdue amount being more than Rupees one lac is not applicable. (e). The company has taken unsecured loans from three companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs.850 lacs and the amount outstanding at the year end is Rs.800 lacs. (f) According to the information and explanation given to us, the rate of interest and the other terms & conditions are prima facie not prejudicial to the interest of the company.

(g) According to the information and explanation given to us the loan taken is in the nature of demand loan and there is no stipulation regarding repayment of loan. The interest on the aforesaid loan has been regularly paid. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of inventories and fixed assets and with regard to sale of goods. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in the aforesaid internal control procedures.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 have been so entered. (b) In our opinion and according to the information & explanations given to us aforesaid contract or arrangements exceeding the aggregate amount of Rupees five lacs in respect of each party made during the year, have been made at prices, which as informed to us by the management are not comparable as these are of specialized nature. 6. 7. The Company has not accepted any deposit within the meaning of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under. Company’s internal audit is handled by the internal auditors appointed by the holding company and in our opinion, the same is commensurate with the size and nature of its business.

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Annexure to Auditors Report (Contd...)
8. 9. The company is not required to maintain cost records u/s 209(1) (d) of the Companies Act, 1956. Accordingly paragraph 4(viii) of the order is not applicable. (a) According to the information and explanations given to us and the records of the Company examined by us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Custom Duty, Service Tax, Cess with the appropriate authorities. The provisions of other statute mentioned in the clause are not applicable to the company for the year under audit. (b) According to the information and explanations given to us and the records of the Company examined by us, there are no disputed dues of Income Tax/Wealth tax/Service tax/Custom duty/excise duty/cess. The details of disputed dues of sales tax are as follows: Name of the Statute Delhi Sales Tax Nature of the Dues Sales tax Forum where the demand is Pending Dy.Commissioner of Sales Tax(Appeals) –Delhi Amount (Rs. in lacs) 85.52 Period to which amount relates 2003-2004

10.

At the end of the financial year March 31, 2005, the company has accumulated losses of Rs.1481.13 lacs and the same is more than the fifty percent of the net worth of the company. Further, the Company has not incurred any cash losses during the financial year ended March 31, 2005 and in the immediately preceding financial year. According to the records of the Company examined by us and the information and explanations given to us, the Company during the year has not defaulted in repayment of dues to financial institutions and banks. As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4 (xii) of the Order is not applicable. The provisions of any special statute as specified under paragraph 4 (xiii) of the Order are not applicable to the Company. As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4 (xiv) of the Order is not applicable. In our opinion and according to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions. In our opinion and according to the information and explanations given to us, the term loans during the year have been applied for the purpose for which they were obtained. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that short term funds have not been used to finance long term investments. As the Company has not made any preferential allotment of shares during the year, paragraph 4 (xviii) of the Order is not applicable. During the year, since the Company has not issued any debentures, paragraph 4 (xix) of the Order is not applicable. During the year, since the Company has not raised any money by way of public issue, paragraph 4 (xx) of the Order is not applicable. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2005.

11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

FOR JHALANI & CO. Chartered Accountants V.K. Jhalani Partner (Membership No.:82691) Ghaziabad 22nd April, 2005
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Balance sheet as at 31st March, 2005

Schedule

As at 31st March 2005 (Rs. In lac)

As at 31st March 2004 (Rs. In lac)

Sources of funds :
Shareholders’ funds:
A) share capital A 1,000.00 1,000.00 1,000.00 1,000.00

Loan funds:
A) secured loans B) unsecured loans B C 1,637.34 1,727.79
3,365.13

625.00 1,836.46
2,461.46

Total

4,365.13

3,461.46

Application of funds :
Fixed assets :
(A) gross block (B) less : depreciation (C) net block E 7.52 3.00 4.52 7.39 1.52 5.87

Investments Current assets, loans and advances:
A) B) C) D) inventories sundry debtors cash & bank balances loans & advances

F G
1,177.52 971.89 202.54 1,217.51 3,569.46

500.21

504.14 484.83 455.12 100.61 1,544.70

505.21

Less: current liabilities and provisions
A) liabilities B) provisions Net current assets Miscellaneous expenditure (to the extent not written off or adjusted) Profit & loss Notes to accounts

D
1,120.25 70.09 1,190.34 H 2,379.12 1,481.28 N 573.32 27.83 601.15 943.55 2,006.83

Total

4,365.13

3,461.46

As per our report of even date attached For Jhalani & Co. Chartered Accountants V.K. Jhalani Partner Ghaziabad 22nd April, 2005

For Dabur Foods Ltd. Amit Burman P. D. Narang Neeraj Aggarwal Director Director Manager Finanace& Company Secretary

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Profit and Loss account for the year ended 31st March, 2005

Schedule

For the year ended 31st March 2005 (Rs. In lac)

For the year ended 31st March 2004 (Rs. In lac)

Income :
Sales less returns Other income

I
12,969.97 44.75 8,579.80 145.35

Total income

13,014.72

8,725.15

Expenditure :
Cost of materials Payments to and provisions for employees Selling and administrative expenses Financial expenses Miscellaneous expenditure written off Depreciation J K L M 7,508.47 404.04 4,316.23 214.24 0.00 1.48 5,207.93 384.56 2,659.97 198.49 114.70 0.98

Total expenditure

12,444.46

8,566.63

Balance being net profit before taxation
Less provision for taxation - current Net profit after taxation Loss brought forward

570.26
44.71 525.55 -2,006.83

158.52
12.25 146.27 -2,153.10

Balance carried over to balance sheet
Earning per share - basic & diluted (fig.in rs.)

-1,481.28
5.26

-2,006.83
1.46

As per our report of even date attached For Jhalani & Co. Chartered Accountants V.K. Jhalani Partner Ghaziabad 22nd April, 2005

For Dabur Foods Ltd. Amit Burman P. D. Narang Neeraj Aggarwal Director Director Manager Finanace& Company Secretary

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Schedules annexed to and forming part of the balance sheet as at 31st March 2005

Schedule A - Share Capital
As at 31st March 2005 (Rs.in lac) As at 31st March 2004 (Rs.in lac)

Authorised :
20000000 Equity shares of Rs.10 each (previous year 10000000 equity shares of Rs.10 each) 2,000.00 2,000.00 1,000.00 1,000.00

Issued, subscribed and paid up:
10000000 Equity shares of Rs.10 each fully paid up (all the shares have been held by holding company, Dabur India Limited and its nominees) 1,000.00 1,000.00 1,000.00 1,000.00

Schedule B - Secured Loans
from Hong-Kong & Shanghai Bank, New Delhi
I) Ii) short term loans cash credit account 1,284.25 182.47 170.62 625.00 -

Iii) packing credit account

secured by :
All these loans are secured by way of first charge agst. Hypothecation of revolving stocks, other movable assets and present and future book debts. (the above loans are guaranteed by holding company, Dabur India Limited)

1,637.34

625.00

Schedule C - Unsecured loans
Loan from body corporates Security deposit from dealers and others Temporary loans from canara bank (guaranteed by holding company, Dabur India Limited) Book overdraft with current account with banks 800.00 0.14 875.00 52.65 1,727.79 1,050.00 2.51 775.00 8.95 1,836.46

Notes: 1. Maximum amount of loan from canara bank outstanding during the year Rs.1200, repayble with in one year Rs.875

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Schedules annexed to and forming part of the balance sheet as at 31st March 2005 (Contd...)

Schedule D - Current Liabilities and Provisions
As at 31st March 2005 (Rs.in lac) As at 31st March 2004 (Rs.in lac)

A. Current liabilities :
sundry creditors a) b) c) amount due to ssi units creditors for goods creditors for expenses and other liabilities 0.80 324.63 732.85 1,058.28 58.56 3.41 1,120.25 1.57 42.21 467.87 511.65 26.47 33.32 1.88 573.32

amount due to holding company advances from customers interest accrued but not due on loans

B. Provisions :
for taxation for leave salary for leave travel concession 56.96 10.49 2.64 1,190.34 12.25 12.18 3.40 601.15

Schedule E - Fixed Assets
NAME OF ASSETS
As on 1-Apr-04 Electrical Appliances Furniture & Fixtures Computers Vehicles TOTAL As on 31.03.2004 0.85 0.21 0.30 6.03 7.39 1.36 0.23 6.03 0.10 0.00 0.23 -

GROSS BLOCK
Additions Adjustment As on 2004-05 0.10 31-Mar-05 0.75 0.44 0.30 6.03 7.52 7.39 As on 1-Apr-04 0.33 0.13 0.25 0.81 1.52 0.54

DEPRECIATION
For the year Adjustment As on 2004-05 0.08 0.03 0.02 1.35 1.48 0.98 0.00 0.00 -

(Rs. in lac) NET BLOCK
As on As on 31-Mar-04 0.52 0.08 0.05 5.22 5.87 31-Mar-05 31-Mar-05 0.41 0.16 0.27 2.16 3.00 1.52 0.34 0.28 0.03 3.87 4.52 5.87

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Schedules annexed to and forming part of the balance sheet as at 31st March 2005 (Contd...)
Schedule - F Investments (At Cost)
Long Term Investment
A) Govt. Securities (National Saving Certificates Viii Series) (Lodged With Sales Tax Department) B) Trade Investment In Subsidiary Company Unquoted Pasadensa Foods Ltd (5000000 Equity Shares Of Rs.10/- Each Fully Paid Up, At Cost ) (Book Value Of Unquoted Investment Is Rs.195.88 Previous Year Rs.483.65) Share Application Money Pending Allotment (With Pasadensa Foods Ltd) 0.20 0.20 As at 31st March 2005 (Rs.in lac) As at 31st March 2004 (Rs.in lac)

500.01

500.01

500.21

5.00 505.21

Schedule G - Current Assets, Loans and Advances
A. Current assets : Stock-in-trade : (as taken, valued and certified by the management) - raw materials with processors - packing materials with processors - finished goods Sundry debtors (unsecured) - debts outstanding for a period exceeding six months : Considered good Considered doubtful Less : provision for doubtful debts - other debts (considered good) - other debts (considered doubtful) Less : provision for doubtful debts Cash and bank balances : - cash in hand at head office and other offices - balance with scheduled banks In current accounts In cash credit account In fixed deposit accounts ( lodged with the sales tax deptt) - remittance-in-transit & cheques-in-hand 100.24 3.65 97.95 202.54 2,351.95 144.03 289.60 3.65 17.53 455.12 1,444.09 11 0.70 0.31 5.89 5.89 5.89 971.89 8.11 980.00 8.11 971.89 31.79 31.79 31.79 453.04 484.83 484.83

68.78 37.55 1,071.19 1,177.52

13.57 33.39 457.18 504.14

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Schedules annexed to and forming part of the balance sheet as at 31st March 2005 (Contd...)

Schedule G - Current Assets, Loans and Advances (Contd...)
As at 31st March 2005 (Rs.in lac) B. Loans and advances (unsecured and considered good) 8.51 800.00 316.38 13.69 4.68 69.68 4.57 1,217.51 6.24 71.43 13.29 3.85 5.80 100.61 As at 31st March 2004 (Rs.in lac)

Security deposit with various authorities Advances to pasadensa foods ltd. (subsidiary co.) Advances to suppliers Advances to employees Duty entitlment benefit receivable Advance income tax Other advances - recoverable in cash or in kind Or for value to be received Total (a+b)

3,569.46

1,544.70

Schedule H - Miscellaneous expenditure
(to the extent not written off or adjusted) Deferred advertisement & publicity Less: amortised during the year 114.70 114.70 -

Schedules annexed to and forming part of the Profit and Loss account for the year ended 31st March 2005
Schedule - I Sales and other income
For the year ended 31st March 2005 (Rs.in lac) For the year ended 31st March 2005 ( Rs.in lac)

A. Sales :
domestic sales less returns export sales 12,400.32 569.65 12,969.97 8,347.06 232.74 8,579.80

B. Other income :
premium on transfer of loan miscellaneous receipts interest received (tax deducted at source Rs. 6.64 previous year nil) 12.28 32.47 44.75 132.00 13.18 0.17 145.35 12

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Schedules annexed to and forming part of the Profit and Loss account for the year ended 31st March 2005
Schedule J - Cost Of Materials
For the year ended 31st March 2005 (Rs.in lac) For the year ended 31st March 2005 ( Rs.in lac)

Raw Materials Consumed :
(i) Opening Stock 13.57 1,033.10 1,046.67 (iii) Less : Closing Stock 68.78 977.89 Packing Materials Consumed : (i) Opening Stock (ii) Add : Purchases 33.39 195.35 228.74 (iii) Less : Closing Stock 37.55 191.19 6,791.04 162.36 53.64 57.85 111.49 33.39 78.10 4,727.94 79.58 28.12 247.72 275.84 13.57 262.27 (ii) Add : Purchases

Purchase Of Finished Products Processing Charges Adjustment Of Stocks Opening Stock : Stock In Process Finished Products 17.85 439.33 457.18

0.28 516.94 517.22

Closing Stock :
Stock-In-Process With Processors Finished Products 1,071.19 1,071.19 17.85 439.33 457.18

Increase(-)/Decrease In Stock

(614.01)
7,508.47

60.04
5,207.93

Schedule K - Payments To And Provisions For Employees
Salaries, Wages And Bonus Contribution To Provident,Superannuation,Grauity & Other Funds Staff Welfare 3.87 404.04 8.21 384.56 365.60 34.57 340.74 35.61

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Schedules annexed to and forming part of the Profit and Loss account for the year ended 31st March 2005 (Contd...)

Schedule L - Selling And Adminstrative Expenses
For the year ended 31st March 2005 (Rs.in lac) Rent Rates And Taxes Insurance Sales Tax Freight And Forwarding Charges Commission, Discount And Rebate Advertising And Publicity Breakage/Leakage Claims Travel & Conveyance Legal & Professional Telephone , Fax Expenses General Expenses Bad Debts Auditors’ Remuneration: - Audit Fee - Tax Audit Fees - Other Matters Reimbursement Of Expenses Contribution For Scientific Research Expenses 1.33 0.22 0.79 0.63 2.97 57.00 4,316.23 1.16 0.22 0.58 0.80 2.76 2,659.97 39.31 4.03 13.10 1,315.29 834.47 120.95 1,510.78 217.64 109.50 22.37 2.24 46.36 20.22 For the year ended 31st March 2005 ( Rs.in lac) 9.94 2.32 7.13 895.63 396.90 92.64 904.10 179.28 104.30 15.44 1.79 25.97 21.77

Schedule M - Financial Expenses
Interest Paid On : Fixed Period Loan Others 204.60 0.12 204.72 Bank Charges 9.52 214.24 176.34 12.39 188.73 9.76 198.49

Dabur Foods Limited • Annual Report 2004-05

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Schedules annexed to and forming part of the accounts for the year ended 31st March 2005
(Rs. In lac)

Schedule N - Notes Forming Part Of The Accounts For The Year Ended 31st March,2005

A. ACCOUNTING POLICIES
Significant accounting policies are summarized below: 1. Accounting Convention
The financial statements are prepared under the historical cost convention in accordance with applicable mandatory Accounting Standards and relevant provisions of the Companies Act, 1956.

2.

Use of estimates
• The preparation of the financial statement in conformity with generally accepted accounting policies requires management to make estimates and assumptions that effect the reported balances of assets & liabilities and disclosure relating to contingent assets & liabilities as at the date of the financial statements and reported amounts of income & expenses during the period. Management assesses using external and internal sources whether there is an indication that asset may be impaired. An impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the assets and its eventual disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset’s net sales price or present value as determined above. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from those estimates.

3.

Investments
Long term investments are stated at cost. A provision for diminution is made to recognize a decline other than temporary in the nature of value of investment.

4.

Sales
Sales are recognized net of returns when goods are supplied in accordance with terms of sale. Sales comprise of sale price of goods including sales tax. Breakage and leakage claims from customers are charged as expenses upon approval.

5.

Fixed Assets and Depreciation
• • Fixed assets are stated at cost less depreciation. Cost includes inward freight, duties and taxes and expenses incidental to acquisition. Depreciation on Fixed Assets has been provided on written down value method at rates specified in Schedule XIV of the Companies Act.

6.

Inventories
Inventories, other than goods in transit, are valued at cost (on FIFO basis) or estimated net realizable value, whichever is lower, after providing for cost of obsolescence and other anticipated losses, where considered necessary.

7.

Deferred Entitlement on LTC :
As per the opinion of the Expert Advisory Committee of the ICAI, the Company has provided liability accruing on account of deferred entitlement towards LTC in the period in which the employees concerned render their services even though no expenditure has been incurred on performance of journeys.

8.

Foreign Currency Transactions
• Transactions in foreign exchange, other than those covered by forward contracts, are accounted for at the exchange rates prevailing on the date of transactions. Assets and Liabilities, if any, remaining unsettled at the end of the year, other than those covered by forwards contracts, are translated at the closing rates. Realized gains and losses on Foreign Exchange transactions are recognized in the Profit and Loss account. In respect of transactions covered by the forward contracts, the difference between the contract rate and the spot rate on the date of the transaction is charged to the Profit and Loss account over the period of contract.
Dabur Foods Limited • Annual Report 2004-05

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Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)
(Rs. In lac)

9.

Retirement benefits
• • • Liability of Gratuity to employees is determined on the basis of contribution made to Life Insurance Corporation of India from whom the company has taken the Group Gratuity Insurance policy. Liability for leave encashment benefit determined on the basis of contribution made to Life Insurance Corporation of India from whom the company has taken the Leave Encashment policy Contributions to defined contribution schemes such as Provident Fund and Family Pension Fund are charged to profit & Loss Account as incurred.

10. Borrowing Cost
Borrowing cost that are attributable to acquisition of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to revenue.

11. Taxes on income
• Deferred tax amount is recognized subject to the consideration of the prudence on the tax effect of timing difference between the taxable income and accounting income computed for the current accounting year and reversal of earlier year timing difference. Deferred Tax assets are recognized and carried forward to the extent there is a reasonable certainty except arising from unabsorbed depreciation and carry forward losses which are recognized to the extent that there is virtual certainty that sufficient future taxable income will be available against such deferred tax assets.

12. Cash flow statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals of accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; investing and financing activities of the company are segregated.

B. NOTES TO ACCOUNTS
1. 2. The company has provided Rs 2.64 (previous period Rs 3.40) as liability accruing on account of deferred entitlement towards LTC. (Refer Para 6 of Accounting Policies). Contingent Liabilities (Disclosed in terms of AS-29 issued by ICAI which becomes mandatory with effect from 01.04.2004) • • • Bank Guarantees issued by banks on behalf of the company Rs.3.20 (previous year Rs.12.05). In respect of Letters of Credit Rs. 572.66 (previous year Rs. 732.30). Sales Tax A demand of Rs.85.52 has been issued against the company due to dispute over taxability of the food products. The company has filed an appeal before the DC (Appeals), Delhi and the same is pending for hearing. The company has been legally advised that no provision is necessary as the probability of crystallization of the liability is very remote. • 3. 4 5. Estimated Amount of contract remaining to be executed on capital Account Rs.300 net of advance (Previous year Rs.Nil)

The company has entered into an agreement with Dabur India Ltd., its holding company, for exclusive rights to use trademarks Real, Hommade and Lemoneez in the domestic market. Balances of Sundry Creditors and Debtors are subject to confirmation. Particulars of consumption of Important Raw Materials
2004-2005 Class of Goods Mango Mango Pulp Others Qty.(In MT) 1967.60 1767.00 Value 203.27 322.19 452.43 977.89 Qty.(In MT) 1393.10 2003-2004 Value 82.14 180.13 262.27

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Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)
(Rs. In lac) 6. Value of Raw and Packing materials consumed
Raw Material 2004-2005 Val ue Imported Indigenous Total 89.21 888.68 977.89 % 9.12 90.88 100.00 2003-2004 Value % 52.92 209.35 262.27 20.18 79.82 100.00 2004-2005 Value 191.19 191.19 Packing Material 2003-2004 % Value 100.00 100.00 78.10 78.10

% -

100.00 100.00

7. Particulars of Traded/Manufactured Goods Classes of Goods
Purchases Qty Value

Fruit Juices
22089.83 (17086.37) 5710.29 (4486.78) 849.96 (1335.83) 358.10 (417.76) 2160.41 (849.96) 714.82 (358.10)

Vegetable Pastes
367.76 (185.71) 242.52 (106.64) 52.76 (56.14) 29.47 (38.36) 47.61 (52.76) 30.64 (29.47) 372.91 (189.09) 330.43 (218.74)

Others

Total

851.28 (134.52)

6804.09 (4727.94)

Opening Stock

Qty Value

51.76 (60.82)

439.33 (516.94)

Closing Stock

Qty Value

344.27 (51.76)

1089.73 (439.33)

Sales

Qty Value

20779.39 (17572.23) 10765.2 (7648.08)

1874.35 (712.99)

12969.98 (8579.81)

(Previous year figures given in bracket. Fruit juices unit in Kilo Liters & Vegetable Pastes in M Ton)
31.03.2005 31.03.2004

8.

CIF Value of Imports (Purchases) Raw Materials 93.38 43.70

9.

Earnings in Foreign Exchange On account of exports at FOB 513.47 21.31

10. Segment Reporting: The company has primarily engaged in the business of fruit juices and vegetable pastes, which are governed by the same set of risk and return and therefore the entire business is covered under one Food segment. The said treatment is in accordance with the guiding principles enunciated in the Accounting Standard on Segment Reporting (AS 17). 11. Deferred Taxation: As per Accounting Standard 22, accounting for tax on income, no provision has been made for deferred taxes in view of carry forward loss as per Income Tax Act, 1961, and after considering the effect of timing difference, still there was loss and hence no deferred tax assets/liabilities has been created. 12. In the opinion of management, fall in the value of long term investment in Pasadensa Foods Limited, (wholly owned subsidiary of the company) is of temporary nature. Hence provision for diminution in the value of investment is not deemed necessary.
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Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)
(Rs. In lac)

13. Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the year, to the Manager: 31.03.2005 Basic Salary Contribution to Pension, PF & other Funds Other Allowances 6.02 1.92 12.95 20.89 31.03.2004 5.45 1.74 11.46 18.65

The above remuneration has been approved by the Central Government, hence the computation of remuneration u/s 349 of The Companies Act, 1956 has not been given. 14. Total outstanding dues to small scale industries have been determined to the extent such parties have been identified on the basis of information available with the Company. The list of small scale industries to whom the Company owes any sum as on March 31, 2005 are: • Sheel Packaging Pvt. Ltd • Northern Aeromatic Ltd • Jainex India 15. Earning per share 31.03.2005 Earning Profit after tax Shares Weighted Average No. of Shares E.P.S.(Basic & Diluted) 16. Related Party Transactions:
Particulars Purchases of Goods Sale of Goods Receipt of Loan given Finance (incl. Loan & equity Contributions in cash or kind) Remuneration Paid Interest recd on Loan Corporate Guarantees given by Holding Company Holding Company 49.37 (58.98) 3750.00 (2887.00) Subsidiary 75.00 (0) 875.00 (1705.00) 31.79 (15.53) Fellow Subsidiary 6143.81 (4257.50) 394.46 (297.74) Associate Key Mgt. Personnel 20.89 (18.65) Total 6193.18 (4316.48) 394.46 (297.74) 75 (0) 875 (1705.00) 20.89 (18.65) 31.79 (15.53) 3750 (2887.00) Outstading as on31.03.05 (33.97) (26.46) 9.90 (9.24) Nil (Nil) 800.00 (505.00) Nil (Nil) Nil (Nil) 3750.00 (2887.00)

• Dayanamic Sticker Industries • Sun Control System Ltd

31.03.2004 146.27 10000000 1.46

525.55 10000000 5.26

Note: Names of related parties and description of relationship: Dabur India Limited - Holding Company Dabur Nepal Pvt. Limited - Fellow Subsidiary Pasadensa Foods Limited - Subsidiary Company Mr. Sanjay Sharma - Key Management Personnel
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Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)
(Rs. In lac)

17. Auditors Remuneration includes

31-03-2005
Audit Fee Tax Audit Fees Reimbursement of Expenses Other Matters 1.33 0.22 0.79 0.63 2.97

31-03-2004
1.16 0.22 0.58 0.80 2.76

18. Foreign Exchange loss of Rs.4.08 (net of gain) has been charged to Profit & Loss Account. 19. The company has not received any claim for interest from any supplier under the “Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1933”. 20. Previous year figures have been regrouped and rearranged wherever considered necessary. 21. Additional information as required under Part IV of Schedule VI of the Companies Act, 1956:

I.

Registration Details Registration No. State Code Balance Sheet Date 83594 55 31.03.2005

II.

Capital raised during the year (Amount in Rs.thousand) Public Issue Right Issue Bonus Issue Private Placement Promoters/Subscribers NIL NIL NIL NIL NIL

III. Position of Mobilization and Deployment of Funds (Amount in Rs.thousand) Total Liabilities Total Assets Sources of Funds Paid up Capital Share Application Money Reserves and Surplus Secured Loans Unsecured Loans Application of Funds Net Fixed Assets Investments Net Current Assets Misc. Expenditure Accumulated Losses 452 50021 237912 0.00 148128 100000 NIL NIL 163734 172779 555547 555547

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Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)
(Rs. In lac)

IV.

Performance of Company (Amount in Rs.thousand) Turnover Total Expenditure Profit Before Tax Profit After Tax Earning per share in Rupee Dividend Rate 1301472 1244446 57026 52555 5.26 NIL

V.

Generic names of Principal Products/Services of Company (As per Monetary terms) Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description 220240 Fruit Juice 220110 Vegetable Pastes

22. Schedules A to N form an integral part of accounts. As per our report of even date attached

As per our report of even date attached For Jhalani & Co. Chartered Accountants V.K. Jhalani Partner Ghaziabad 22nd April, 2005

For Dabur Foods Ltd. Amit Burman P. D. Narang Neeraj Aggarwal Director Director Manager Finanace& Company Secretary

Dabur Foods Limited • Annual Report 2004-05

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Cash Flow Statement For The Year Ended 31st March 2005
For the year ended 31st March 2005 (Rs.in lac) For the year ended 31st March 2005 ( Rs.in lac)

A. Cash Flow From Operating Activities
Net Profit Before Tax And Extraordinary Items Add: Depreciation 1.48 Miscellenous Exp. Written Off Interest 214.24 198.49 215.72 785.97 Less: Interest Received Operating Profit Before Working Capital Changes Working Capital Changes Increase/(Decrease) In Inventories Increase/(Decrease) In Debtors Decrease/(Increase) In Trade Payables Increase/(Decrease) In Working Capital Cash Used(-)/(+)Generated For Operating Activities (A) 673.38 461.82 (272.76) 862.44 (108.94) 32.47 32.47 753.50 (94.84) (210.22) (223.39) (528.45) 1,001.15 472.69 314.17 472.69 0.98 114.70 570.25 158.52

B. Cash Flow From Investing Activities
Sale/(Purchase) Of Investments Interest Received Purchase Of Fixed Assets Sale Of Fixed Assets Cash Used(-)/(+)Generated For Investing Activities (B) 5.00 32.47 (0.23) 0.10 37.34 (505.01) (6.03) (511.04)

C. Cash Flow From Financing Activities
Interest Paid Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities Repayment(-)/Proceeds(+) From Short Term Loans Proceeds From Deposits Repayment(-)/Proceeds(+) From Other Unsecured Loans Payment Of Other Advances Cash Used(-)/+(Generated) In Financing Activities © Net Increase(+)/Decrease (-) In Cash And Cash Equivalents (A+B+C) Cash And Cash Equivalents Opening Balance Cash And Cash Equivalents Closing Balance Cash In Hand Bank Balances (Including Cheques In Hand) Less: Book Overdraft 0.70 201.84 52 .65 149.89 0.31 454.82 8.95 446.18 21 23 (212.72) 1012.34 (2.37) (150.00) (871.94) (224.69) (296.29) 446.18 (198.77) 425.00 (34.52) (575.00) 0.23 (184.29) 305.82 339.13

Dabur Foods Limited • Annual Report 2004-05