Dabur Nepal

Dabur Nepal Private Limited Audited Balance Sheet and Profit & Loss Accounts for the year ended 31st March 2005

Contents Page

Director’s Report

1

Independent Auditor’s Report

3

Balance Sheet

4

Profit and Loss Account

5

Schedules

6

Accounting Policies and Notes to Accounts

11

Cash Flow Statment

17

Directors’ report This report has been prepared for the purpose of annexing the Annual Accounts of the Company with the Annual Accounts of Dabur India Ltd., the holding company. The report is based on the performance of the Company during the period 1st April 2004 to 31st March 2005. The financial year of the Company will end on 15th July 2005 as per the Nepali Law.

Financial Results The financial results for the Company’s working are as follows: (Nrs in Lacs) .... 2004-05

2003-04

Turnover including other income

29830.24

28492.98

Profit after depreciation and before provisions

1615.45

2153.83

80.77 153.47 264.53

107.69 204.61 395.93

1116.68

1445.60

5863.34

4846.69

6938.10

6282.74

319.41 100.00 6518.69

319.40 100.00 5863.34

6938.10

6282.74

Less: Provision for housing facility Less: Provision for Bonus Less: Provision for Income Tax

Net Profit after Tax Add: Balance in Profit & Loss account brought forward from the previous year

Profit available for appropriation Appropriation: Interim Dividend Transfer to General Reserve Balance carried to Balance Sheet

Operations The turnover of the company has increased by 4.69% over the previous year. The Net Profit after tax has reduced by 2.28% over the previous year due to lower contribution margin. During the year your company has invested Rs 24.65 crore on account of fixed assets. Out of which, major amount is spent towards installing a new packing machine in Juice Plant in Flex Pack and increasing cold store capacity. Your company has disposed off it’s fixed assets amounting Rs 4.51 crore during the year. During the year, your company launched new A-3 flex pack of 1 litre and 330 ml. for Active range of juices. Your company has also for the first time, launched fruit-vegetable juices and Coolers during the year. Continuing its thrust on the domestic market, your company has started manufacturing Red toothpaste and gel, Chywanprash, Vatika face-pack and Anmol Black shampoo during the year. During the year, the company’s sale from domestic market is 13% as against 8.4% in the previous year.

Medicinal plants project: In the Nursery business, your Company has now become self-sufficient in Pellitory Roots (Akarkara), one of the key ingredients, which has been imported so far. Your Company has signed a MOU with a US based Company for plantation of Mint and extraction of Mint oil, which will be sold to the US Company. This will not only create a new area of expansion, but also act as a backward linkage for Company’s inhouse requirement of Mint oil.

Dabur Nepal Private Limited • Annual Report 2004-05

1

Directors’ Report (Contd...)

Expansion / modernization program During the year, your company has installed a new packing line for packing 1 litre and 330 ml fruit juices in a new Flex pack. The new pack is a very modern and contemporary pack and will help your company to capture larger market share for its brand.

Quality & safety: Your Company has undertaken a detailed Quality Audit in its plant covering wide areas like production, processes, manpower, infrastructure etc. and has implemented almost all the recommendations given in the audit. Your Company has also gone through Safety Audit, which was conducted by a professional firm from India.

Dividend An interim dividend of Rs 40.00 per equity share was declared in March 2005.

Acknowledgment The directors wish to place on record their appreciation for the continued support and co-operation extended by Dabur India Ltd., Shareholders, Dealers, Customers and all the employees of the company. They also wish to place on record their sincere appreciation for the co-operation, assistance and guidance received from various officers of the His Majesty’s Government of Nepal and Government of India.

On behalf of the Board of Directors Pradip Burman Chairman Kathmandu, Nepal 19th April 2005 (2062/01/06)

Dabur Nepal Private Limited • Annual Report 2004-05

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INDEPENDENT AUDITOR’S REPORT To, The Shareholders, Dabur Nepal Private Ltd. We have audited the accompanying Balance Sheet of Dabur Nepal Private Limited, as of 31 March 2005, the related Profit and Loss Account and the Cash Flow Statement for the year then ended. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Nepal Standards on Auditing. 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. As per the requirement of the Companies Act 2053 we report that: a)

we have obtained 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 as required by law have been kept by the Company so far as appears from our examination of such books;

c)

in our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account maintained by the Company;

d)

in our opinion, so far as appeared from our examination of the books, the business of the Company has been conducted satisfactorily; and

e)

to the best of our knowledge and in accordance with explanations given to us and from our examination of the books of account of the Company necessary for the purpose of our audit, we have not come across cases where the Board of Directors or any employees of the Company have acted contrary to the provisions of law, or committed any misappropriation or caused loss or damage to the Company.

In our opinion, the financial statements read together with the notes appended in Schedule O presents fairly, in all material respects, the financial position of the Company as of 31 March 2005, and of the results of operations and its cash flows for the year then ended in accordance with Nepal Accounting Standards and other accounting standards generally applicable in Nepal and comply with the provisions of the Companies Act 2053.

Shashi Satyal Partner For and on behalf of T R Upadhya & Co. Chartered Accountants

7 April 2005 Kathmandu, Nepal

Dabur Nepal Private Limited • Annual Report 2004-05

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Balance Sheet As At 31 March 2005 Schedule

As at 31.03.05 Nrs. In Lacs

As at 31.03.04 Nrs. In Lacs

Sources Of Funds Share Holders’ Funds (A) Share Capital (B) Reserves & Surplus Loan Funds (A) Secured Loans (B) Unsecured Loans

Total Application Of Funds Fixed Assets

A

Current Assets, Loans & Advances (A) Inventories (B) Sundry Debtors (C) Cash & Bank Balances (D) Loans And Advances (E) Deposits And Other Receivables Less :Current Liabilities & Provisions (A) Liabilities (B) Provisions Net Current Assets Deferred Expenditure (To The Extent Not Written Off Or Adjusted)

Total Accounting Policies

8,649.58

798.52 7,122.66

5,765.90 77.00

5,842.90

5,776.22 77.00

7,921.18

B

14,492.48

5,853.22

13,774.40

C

(A) Gross Block (B) Less: Depreciation (C) Net Block

Investments

798.52 7,851.06

14,803.75 5,844.48 D E

12,789.46 5,017.20 8,959.27

7,772.26

19.30

-

7,097.31 1,664.65 12.70 2,555.71 2,873.53

5,318.12 1,722.47 91.78 2,001.66 4,112.81

14,203.90

13,246.84

6,549.33 2,190.38

5,555.79 1,753.73

8,739.71

7,309.52

F

G

5,464.19 49.72

5,937.32 64.82

14,492.48

13,774.40

O

Schedule A to G and O forms an integral part of this Balance Sheet

As Per Our Report Of Even Date Attached

For Dabur Nepal Pvt. Ltd. Pradip Burman

Chairman

Shashi Satyal

R. S. Rana

Managing Director

Partner

A. Mehra

CFO & Co. Secretary

G. Kashinath

Chief Executive Officer

For T. R. Upadhya & Co. Chartered Accountants Kathmandu 7th April 2005

Dabur Nepal Private Limited • Annual Report 2004-05

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Profit and Loss Account for the year ended 31 March 2005 Schedule

Income Sales Other Income Expenditure Cost Of Materials Excise Duty Manufacturing Expenses

For the year ended 31-03-2005 Nrs. in Lacs

H I

29,634.41 195.83

J

21,849.55 50.58 1,377.96

K

Gross Profit Payments & Benefits To Employees Administrative & Selling Expenses Financial Expenses Amortisation Of Miscellaneous Expenses Depreciation

29,830.24

28,347.35 145.63

23,278.09

20,354.87 28.82 1,347.59

6,552.15 L M N

1,230.18 1,900.00 663.40 15.10 1,014.31

Net Profit Before Extraordinary Items (Profit)/Loss On Sale Of Fixed Assets Loss On Sale Of Bonds Assets Not In Use /Written Off Provision For Claims Receivable

Net Profit Before Provisions Provision For Housing Provision For Bonus

Net Profit Before Taxation Provision For Taxation Net Profit After Tax Surplus B/F From Previous Year Income Tax Adjustment For Previous Years

Profit Available For Appropriation Appropriation / Allocation General Reserve Interim Dividend Proposed Dividend Balance Carried Over To Balance Sheet

Accounting Policies

For the year ended 31-03-2004 Nrs. in Lacs

4,822.99

28,492.98

21,731.28

6,761.70 806.77 1,445.90 940.17 16.42 1,065.95

4,275.21

1,729.16

2,486.49

(12.75) 91.77 34.69

10.74 120.48 91.77 109.67

1,615.45

2,153.82

80.77 153.47

107.69 204.61

1,381.21

1,841.52

264.53 1,116.68 5,863.34 41.92

395.93 1,445.59 4,846.67 9.52

6,938.10

6,282.74

100.00 319.41 6,518.69

100.00 319.40 5,863.34

6,938.10

6,282.74

O

Schedule H to O forms an integral part of this Profit and Loss Account

As Per Our Report Of Even Date Attached

For Dabur Nepal Pvt. Ltd. Pradip Burman

Chairman

Shashi Satyal

R. S. Rana

Managing Director

Partner

A. Mehra

Cfo & Co. Secretary

G. Kashinath

Chief Executive Officer

For T. R. Upadhya & Co. Chartered Accountants Kathmandu 7th April 2005

Dabur Nepal Private Limited • Annual Report 2004-05

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Schedules annexed to and forming part of the balance sheet as at 31st March 2005 As at 31st March 2005 Nrs. in Lacs

As at 31st March 2004 Nrs. in Lacs

Schedule A - Shareholders‘ Fund Share Capital Authorised 1400000 Equity Shares of Rs.100 Each (Previous Year : 1400000 Equity Shares of Rs.100 Each)

1,400.00

1,400.00

800.00

800.00

798.52

798.52

600.00 759.30 6,518.69

600.00 659.30 5,863.36

7,877.99

7,122.66

Issued 800000 Equity Shares of Rs. 100 Each (Previous Year : 800000 Equity Shares of Rs. 100 Each)

Subscribed & Paid Up 798520 Equity Shares of Rs.100 Each Fully Paid Up (Previous Year : 798520 Equity Shares of Rs.100 Each) Reserves & Surplus Share Premium Reserve General Reserve Profit and Loss Account Less: Bonus Adjusted in Retained Earnings

26.93

-

7,851.06

7,122.66

919.34 3,252.38 1,121.16

1,513.76 2,996.56 796.70

Schedule B - Loan Funds Secured Loans Working Capital Loans Nabil Bank Ltd. Standard Chartered Bank Nepal Ltd. Nepal SBI Bank Ltd.

5,292.88

5,307.02

Trust Receipt Loans Nabil Bank Ltd. Nepal SBI Bank Ltd. Standard Chartered Bank Nepal Ltd.

20.06 236.13 85.38

126.84 202.65 -

341.57

329.49

(All the above loans are secured by execution of registered mortgage by deposit of title deeds of Company’s entire land situated at Rampur Tokani, Bara district and the entire immovable properties, present & future, built thereon, and hypothecation & assignment of entire current assets, present and future, ranking Pari - Passu amongst Nabil Bank Ltd., Std. Chartered Bank Nepal Ltd. and Nepal SBI Bank Ltd., subject to the priorities that Banks extending term loans (except that which is covered by guarantees of Indian banks) shall have first charge on the fixed assets and second charge on current assets while the participating banks extending working capital, overdraft and cash credit shall have paripassu first charge on the current assets and second charge on fixed assets ; and are further secured by a corporate guarantee by the Company’s parent company, Dabur India Ltd., New Delhi, India and by personal guarantee by a Director of the Company.)

Other Long Term Loans Acceptances (Against Tetrapack Machine)

131.45

139.71

5,765.90

5,776.22

Unsecured Loans From A Director

77.00

77.00

77.00

77.00

Dabur Nepal Private Limited • Annual Report 2004-05

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8

Schedules annexed to and forming part of the balance sheet as at 31st March 2005 (Contd...) Schedule C - Fixed assets Name of assets

Nrs. In Lacs

Depreciation

Gross Block

(%)

Land Land for housing colony Building, roads & bridges

5

As at Additions Adjustment

Depreciation As at

Net Block

As at For the year Adjustment

01.04.04

-

-

31.03.05

31.03.04

324.50

-

-

324.50

-

-

-

As at

As at

As at

31.03.05

31.03.05

31.03.04

-

324.50

324.50

163.42

-

-

163.42

-

-

-

-

163.42

163.42

2,615.95

299.95

-

2,915.90

596.57

104.35

-

700.92

2,214.98

2,019.38

Worker’s quarter

5

178.01

127.57

-

305.58

27.51

10.76

-

38.27

267.31

150.50

Furniture & fixture

25

466.29

95.44

9.28

552.45

235.63

66.23

9.11

292.75

259.70

230.66

Laboratory equipment

25

96.67

4.50

-

101.17

58.23

9.72

-

67.95

33.22

38.44

Office equipment

25

429.20

27.03

0.82

455.41

193.69

63.71

0.20

257.20

198.21

235.51

Vehicles

20

306.61

208.07

74.76

439.92

137.63

40.49

48.98

129.14

310.78

168.98

Electrical installation

15

508.10

62.02

-

570.12

271.24

38.28

-

309.52

260.60

236.86

Plant & machinery

15

7,274.85 1,561.28

Tools & implements

15

Capital work in progress

230.43

8,605.70

3,357.42

657.39

128.74

3,886.07

4,719.63

3,917.43

290.47

59.17

-

349.64

139.28

23.38

-

162.66

186.98

151.19

135.39

19.94

135.39

19.94

-

-

-

-

19.94

135.39

450.68 14,803.75

5,017.20

1,014.31

187.03

5,844.48

8,959.27

7,772.26

( including capital items in transit ) Total

12,789.46 2,464.97

As at 31st March 2005 Nrs. in Lacs

As at 31st March 2004 Nrs. in Lacs

Schedule D - Investments 5% Special Bond

19.30 19.30

-

7,103.62 6.31

2,359.24 1,583.50 309.50 105.73 241.94 718.21 5,318.12 -

7,097.31

5,318.12

Schedule E - Current Assets, Loans and Advances Inventories (As Taken,Valued And Certified By The Management) Raw Materials Packing Materials Stores And Spares Stock In Process Finished Goods Material In Transit

3,294.07 1,452.85 260.42 161.87 831.44 1,102.97

Less: Provision For Damaged Stock

Sundry Debtors (Unsecured, Considered Good) Over Six Months Others

46.99 1,617.66

26.19 1,696.28

1,664.65

1,722.47

Cash & Bank Balances Cash In Hand Balance With Banks

1.28 11.42

1.89 89.89

12.70

91.78

Dabur Nepal Private Limited • Annual Report 2004-05

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

As at 31st March 2004 Nrs. in Lacs

Schedule E - Investments (Contd...) Loans & Advances (Unsecured Considered Good Unless Otherwise Stated) Advances Recoverable in cash or kind or for values to be recovered Advance To Employees Advance To Suppliers Margin Money With Bank Prepaid Expenses Advance Income Tax Other Advances

177.66 926.74 42.13 55.08 1,115.61 238.49

176.97 806.05 26.63 48.30 697.65 246.06

2,555.71

2,001.66

Deposits And Other Receivables Security Deposit Vat Deposit Customduty Drawback Receivable Local Development Tax Deposit Bonds Receivable Interest Accrued On Bonds Custom Duty Deposit & Special Duty Deposit Insurance Claim

18.61 400.72 2,282.60 49.46 110.13 0.93 6.31 33.18

18.61 590.52 1,903.30 217.25 19.30 1,332.78 31.05

2,901.94 Less: Provision For Doubtful Receivables

4,112.81

28.41

2,873.53 14,203.90

4,112.81 13,246.86

Schedule F - Current Liabilities & Provisions Liabilities Creditors For Goods Acceptances Interest Accrued But Not Due Creditors For Exps. & Other Liabilities Dividend Payable Advance Against Supplies & Expenses

1,403.67 4,509.06 50.10 373.44 60.80 152.26

1,720.22 3,447.64 13.12 355.43 19.38

6,549.33

5,555.79

Provisions Provision For Housing Provision For Bonus Provision For Earned Leave Salary Provision For Taxation

673.13 153.47 29.44 1,334.33

592.36 150.53 11.13 999.70

2,190.38 8,739.70

1,753.73 7,309.52

64.82 15.10

5.48 75.76 16.42

49.72

64.82

Schedule G - Deferred Expenditure Opening Balance Addition During The Year Less: Written-Off During The Year

Closing Balance

Dabur Nepal Private Limited • Annual Report 2004-05

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10

Schedules annexed to and forming part of the Profit and Loss account for the year ended 31st March 2005 for the year ended 31st March 2005 Nrs. in Lacs

for the year ended 31st March 2004 Nrs. in Lacs

Schedule H - Sales Sales Domestic Sales Export Sales

3,878.85 25,755.56

2,401.90 25,945.45

29,634.41

28,347.35

8.09 137.42 0.83 2.93 2.15 44.41

11.28 95.58 1.82 36.95

195.83

145.63

Schedule I - Other Income Interest Received Scrap Sales Discount Received Rent Received Misc Income Exchange Gain (Net)

Schedule J - Cost Of Materials Cost Of Materials Consumed Raw Material : Opening Stock Purchase Less : Closing Stock Raw Material Consumed

2,359.24 15,717.05 3,294.07

14,782.22

3,573.65 11,798.07 2,359.24

13,012.48

1,583.60 7,582.22 1,452.85

7,712.97

1,483.87 7,143.92 1,583.50

7,044.28

105.73 161.87

(56.14)

139.41 105.73

Packing Material : Opening Stock Purchase Less : Closing Stock Packing Material Consumed

Work In Process : Opening Stock Less : Closing Stock

Cost Of Materials Consumed Cost Of Goods Sold Cost Of Materials Consumed Adjustment Of Finished Goods Stock : Opening Stock Less : Closing Stock

241.94 831.44

33.68

22,439.05

20,090.45

22,439.05

20,090.45

(589.50)

506.36 241.94

264.42

21,849.55

20,354.87

729.60 62.76 37.51 38.36 358.98 68.92 6.67 44.31 30.85

704.70 18.26 195.39 26.27 322.04 11.64 1.91 36.96 30.42

1,377.96

1,347.60

Schedule K - Manufacturing Expenses Power & Fuel Repair & Maintenance (Machinery) Repair & Maintenance (Building) Repair & Maintenance (Others) Consumable Stores Custom Duty (Others) Laboratory Expenses Cartage & Coolie Other Expenses

Dabur Nepal Private Limited • Annual Report 2004-05

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11

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

for the year ended 31st March 2004 Nrs. in Lacs

Schedule L - Payments & Benefits To Employees Salaries & Allowances

648.26

443.82

Wages & Workmen Welfare Staff Welfare Expenses Gratuity Directors Remmuneration Employer’s Share To P.F.

385.72 130.36 16.57 7.13 42.14

232.41 72.00 6.68 18.06 33.80

1,230.18

806.76

104.69 45.94 176.07 82.75 110.85

118.52 60.45 160.67 49.58 87.79

Schedule M - Administrative & Selling Expenses Postage, Telephone & Telegram Vehicle Running Expenses Travelling Expenses Legal & Professional Charges Insurance Auditor’s Remuneration : - Statutory Audit Fee - Tax Audit Fee Selling & Distribution Expenses Advertisement Royalty Rent Printing & Stationery Guest House Expenses Books & Periodicals Entertainment Expenses Donation & Subscription General Charges Watch & Ward Expenses Business Development Expenses Other Administrative Expenses

2.50 0.40

2.90 480.64 413.95 69.34 145.66 29.70 0.32 0.88 15.27 26.84 7.28 57.56 44.17 85.19

1.40 0.75

1,900.00

2.15 258.22 224.77 112.42 134.98 29.71 2.60 8.13 14.06 42.75 10.93 37.14 71.60 19.43

1,445.90

Schedule N - Financial Expenses Interest Interest On : Term Loan Working Capital Loan

Bank Charges

553.85

239.43 570.04 553.85

809.47

109.55 663.40

130.70 940.17

Dabur Nepal Private Limited • Annual Report 2004-05

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12

Schedules annexed to and forming part of accounts as at 31st March 2005

Schedule O - Significant Accounting Policies & Notes to Accounts

Significant Accounting Policies a) Basis of accounting Financial statements are prepared under the historical cost convention, in accordance with Accounting Standards applicable in Nepal and the requirements of Company Act, 2053. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except in case of significant uncertainties relating to income.

b) Fixed Assets Fixed assets are recorded at cost less accumulated depreciation. The Company capitalizes all direct costs relating to the acquisition and installation of fixed assets.

c) Depreciation Depreciation is provided on written down value on all fixed assets (except land) at the rates prescribed by the Income Tax Act 2058.

d) Investments Long term investments are valued at cost. Current investments are valued at lower of cost or fair value as on the date of the Balance Sheet. The Company provides for diminution in value of investments, other than temporary in nature, in the financial statements.

e) Inventories Inventories are valued at lower of cost or net realizable value using the following basis for determining costs: Raw materials, Packing materials and Stores and spares

f)

On FIFO basis

Work in process

At cost including proportionate factory overheads

Finished stock

At costs including proportionate appropriate overheads

Retirement Benefits Retirement benefits to employees comprise payments to gratuity fund, provident fund and leave salary. All contributions to the provident fund are charged to profit & loss account as incurred and such contributions are paid to the approved provident fund trust managed by trustees comprising employees. Liabilities in respect of retirement benefits to employees are provided for as follows: •

Liabilities in respect of staff gratuity on actuarial valuation method.

•

Liabilities in respect of accumulated leave salary on actuarial basis.

g) Borrowing Cost Borrowing costs 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.

h) Revenue Recognition Sales are recognized on dispatch to customers and are recorded net of Value Added Tax. Export sales do not attract any Value Added Taxes.

Dabur Nepal Private Limited • Annual Report 2004-05

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

i)

Staff Housing and Bonus Amount towards Staff Housing and Bonus have been provided as required under Labour Act and Bonus Act respectively.

j)

Foreign Currency Transactions Foreign currency transactions are accounted at exchange rates prevailing on the date of the transactions. All foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing at that date. All exchange differences in respect of foreign currency transactions are dealt with in the Profit & Loss Account except those relating to acquisition of fixed assets, which are adjusted in the cost of the assets.

k) Deferred Expenditure License fees and other costs associated with implementing an ERP are amortized over a period of five years.

2. Notes to Accounts a) Change in accounting estimates With effect from 1 April 2004, the Company has changed the basis of valuation of staff earned leave liability to actuarial valuation from the accrual basis followed upto previous year. With this change, the staff earned leave liability as at 31 March 2005 is Rs 12.19 lacs against the liability of Rs 29.43 lacs recorded in the books as per the basis of valuation followed up to the previous year. The excess provision of Rs 17.24 lacs will continue to be reflected in the books till the liability as per actuarial valuation reaches such levels.

b) Contingent Liabilities There are contingent liabilities in respect of: (Nrs. in Lacs)

Unexpired Letters of Credit Unexpired Bank Guarantees Bill Discounted Disputes regarding income tax liabilities for additional demand pending before Hon’b Supreme Court Dividend tax in appeal Capital commitments on account of construction contracts net of advances Income Tax in appeal for 58-59 and 59-60

As at 31 March 2005

As at 31 March 2004

2,094.22 1,802.37 856.67 -

2,462.49 1,817.43 379.48 1.69

59.59

78.65 111.64

120.05

TOTAL

4932.90

-

4,851.38

c) Acceptances Acceptances denote liabilities for suppliers’ bills accepted/discounted.

d) Royalty As per the Joint Venture Agreement, Royalty payable to Dabur India Ltd for the year is Rs 69.34 lacs (previous year Rs 112.42 lacs).

Dabur Nepal Private Limited • Annual Report 2004-05

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Schedules annexed to and forming part of accounts as at 31st March 2005 e) Custom Duty Drawback Receivable Custom duty paid on import of raw materials (including special taxes and local development taxes) is recoverable against export pursuant to statutory enactment and accordingly the Company has made necessary applications to the appropriate authorities for its refund as per the rules and waiting for final refund order. Rs 2,282.60 lacs (previous year Rs 1,903.30 lacs) is receivable against customs duty drawback excluding special taxes and local development taxes) from HMG/Nepal on the date of the Balance Sheet of which Rs 1,640.61 lacs is outstanding for more than a year.

f)

Staff Housing Fund The Company has spent Rs 163.42(Previous year Rs 163.42 lacs) on purchase of land for the staff housing colony and Rs 305.58 lacs (Previous year Rs 178.01 lacs) on construction of worker’s quarters up to 31 March 2005 out of the total provision of Rs 673.17 lacs (previous year Rs 592.36 lacs.)

g) Inter company balances Debtors and loans and advances include Rs 177.84 lacs (Previous year Rs 276.23 lacs) recoverable from companies where the directors are interested. Of the above, Rs 136.92 lacs (Previous year Rs 574.51lacs) is recoverable from M/s Machapuchre Herbals Pvt Ltd and M/s Machapuchre Enterprises. The Company considers these balances to be recoverable and accordingly no provision for non-recovery has been made.

h) Income Tax Rebate on Investment allowances The Company has received an investment allowance of Rs 32.47 lacs in the current year for additional investment made in the expansion of its manufacturing facilities in 2055-56 to 2057-58. The investment allowance has been netted off against the current year’s tax provision of Rs 264.68 lacs Further a claim of Rs 17.11 lacs has been lodged with the Inland Revenue Department against interest on the above investment allowance.

i)

Physical Verification of Fixed Assets The Company has appointed consultant to undertake physical verification of fixed assets. Suitable accounting adjustments will be made on receipt of the report from the consultant.

j)

Previous year figures/Rounding off Previous year’s figures have been regrouped / rearranged wherever necessary to facilitate comparison. Figures are rounded off to the nearest of Rupees lacs.

Dabur Nepal Private Limited • Annual Report 2004-05

13

Schedules annexed to and forming part of accounts as at 31st March 2005 (Contd...) 3) QUANTITATIVE DETAILS OF MAJOR PRODUCTS 1. PRODUCTION Unit

2004-05

2003 - 04

Qty

Qty

Lal Dant Manjan

Cases

384,997

444,358

Binaca Tooth Powder

Cases

-

267

Dabur Red Tooth Paste

Cases

6,795

Vatika Hair Oil

Cases

298,034

Vatika Fairness Pack

Cases

6,133

Vatika Shampoo

Cases

93,997

350,095

Anmol Shampoo

Cases

8,272

3,191

Amla Hair Oil

Cases

151,580

307,098

Special Hair Oil

Cases

5,784

6,267

Anmol Coconut oil

Cases

921

Anmol Sarson

Cases

36,070

Baby Olive Oil

Cases

1,864

2,045

Hajmola Tablet

Cases

256,744

246,556

Hajmola Candy

Cases

11,514

13,351

Real Fruit Juice

Cases

2,708,155

1,266,261

95,437

Glucose D&C Powder

Cases

32,128

70,658

Chywanprash

Cases

14,947

249

Honey

Cases

8,044

-

Pachan Churan

MT

421.13

217.30

Dantmukta

MT

2,175.63

2,654.00

DCP Mishan

MT

239.85

137.98

MCS

MT

6.81

-

Sles 30% Bulk

MT

40.28

-

Vatika Shampoo - Bulk

MT

7.00

-

Vatika Hair Oil Bulk

MT

14.81

-

Stevia Powder

MT

1.60

-

Pet Bottles & Caps

TH

3,168

-

Honey- Bulk

MT

-

674

Dabur Nepal Private Limited • Annual Report 2004-05

14

Schedules annexed to and forming part of accounts as at 31st March 2005

2. SALES Unit

Qty

2004-05 Nrs in Lacs

Qty

2003-04 Nrs in Lacs

Lal Dant Manjan

Cases

384,704

3,873.10

341,859

3,533.75

Binanca Tooth Powder

Cases

-

-

2,802

24.89

Dabur Red Tooth Paste

Cases

6,016

129.64

Vatika Hair Oil

Cases

299,594

2,983.48

343,752

3,189.77

Vatika Fairness Pack

Cases

5,759

6.82

8,500

15.40

Vatika Shampoo

Cases

92,482

834.41

316,009

2,728.30

Anmol Shine Shampoo

Cases

7,603

153.39

2,332

48.23

Amla Hair Oil

Cases

152,381

1,507.53

205,085

1,884.80

Special Hair Oil

Cases

6,084

129.79

6,286

83.81

Anmol Coconut Oil

Cases

516

10.43

506

10.64

Anmol Sarson

Cases

35,691

43.18

-

-

Baby Olive Oil

Cases

1,866

30.30

2,805

44.87

Hajmola Tablet

Cases

253,646

2,759.83

265,067

2,960.34

Hajmola Candy

Cases

11,482

127.34

10,041

106.96

Real Fruit Juice

Cases

2,686,010

11,673.10

1,800,324

7,836.29

Glucose C & D Powder

Cases

31,789

399.61

59,253

668.33

Chywanprash

Cases

6,761

194.70

-

-

Honey

Cases

7,010

139.68

Pachan Churan

MT

429

591.81

316

392.38

Dantmukta

MT

2,129

2,690.80

2,356

2,985.18

DCP Mishran

MT

242

1,014.70

258

1,227.14

Taxin Resin

MT

-

-

14

143.05

MCS

MT

2.00

166.40

-

-

Sles 30% - Bulk

MT

41.20

20.09

-

-

Vatika Shampoo-bulk

MT

7.00

8.43

-

-

Vatika Hair Oil - bulk

MT

14.81

14.92

-

-

Stevia Powder

MT

1.60

1.92

0.00

0.32

Pet Bottles & Caps

TH

3,168.31

61.1

6,218

150.07

Tooth Brush& others

TH

417.12

22.2

102.4

14.83

Nursery - Sapplings Wax Foundation sheet Others Honey-bulk

19.46

8.38

6.49

-

19.81 MT

-

29,634.41

7.57 179

282.05 28,347.35

Dabur Nepal Private Limited • Annual Report 2004-05

15

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

3. CLOSING STOCK 2004-05 Unit

2003 - 04

Qty

Nrs in Lacs

Qty

Nrs. in Lacs

Lal Dant Manjan

Cases

2,671

25.26

2,378

17.48

Binaca Tooth Powder

Cases

-

-

-

-

Dabur Red Tooth Paste

Cases

779

8.62

-

-

Vatika Hair Oil

Cases

960

9.13

2,520

19.49

Vatika Fairness Pack

Cases

374

1.97

-

-

Vatika Shampoo

Cases

3,224

23.29

1,709

10.48

Anmol Shine Shampoo

Cases

1,528

17.99

859

7.19

Amla Hair Oil

Cases

350

3.20

1,151

10.47

Special Hair Oil

Cases

206

1.61

506

5.14

Anmol Coconut Oil

Cases

405

8.41

-

-

Anmol Sarson

Cases

379

3.40

-

-

Baby Olive Oil

Cases

40

0.80

42

0.58

Hajmola Tablet

Cases

4,583

30.47

1,485

12.00

Hajmola Candy

Cases

616

5.85

584

5.07

Real Fruit Juice

Cases

24,055

95.58

1,910

7.70

Glucose C & D Powder

Cases

1,071

9.53

732

7.01

Chywanprash

Cases

8,186

143.68

-

-

Honey

Cases

1,034

22.84

-

-

Pachan Curan

MT

3.83

3.85

12

11.02

Dantmukta

MT

47.50

45.73

1

1.10

DCP Mishran

MT

0.22

0.45

2

4.70 121.53

Taxin Resin

MT

-

-

16

MCS

MT

4.81

369.79

-

-

Honey-Bulk

MT

1

0.99

831.44

241.95

Dabur Nepal Private Limited • Annual Report 2004-05

16

Cash Flow Statement for the year ended 31st March 2005 for the year ended 31st March 2005 Nrs. in Lacs

A.

for the year ended 31st March 2004 Nrs. in Lacs

Cash Flow From Operating Activities Net Profit As Per P/L Account Add : Depreciation Amortisation Of Deferred Expenses Interest Fixed Assets Written Off Loss On Sale Of Assets Loss On Sale Of Bonds

1,381.21 1,014.31 15.10 553.85 91.77 -

1,841.53 1,065.95 16.42 809.47 91.77 10.74 120.48

1,675.03 Less : Profit On Sale Of Fixed Assets Interest Received Rent Received Operating Profit Before Working Capital Changes Working Capital Changes (Increase)/Decrease In Inventories (Increase)/Decrease In Debtors (Increase)/Decrease In Loans & Advances (Increase)/Decrease In Deposits & Receivables (Decrease)/Increase In Liabilities (Decrease)/Increase In Provisions Increase In Working Capital Cash Generated From Operation Interest Paid Advance Tax Paid Income Tax Adjusted For Previous Years Net Cash Generated From Operating Activities (A)

(12.75) (8.09) (2.93)

(23.77) 3,032.47

(1,779.19) 57.83 (136.11) 1,239.28 892.56 145.19

2,114.83 (11.28) (1.82)

(13.10) 3,943.26

618.69 398.56 (178.58) 723.17 2,425.27 78.02 419.56 3,452.03 (516.87) (417.96) (41.92) 2,475.28

4,065.13 8,008.39 (1,002.48) (306.74) (9.52) 6,689.65

(2,329.58) (19.30) 49.23 2.93 (2,296.72)

(1,032.10) (75.76)

(2.06) (8.26) (242.64) (12.77) 8.09 (257.64)

(1,373.42) (607.88) (4,000.00) (49.36) (364.23) (19.01) 11.28 (6,402.62)

(79.08) 91.78 12.70

61.75 30.03 91.78

B. Cash Flow From Investing Activities Purchase Of Fixed Assets Deferred Revenue Expenses Purchase Of Investments Sale Of Fixed Assets Sales Of Investments Rent Received Cash Outflow From Investing Activities

460.98 419.78 1.82 (225.28)

C. Cash Flow From Financing Activities Payment Of Working Capital Loans Repayment Of Term Loans To Banks Repayment Of Unsecured Loans To Banks Deferred Financing From Supplier Payment Of Dividend Tax On Dividend Interest Received Cash Flow Financing Activities Net Increase In Cash Inflow Opening Cash & Bank Balances Closing Cash & Bank Balances

Schedule A To O Forms An Integral Part Of This Cash Flow Statement As Per Our Report Of Even Date Attached For Dabur Nepal Pvt. Ltd. Pradip Burman Shashi Satyal R. S. Rana A. Mehra Partner G. Kashinath For T. R. Upadhya & Co. Chartered Accountants Kathmandu 7th April 2005

Chairman Managing Director Cfo & Co. Secretary Chief Executive Officer

Dabur Nepal Private Limited • Annual Report 2004-05

17