CHAIRMAN MANAGING DIRECTOR DIRECTORS CONTENTS Board of Directors, etc. 1 Financial Statistics 2...

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CONTENTS

Board of Directors, etc. 1

Financial Statistics 2

Financial Highlights 3

Directors’ Report 4

Corporate Governance Report 9

Management Discussion & Analysis Report 17

Auditors’ Report 20

Balance Sheet 24

Profit & Loss Account 25

Cash Flow Statement 26

Schedules 1, 2 28

Schedules 3, 4, 5 29

Schedules 6, 7, 8, 9 30

Schedules 10, 11, 12, 13 31

Schedules 14, 15 32

Schedule 16 33

Balance Sheet Abstract &Company’s General Business Profile 44

CHAIRMAN

Simon J. Scarff, O.B.E

MANAGING DIRECTOR

Nicholas J. Massey

DIRECTORS

Ashok Dayal

A. S. Lakshmanan

David S. Allen (till 24.01.06)

G. K. Chakraborty

Ian McPherson

Kunal Kashyap

P. Dwarakanath

P. Murari

P. S. Mukherjee

P. K. Gupta (w.e.f. 24.01.06)

Subodh Bhargava

COMPANY SECRETARY

Surinder Kumar

BANKERS

Deutsche Bank

Citibank N.A.

Bank of America

The Hongkong & Shanghai BankingCorporation Limited

Standard Chartered Bank

State Bank of Patiala

ABN Amro Bank

BNP Paribas

Andhra Bank

AUDITORS

Price Waterhouse

REGISTERED OFFICE

Patiala RoadNabha 147 201 (Punjab)

HEAD OFFICE

DLF Plaza TowerDLF City, Phase - IGurgaon 122 002 (Haryana)

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FINANCIAL STATISTICS

TEN YEAR FINANCIAL STATISTICSRs. Lakhs

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005SOURCES OF FUNDS

Share Capital 28,36 45,38 45,38 45,38 45,38 45,38 45,38 45,38 45,38 42,05

Reserves & Surplus 1,02,69 1,26,73 1,83,12 2,52,01 3,29,16 3,96,04 4,37,84 4,46,73 4,83,97 4,33,06

TOTALSHAREHOLDERS’FUNDS 1,31,05 1,72,11 2,28,50 2,97,39 3,74,54 4,41,42 4,83,22 4,92,11 5,29,35 4,75,11

BORROWINGS 8,00 - - 20,00 55,00 75,66 - - - -

FUNDS EMPLOYED 1,39,05 1,72,11 2,28,50 3,17,39 4,29,54 5,17,08 4,83,22 4,92,11 5,29,35 4,75,11

DEFERRED TAXLIABILITIES - - - - - 28,16 35,63 28,16 31,98 27,60

TOTAL 1,39,05 1,72,11 2,28,50 3,17,39 4,29,54 5,45,24 5,18,85 5,20,27 5,61,33 5,02,71

APPLICATION OF FUNDS

Gross Fixed Assets 73,87 88,36 1,20,05 1,95,74 4,02,18 4,96,90 5,15,56 4,92,22 5,04,63 5,17,74

Depreciation 35,91 43,11 51,22 58,67 70,04 84,55 1,22,70 1,62,31 1,97,24 2,33,95

NET FIXED ASSETS 37,96 45,25 68,83 1,37,07 3,32,14 4,12,35 3,92,86 3,29,91 3,07,39 2,83,79

INVESTMENTS 29,00 29,00 29,00 29,00 - - - - - -

Gross Current Assets,Loans and Advances 1,37,88 1,72,08 2,03,41 2,42,90 2,56,80 2,98,15 2,93,43 3,63,02 4,32,25 4,01,79

Current Liabilities &Provisions 65,79 76,99 83,37 1,12,69 1,78,12 1,80,04 1,77,28 1,77,57 1,78,31 1,82,87

NET CURRENTASSETS 72,09 95,09 1,20,04 1,30,21 78,68 1,18,11 1,16,15 1,85,45 2,53,94 2,18,91

MISCELLANEOUSEXPENDITURE - 2,77 10,63 21,11 18,72 14,78 9,85 4,91 - -

TOTAL APPLICATION 1,39,05 1,72,11 2,28,50 3,17,39 4,29,54 5,45,24 5,18,85 5,20,27 5,61,33 5,02,71

TEN YEAR TRACK RECORD

TURNOVER 4,96,58 5,62,30 6,45,62 7,20,48 8,75,12 9,92,14 8,71,06 9,08,95 9,81,72 10,89,02

PROFIT BEFORE TAX 79,31 94,70 1,16,51 1,38,33 1,51,73 1,93,96 1,26,71 99,58 115,68 1,62,42

NET PROFIT 46,94 62,02 81,35 97,61 1,12,02 1,26,63 85,01 76,35 73,16 1,07,15

DIVIDEND PAYOUT 17,02 19,06 22,69 25,87 28,59 31,77 31,77 31,77 31,77 33,64

CORPORATEDIVIDEND TAX - 1,90 2,27 2,84 6,29 3,24 - 4,07 4,15 4,72

RETAINED EARNINGS 29,92 41,06 56,39 68,90 77,14 91,62 53,24 40,51 37,24 68,79

DIVIDEND - % 60 42@ 50 57 63 70 70 70 70 80

EARNINGS PERSHARE (Rs.) 16.55 13.66@ 17.93 21.51 24.68 27.90 18.73 16.82 16.12 24.84

BONUS ISSUE - 3:5 - - - - - - - -

NUMBER OF SHAREHOLDERS 28,831 30,145 29,413 31,690 33,019 31,442 30,607 30,607 28,048 24,571

@ POST ISSUE OF BONUS SHARES IN THE RATIO OF 3:5

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FINANCIAL HIGHLIGHTS

TURNOVER(Rs. CRORES)

PROFIT BEFORE TAX(Rs. CRORES)

UTILISATION OF INCOME 2005

MATERIALS28.4%

OTHER EXPENSES23.8%

RETAINEDEARNINGS

6.2%

INCOME TAX,EXCISE DUTY &TURNOVER TAX

17%

DIVIDEND3%EMPLOYEES’ COST

10.3%

ADVERTISING ANDPROMOTIONS

11.3%

NET PROFIT(Rs. CRORES)

CURRENT RATIO (TIMES)(Rs. CRORES)

% %

%

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Your Directors are pleased to present the AnnualReport on the business and operations of yourCompany and the audited accounts of the Companyfor the year ended 31st December, 2005.

FINANCIAL RESULTS

(Rs. Lakhs)

2005 2004

Sales 10,89,01.66 9,81,71.67Profit before Depreciation,Amortisation and Tax 2,04,27.07 1,62,05.15Less: Depreciation 37,24.43 36,85.76Less: Amortisation of :- Patents and Trade Marks 4,60.62 4,60.62- Deferred Revenue

Expenditure - 4,91.25

Profit before Tax 1,62,42.02 1,15,67.52Less: Provision for Tax- Current Tax 58,97.10 38,86.00- Deferred Tax (438.11) 3,81.89- Adjustment of

Previous Years (348.07) (16.10)- Fringe Benefit Tax 416.00 -

55,26.92 42,51.79Profit available forAppropriations 1,07,15.10 73,15.73

Previous year figures regrouped/reclassified wherevernecessary to conform to this year’s classification.

Appropriations

Dividends- First Interim 33,64.43 14,97.57- Second Interim - 16,79.09Corporate Dividend Tax 4,71.85 4,15.14Transferred to GeneralReserves 68,78.82 37,23.93

1,07,15.10 73,15.73

Earnings Per Share 24.84 16.12(Basic & Diluted)

PERFORMANCE OF THE COMPANY

Your Company is pleased to report a 10.9% salesgrowth for 2005 over the previous year.

The focus for your Company continued to be on topline increase supported by aggressive advertisementand marketing initiatives. Moreover various initiatives/process re-engineering initiatives have beenintroduced to reduce operating costs in the business.Profit before Tax amounted to Rs.1,62,42.02 Lakhs,representing a growth of 40.4% over the previous year.

DIRECTORS’ REPORT

Profit after Tax amounts to Rs.1,07,15.10 Lakhs, anincrease of 46.5% over the previous year.

Your Company continues to operate with minimumtrade pipelines, selling as per the market demandsand closed the year with negligible trade stock.

The flagship Horlicks brand, following intense marketresearch and product development activities, wasre-staged during the year with improved formulationwhich is clinically tested to make children “Taller,Sharper & Stronger”. Horlicks Lite, both as a MaltBased Drink and as Biscuits, has been launchedfor health conscious adults. Boost has seen theintroduction of a new extra-chocolate variant, BoostChocoblast, while the malted version wasrelaunched with improved formulation andpackaging. The Horlicks vending machines continueto do well and have helped the thrust on growingout-of-home business. However, the Company hasdiscontinued the test marketing of the Ready-to-drink Horlicks & Boost during the year due to lowerthan expected margins.

VAT was introduced in some of the states in April,2005 and your Company managed to operate withminimal disruption to its ongoing business.

Profit before Depreciation, Amortisation and Tax asa percentage to sales has improved to 18.8% thisyear as against 16.5% in the previous year. Duringthe year, input cost of Raw Material, Packing Materialand Finished Goods as a percentage to sales hasreduced to 29% as against 31.8% last year mainlydue to lower input costs (particularly liquid milk andskimmed milk powder).

DIVIDENDS

The Directors consider that the Interim dividendaggregating to Rs.8 per share declared, to bereasonable and commensurate with the results for theyear ended 31st December, 2005 and do notrecommend a final dividend for the year.

RESERVES

The total Reserves as on 31st December, 2005 stoodat Rs.4,33,05.63 Lakhs representing a decrease of10.5% from last year. This has mainly been on accountof utilization of Free Reserves for Share Buy Backduring the year.

BUY BACK OF SHARES

The Company, during the year, bought back fully paidequity shares of a face value of Rs.10 each at Rs.370per share amounting to Rs.1,23,02.81 Lakhs inaccordance with the provisions of the Companies Act,

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1956 and the Securities and Exchange Board of India(Buy Back of Securities) Regulations, 1998. The buyback of shares has been done to create long termshareholder value, improve return on net worth andenhance the Earnings per share. The EPS at the endof the year was Rs.24.84 as compared to Rs.16.12previous year.

EXPORTS

During the year, the Company’s export earningsamounting to Rs.56,28.94 Lakhs covering exports toBangladesh, Myanmar, Sri Lanka, Middle East, HongKong, Malaysia, Fiji, Mauritius, Nepal, Bhutan andother markets represented a marginal increase of 3.7%over the previous year.

RESEARCH AND DEVELOPMENT

Research & Development has been instrumental inproviding valuable suppor t to the excellentperformance of your Company. With innovation asthe key mantra, it has managed to develop newproducts across all brands. Re-positioning Horlickswith superior scientific credentials and claims hasnot only helped us grow the top line but has alsogiven us a great competitive advantage.

The new state-of-the-art R&D centre in Gurgaon isserving as a great enabler to support even higherlevels of innovation in the future and is currentlyworking on development of a number of new andimproved products.

ISO CERTIFICATION

Your Company’s manufacturing facilities at Nabha,Rajahmundry and Sonepat continue to be certified tothe latest version of ISO 9001-2000 as well as ISO14001 by DNV, a leading International certificationCompany. Rajahmundry site has been accredited withSA-8000:2001 and is the first site in the Indian FoodIndustry to receive it. Sonepat and Nabha productionfacility have already been certified for HACCP (HazardAnalysis Critical Control Point for Food safety). Workis in progress at Rajahmundry on HACCPimplementation.

Secondary manufacturing/packing sites i.e. DurandelFoods at Chennai, Pratap Health Foods Ltd. atHyderabad, Mann Feeds Ltd. at Ballabhgarh, ParsonsLtd. at Ghaziabad and SRDN at Guwahati have alreadybeen ISO 9001-2000 certified by DNV.

In our pursuit for excellence, Rajahmundry & Sonepatsites continue to be certified on OHSAS-18001:1999.Nabha Site has been cer tified on OHSAS –18001:1999 during the year.

These certifications indicate our commitment inmeeting Global Quality, Environment, Health andSafety Standards.

During the year, your Company has opened a newsecondary manufacturing site (Legacy Foods) atBaddi in Himachal Pradesh. This would enable yourcompany to avail of Tax incentives offered by theCentral Government.

INFORMATION TECHNOLOGY

Your Company has always been at the forefront ofInformation Technology having implemented two ERPpackages. It has connected up all its businesslocations all over the country via satellite and terrestriallinks and is leveraging direct market informationthrough its Wholesaler Automated project.

CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

Information required as per the Companies (Disclosureof particulars in the Report of the Board of Directors)Rules, 1988, is given in the Annexure to this Report.

DIRECTORS

There was no change in the Directors of the Companyduring the year.

AUDITORS

Messrs Price Waterhouse, Chartered Accountants,who retire at the conclusion of the forthcoming AnnualGeneral Meeting and being eligible, offer themselvesfor re-appointment.

HUMAN RESOURCE DEVELOPMENT

Harmonious industrial relations continued to prevailat all the units throughout the Company. The Companycontinued its focus on training and developing peoplethrough internal and external managementdevelopment programmes and overseas assignments.

The Company has been adjudged as one of the top25 companies to work in, by a survey (Great Place toWork) conducted by the Grow Talent & BusinessWorld, for two years in a row.

ENVIRONMENT AND SOCIAL COMMITMENT

Your Company, in its endeavour to serve thecommunity, continues to contribute in the rural areasaround the factories. Post the Tsunami, a team ofemployees from the company volunteered theirservices in the medical camps around Nagapattnam,one of the worst hit districts. All employees donateda day’s salary, with the company matching thecollection, bringing the total close to Rs.2 million.

DIRECTORS’ REPORT

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Products worth another Rs.3 million were sent to theaffected areas. Rajahmundry site has adopted a villageby name Fazullabad for its overall upliftment whichincluded activities like providing safe drinking water,education, infrastructure etc. The Federation of AndhraPradesh Chamber of Commerce and Industries(FAPCCI) presented the site for the “Best RuralDevelopment Activity Award” for the year 2004-2005.

A free mobile primary-healthcare project called ‘Healthat the doorstep’ has been initiated to reach the villagesaround Nabha factory. The project covers 40 villageslocated across three districts around Nabha’s Milk-shed area and provides free medicines and awarenesssessions in addition to the treatment service.

As in previous years, your Company had organizedregular animal welfare measures such as developinga fodder park, subsidising vet medicines, organisingdeworming camps etc. around its factories at Nabhaand Rajahmundry. A program has been initiated forimparting vocational training to the rural womenfolkto augment their income through stitching &embroidery in and around your factory at Sonepat.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Section217 (2A) of the Companies Act, 1956 are enclosed.

ACKNOWLEDGEMENTS

The Directors wish to extend their thanks andappreciation to all the employees of the Company atall levels, agents and other business associates fortheir commitment, dedication and respectivecontributions to the Company’s operations during theyear under review.

The Directors would also like to acknowledge thevaluable guidance, technical assistance and advicebeing received from the Associate Company in the U.K.

Your Directors look forward to the future withconfidence.

For and on behalf of the Board

S. J. Scarff Nicholas J. Massey G. K. ChakrabortyChairman Managing Director Kunal Kashyap

P. S. MukherjeeDirectors

Place : GurgaonDated : January 24, 2006

ANNEXURE TO THE DIRECTORS’ REPORT 2005

Particulars regarding Conservation of Energy,Technology Absorption, Foreign ExchangeEarnings and Outgo.

Your Company is pleased to announce that theRajahmundry site has been awarded the 2nd Prize inNational Energy Conservation Award-in the FoodProcessing Sector for the year 2005 by Ministry ofPower, Government of India.

A. CONSERVATION OF ENERGY

(a) Energy Conservation Measures Taken

1. Steam

Consumption of coal per ton of production hasdecreased by 3.66% compared to last year. Thisis driven by increased production over last yearalong with initiatives such as processoptimization and waste minimization.

2. Electricity

Electricity per unit of production has decreasedby 16.41% in the current year which is drivenby increased production over last year andvarious Operational Excellence initiatives takenat our sites to bring down the per unit power.Installation of energy efficient equipment atNabha along with initiatives such as DGsynchronization at Sonepat plant has help bringdown the consumption.

(b) Additional investments and proposals, if any,being implemented for reduction ofconsumption of energy

Various steps and measures are being initiatedto continuously improve on consumption of coalat Nabha and Rajahmundry plants and electricityat all the sites.

(c) In respect of measures at (a) and (b) above forreduction of energy consumption andconsequent impact on the cost of productionof goods

As already mentioned above, the reduction ofUtilities per TOP has helped the company containits Utility cost despite the increase in the rates.

(d) Total energy consumption and energyconsumption per unit of production as perForm “A” of the Annexure in respect ofindustries specified in the Schedule thereto:

DIRECTORS’ REPORT

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effectiveness, superior product claims andimproved packaging.

(2) Benefits derived as a result of the aboveR&D

Production processes have improved resultingin enhanced productivity, efficiency inthroughput and introduction of new variants.

(3) Further Plan of Action

Steps are continuously being initiated toupgrade the processing technologies,development of science based innovativeproducts of higher nutritional value and tomaximise production capacity at optimum cost.

(4) Expenditure on R&D

(Rs. Lakhs)

2005 2004a) Capital 90.58 5,82.99b) Recurring 8,98.35 6,70.39c) Total 9,88.93 12,53.38d) Total R&D Exp.

as a percentageof total turnover 0.91% 1.28%

TECHNOLOGY ABSORPTION, ADAPTATIONAND INNOVATION

The Company is continuously taking steps toimprove the product and process technology in aneffort to provide for better value for money toconsumers.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to exports : Initiativestaken to increase exports: Development ofnew export methods for products andservices and export plans

The Foreign exchange earnings through exportshave substantially increased in the current yearcovering exports to Bangladesh, Myanmar, SriLanka, Middle East and other markets. Theefforts to broaden the export base to othercountries in south East Asia and the MiddleEast are continuing.

(b) Total Foreign Exchange used and earned:

(Rs. Lakhs)

2005 2004Foreign exchangeearnings 37,13.39 34,04.79Foreign exchangeoutgo 22,25.32 24,20.43

FORM “A”

2005 2004

A.Power and Fuel Consumption

1. Electricity

a) Purchased Units (in Lakhs) 2,06.69 1,93.65Total amount(Rs. Lakhs) 8,43.01 7,89.86Rate/Unit (Rs.) 4.08 4.08

b) Own Generation-1) DG SetsUnits(in Lakhs) 62.14 91.52Units per litre of Diesel oil 3.59 3.93Cost/Unit (Rs.) 7.23 5.502) TurbineUnits(in Lakhs)* 20.88 18.90

2. Coal Used in BoilersQuality (Calorific value rangingbetween 2500 to 3500BTU)Quantity (Tonnes)* 27,282 23,668Total Cost (Rs. Lakhs) 7,93.80 6,12.58Average Rate (Rs.) 2,909.61 2,588.21

*Includes Coal consumed to produce steam togenerate electricity from Turbine.

B. Consumption per unit of Production:

Current Year Previous Year

Coal Power Coal Power

MT Units MT Units1. Malt BasedFood/Malted Food/Energy and ProteinHealth Food/Powdered Milk(Per Ton) 0.53 462 0.55 558

2. Ghee & Butter(Per Ton) 0.40 116 0.35 115

In case of Ghee, the allocation procedure has beenrevised and only the electricity consumption forghee manufacturing section has been considered.

B. TECHNOLOGY ABSORPTION

RESEARCH & DEVELOPMENT (R&D)

(1)Specific Areas in which R&D was carried outby the Company

The Research and Development Centrecontinued to provide valuable support forimprovement in quality of existing products,development of new products and processesfor better productivity, quality cost

DIRECTORS’ REPORT

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DIRECTORS’ REPORT

ANNEXURE TO THE DIRECTORS’ REPORT 2005INFORMATION AS PER SECTION 217(2A) OF COMPANIES ACT, 1956 READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES ) RULES, 1975 AND FORMINGPART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST DECEMBER, 2005

Name Age Date of Designation/ Gross Qualifications Experience Previous Employment/Position Held(Years) Commencement Nature of Duties Remuneration (Years)

of Employment Rs.

A. EMPLOYED THROUGHOUT THE YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING TO RS. 24,00,000/- PER ANNUM OR MORE

1 A K Sharma 47 01-11-1982 General Manager - N.F.S. 36,58,701 B.Sc.(Elec.) 25 Marketing Engineer, Kumar Electrical Industries, New Delhi2 Arun Mohan 54 01-07-1976 General Manager - Sales Training 32,61,105 B.A.(H),M.B.A. 28 —3 B Jagdish Rao 50 28-05-1981 General Manager - Rajahmundry Factory 41,43,809 B. Sc.(H) (Chem.), B. Tech. (FT) 25 Asstt. Manager, Proddatur Milkfoods, Proddatur.4 B Manikyala Rao 55 01-07-1973 Manager - Operations 30,75,621 B.Sc. 31 —5 C K Narayanan 52 12-05-1997 General Manager - R&D (Packaging) 30,16,932 B.Sc. 29 Sr. Manager - Packg. Development, Dabur India Limited, Ghz.6 David S Allen 63 01-08-2003 Vice President - Operations 46,07,318 B. Pharm(H). M.R.Pharm.S. 37 Site Director-Stafford Miller U.K. Ltd.7 Deepak Gunvante 45 15-12-1997 General Manager - R&D 35,12,825 B.Tech.(CE) 20 Development Q.A. Manager Brooke Bond & Lipton Ltd.8 Dinesh Kumar Jain 46 15-10-1980 Senior Manager - Information Technology 24,56,400 B.Com.,D.T.A.Pro.Course. 26 —9 G K Chakraborty 51 14-11-1983 Director - Finance & Information Technology 122,92,139 B. Com., F.C.A., A. I. C. W. A. 25 Admin. Officer, Rasoi Ltd., Calcutta.10 G S Kalra 50 21-10-1997 General Manager - Security & Admin. 26,25,463 B.A. 18 Joint Director - Canteen Services, Indian Army.11 Indrajit Sengupta 51 15-05-1989 General Manager - Financial Accounting 32,21,035 B.Com. (H), A.C.A.. 25 Exec. Int. Audit & Corp. Affairs, Bata, Calcutta.12 Ira Gupta 31 01-06-1997 General Manager- Human Resources 27,10,741 B.A.(Hons.) P.G.D.P.M.&IR 9 —13 Jaya Mathai 52 01-07-1996 Manager - Medical Marketing 25,86,494 M.Sc. 10 Sr. Scientific Office,Britannia Industries Ltd., Bangalore14 K G K Prasad 45 05-06-1982 General Manager - Sonepat Factory 48,76,500 B. Sc.(D.T.). 23 —15 Leanne Cutts 40 01-04-2003 Vice President - Marketing 41,42,822 Bachelor in Economics, M.B.A. 18 Category Manager - Marketing, GlaxoSmithKline, U.K.16 Mahadeep S Chhachhi 51 16-08-1994 General Manager - Corporate Production Services. 61,21,670 B.Tech.,P.G.D.M. 27 Factory Manager, Britannia Ind.Ltd.17 N Narasimha Rao 45 29-03-1993 General Manager - Human Resources 43,38,080 B. Sc., M.P.M. 21 Works Manager, Vishaka Ind., Hyderabad18 N Venkatakrishnan 53 14-11-1982 Asst Manager - Finance 24,86,341 B.Com, ICWA (inter) 23 S M Mehta & Co, Accounts Clerk19 Narotam Kumar Gupta 49 11-10-1977 Vice President - Procurement & N.F.S. 102,39,834 B. Com. (H) 28 —20 Neeraj Bansal 46 11-01-1990 Senior Manager - Procurement 28,54,080 B.E.(Mech.) (H), M.B.A.. 15 Project Engr. Escorts Limited.21 Nicholas J. Massey 51 01-11-2002 Managing Director 76,51,459 M.A. in Pol., Phil. and Eco. 23 Vice President & General Manager - GlaxoSmithKline plc, U.K.22 P Dwarakanath 59 22-06-1979 Director - Human Resources & Admin. 161,73,411 B.Sc.,B.L.,P.G.D.M.(P.M. & I.R.). 37 Law Officer,I.D.L. Chemicals Ltd.Hyderabad.23 P K Chaudhry 49 01-12-1979 Vice President - R. & D. and Regulatory Affairs 84,32,880 M.Sc. 26 —24 P M Mathai 55 02-05-1986 General Manager - C.E.S. 60,52,866 B.Tech.,P.G.D.M. 31 Branch Manager,Voltas Ltd.25 P S Mukherjee 56 01-04-1977 Director - Legal & Corporate Affairs 156,51,074 M.A.,L.L.B. 33 Legal Assistant,Indian Aluminium Co.Ltd., Calcutta.26 P John Winnie 40 18-11-2002 General Manager - Nabha Factory 30,78,487 B.Tech 3 Works Manager, Marico Industries Ltd., Kerala27 Pawan Sud 32 01-06-1997 General Manager - Sales 24,30,356 B.Pharma, M.B.A. 9 —28 Praveen Kumar Gupta 49 15-10-1976 General Manager - Nabha Factory 59,82,990 M. Com. 29 —29 Pritendra Chawla 31 01-06-1997 General Manager - Marketing 27,67,131 B.Tech.(Mech.),P.G.D.M. 8 —30 Pritpal Singh Kular 38 22-03-1993 General Manager - Human Resources 30,74,329 B.Com.(H),M.B.A., P.G.D.HRD. 13 Personnel Executive, Agro Tech. India Ltd.31 R C Gupta 50 22-03-1977 Senior Manager - Taxation 33,03,115 B.Com (H), M.Com. 31 Accounts Astt., Advani Oerlikon Ltd., New Delhi32 R Sridhar 46 11-06-2003 General Manager - Taxation 33,92,563 B.A., A.C.A 21 General Manager - Taxation HCL Technologies Ltd.33 S Balakrishnan 55 14-03-1994 General Manager - Finance (Projects) 36,10,295 B.Sc..A.C.M.A.(London) 31 Sr. Manager-Finance, IMFA Group Of Co’s. Bhuneshwar.34 Sameer Goel 42 01-05-1988 Vice President - Sales 99,14,467 B.A.(H), P.G.D.M. 18 —35 Sanjay Rawal 39 15-06-1992 General Manager - Information Technology 40,01,518 Dop.(Elect.) PGD.C.A. 13 Analyst, Cap Group36 Sanjay Singh 40 01-08-1991 Senior Manager - C.E.S. 27,66,303 B.E.(Mech.) 14 —37 Shubhajit Sen 36 01-06-1993 General Manager - Marketing 58,80,191 B.A. (H), P.G.D.M. 13 —38 Subhransu Rout 36 01-09-2003 General Manager - Market Research 30,60,338 B.Sc. PGDBA 11 Sr. Regional Consumer & Market Insight Manager, HLL.39 Surinder Kumar 48 20-12-1982 General Manager - Legal & Secretarial 57,32,721 M.Com.,L.L.B., F.C.S. 23 —40 T S Dayanand 38 24-05-1995 General Manager - Sales (South) 34,17,710 B.Sc. (Phy.), PGD in Packg., MBA 11 Jr. Officer Packaging Development, Pond’s (India) Ltd.41 T G B Shankar Rao 57 17-04-1974 Senior Manager - Production. 48,77,428 B.Sc.,I.D.D. 31 Technical Officer, Intensive Milk supply Scheme, Nellore.42 Udayan Ganguly 40 03-10-1994 General Manager - Sales (North) 28,19,637 B.A. (H), PGDBM 12 Asst. Manager-Sales,Dunlop India Ltd.43 V K Chopra 55 01-05-1970 Head of Central Quality 65,03,580 M.Sc. 35 Trainee Chemist,Indian Sugar & Gen.Engg. Co,Yamunanagar.44 Vikash Mohan Prasad 36 01-06-1996 General Manager - Sales (East) 59,68,713 B.E.,P.G.D.M. 11 GET, Telco Jamshedpur

B. EMPLOYED FOR A PART OF THE YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING TO RS. 2,00,000/- PER MONTH OR MORE

45 A Sridharan 49 21-02-1980 Manager - Purchase. 26,26,426 B.Com. 25 —46 Anindya Dasgupta 33 01-06-1996 General Manager - Marketing. 33,28,268 B.A.,P.G.D.M. 9 —47 J S Sarlech 47 17-12-1990 Manager - Quality Assurance. 19,58,300 M.Sc. (Dairy), Dip.Mgmt. 15 Asst. Mgr.-QC.M.P.P.Dugdha Mahasangh.48 Madhulika Marwaha 55 24-09-1973 Executive Secretary 32,41,254 B.Sc. 32 Steno-Seceretary, Intl. Congress of Physiological Science.49 N C Malik 54 21-05-1990 Manager - Operations 26,97,847 B.Sc.(Dairy Tech.).) 15 General Manager, Dalima Dairy Industries, Bharatpur.50 P Veerraju 57 01-07-1948 Sr. Centre Incharge - MPD 15,72,028 10th class 32 Valcanlevl Ltd./Store keeper51 R Ranganayakulu 58 01-04-1973 Asst. Manager - Finance 15,22,447 B.Sc. 32 —52 V.C. Sathiah 52 22-03-1976 Executive - Milk Procurement 23,02,882 B.Com, CS (Inter) 29 East India Commercial Pvt Ltd, Steno Cum Clerk.53 Y Jawaharlal 56 01-05-1977 Operator Production 3,42,455 10th class 28 —

NOTE:Remuneration comprises basic salary, allowances, payment on account of leave salary, accruals for Long term Incentive Plan, taxable value of the perquisites, contribution to Provident Fund, Pension Fund, Medical Insurance Premium and PersonalAccident Insurance Premium. The contribution to Gratuity Funds has been made on a group basis and separate figures applicable to an individual employee are not available and therefore, contribution to Gratuity Funds has not been consideredin the above computation. None of these employee are related to any Director of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT AS PER SECTION 217(2AA) OF THE COMPANIES ACT, 1956

The financial statements of the Company for the year ended 31st December, 2005 have been prepared in conformity with theaccounting standards issued by the Institute of Chartered Accountants of India and the requirements of the Companies Act, 1956. Allthe financial statements have been prepared on a historical cost convention, as a going concern and on the accrual basis. There havebeen no material departures in the adoption and application of the accounting standards. The accounting policies used in thepreparation of the financial statements have been consistently applied except where otherwise stated in the notes to accounts.

The Board of Directors of GlaxoSmithKline Consumer Healthcare Limited (GSKCH) accepts the responsibility for the integrity and theobjectivity of these financial statements. The estimates and judgements relating to the financial statements have been made on aprudent and reasonable basis in order to ensure that the financial statements reflect in a true and fair manner the form and substanceof the transactions and reasonably present the Company’s state of affairs and profits for the year. To ensure this, the Directors havetaken proper and adequate care for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956. The system of internal controls are reviewed, evaluated and updated on an ongoing basis. Our internal auditorshave conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company havebeen followed for safe-guarding the assets of the Company and for protecting any form of fraud and irregularities, subject to theinherent limitations in any system and procedure and coverage thereof that should be recognized in weighing the assurance providedby system of internal controls and accounts.

The financial statements have been audited by Price Waterhouse, Chartered Accountants. The Audit Committee of GSKCH meetson a quarterly basis to review the manner in which the internal auditors are performing their responsibilities and to discuss auditing,internal controls and financial reporting issues. To ensure complete independence, the internal auditors have full and free access tothe members of the Audit Committee to discuss any matter of substance.


S. J. Scarff Nicholas J. Massey G. K. ChakrabortyChairman Managing Director Kunal Kashyap

Place : Gurgaon P. S. MukherjeeDated : January 24, 2006 Directors

9

CORPORATE GOVERNANCE REPORT

COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

GlaxoSmithKline Consumer Healthcare Ltd., an associate of GlaxoSmithKline plc., is committed to adoptingthe best global practices of Corporate Governance in its pursuit to achieve excellence in its operations. TheCompany’s philosophy is to satisfy corporate governance norms in letter and in spirit, by ensuring transparencyin the functioning of all its operations and to maintain a high degree of disclosure by truthful communication toall its stakeholders. The Company is committed in implementing best governance practices in a professionalmanner and not just to fulfill the stipulations imposed by regulatory agencies.

BOARD OF DIRECTORS

Composition of the Board of Directors and other details as on 31st December, 2005 are as under:

Name of the Director Category of No. of Board Attendance No. of No. of CommitteeDirectorship Meetings at last Directorships Position held in Other

attended AGM held on in other Public Public Companies29th April, 2005 Companies

Mr. Simon J. Scarff NEC 4 Yes 1 Nil 1

Mr. Nicholas J. Massey MD 4 Yes Nil Nil Nil

Mr. Ashok Dayal NED - I 3 Yes 2 1 Nil

Mr. A. S. Lakshmanan NED - I 3 Yes 6 3 5

Mr. P. Murari NED - I 4 Yes 10 1 6

Mr. Kunal Kashyap NED - I 4 Yes 3 1 4

Mr. Subodh Bhargava NED - I 4 Yes 10 4 4

Mr. Ian McPherson NED Nil No Nil Nil Nil

Mr. P. Dwarakanath WTD 4 Yes Nil Nil Nil

Mr. G. K. Chakraborty WTD 4 Yes Nil Nil Nil

Mr. P. S. Mukherjee WTD 4 Yes Nil Nil Nil

Mr. David S. Allen WTD 4 Yes Nil Nil Nil

NEC - Non Executive Chairman MD - Managing Director WTD - Wholetime DirectorNED - Non Executive Director NED-I - Non Executive Director - Independent

Dates of Board Meetings held during the year: January 28, 2005, April 28, 2005, July 22, 2005, October 21, 2005

AUDIT COMMITTEE

The Audit Committee comprises of three members, all of whom are Independent Directors and possess financialand/or accounting knowledge. Mr. Kunal Kashyap is the Chairman and Mr. A. S. Lakshmanan and Mr. SubodhBhargava are the other two members of the Committee. Mr. Surinder Kumar, Company Secretary acts asSecretary to the Committee. The Chairman, Managing Director, Finance Director, Operations Director, theconcerned partners of Price Waterhouse, the Statutory Auditors and the Cost Auditors are permanent inviteesto the Audit Committee meetings.

The Company has a multi disciplinary Internal Audit Team which submits its report directly to the AuditCommittee on a quarterly basis. The Head of the Internal Audit Department reports to the Audit Committee.The Chairman of the Audit Committee attended the last Annual General Meeting held on April 29, 2005 toanswer shareholders queries.

Description of the terms of reference:

The functioning and terms of reference of the Audit Committee including the role, powers and duties, quorum formeetings and frequency of meetings have been devised keeping in view the requirements of Section 292 A ofthe Companies Act, 1956 and the Listing Agreement with the Stock Exchanges.

The terms of reference of the Audit Committee include:-

1. Oversight of the Company’s financial reporting process and the disclosure of its financial information toensure that the financial statement is correct, sufficient and credible.

Chairman Member

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2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removalof the statutory auditor and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing, with the management, the annual financial statements before submission to the board forapproval, with particular reference to:a) Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s

report in terms of clause (2AA) of section 217 of the Companies Act, 1956;b) Changes, if any, in accounting policies and practices and reasons for the same;c) Major accounting entries involving estimates based on the exercise of judgment by management;d) Significant adjustments made in the financial statements arising out of audit findings;e) Compliance with listing and other legal requirements relating to financial statements;f) Disclosure of any related party transactions;g) Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly financial statements before submission to the board forapproval.

6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internalcontrol systems.

7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal auditdepartment, staffing and seniority of the official heading the department, reporting structure coverage andfrequency of internal audit.

8. Discussion with internal auditors any significant findings and follow up thereon.

9. Reviewing the findings of any internal investigations by the internal auditors into matters where there issuspected fraud or irregularity or a failure of internal control systems of a material nature and reporting thematter to the board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as wellas post-audit discussion to ascertain any area of concern.

11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,shareholders (in case of non payment of declared dividends) and creditors.

12. To review the functioning of the Whistle Blower mechanism, in case the same is existing.

13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

14. The Audit Committee to mandatorily review the following information:a) Management discussion and analysis of financial condition and results of operations;b) Statement of significant related party transactions (as defined by the audit committee), submitted by

management;c) Management letters / letters of internal control weaknesses issued by the statutory auditors;d) Internal audit reports relating to internal control weaknesses.

15. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to reviewby the Audit Committee.

Six meetings of the Audit Committee were held during the year. Attendance at meetings during the year:

Director No. of meetings attended

Mr. Kunal Kashyap 6

Mr. A. S. Lakshmanan 4

Mr. Subodh Bhargava 6

INVESTOR GRIEVANCE COMMITTEE

The Investor Grievance Committee of the Company has three members. Mr. Ashok Dayal, an Independent Director,is the Chairman of the Committee with Mr. Simon J. Scarff and Mr. P. S. Mukherjee as other two members. Mr.Surinder Kumar, Company Secretary acts as Secretary to the Committee and also as the Compliance Officer.

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Brief Description of the terms of reference:

The functioning and terms of reference of the Committee are as prescribed under the Listing Agreement withthe Stock Exchanges with particular reference to transfer, dematerialisation, complaints of shareholders etc.Four meetings of the Investor Grievance Committee were held during the year. Attendance at meetings duringthe year:


Mr. Ashok Dayal 3

Mr. Simon J. Scarff 4

Mr. P. S. Mukherjee 4

The total number of complaints received and replied to the satisfaction of the shareholders during the yearunder review were 527. The Company attends to the investors correspondence expeditiously and usually a replyis sent within three days of receipt, except in cases that are constrained by disputes or legal impediments.There are no pending share transfer complaints as on 31st December, 2005 and the shares after transfer aredespatched within two days from their approval at the Share Transfer Committee.

REMUNERATION COMMITTEE

The Company has a Remuneration Committee which comprises of four members. Mr. P. Murari, an IndependentDirector, is the Chairman of the Committee and Mr. Ashok Dayal, also an Independent Director, Mr. Simon J.Scarff and Mr. P. Dwarakanath are the other members of the Committee. Mr. Surinder Kumar, Company Secretaryacts as Secretary to the Committee.

Brief Description of the terms of reference:

The functioning and terms of reference of the Committee are as prescribed under the Listing Agreement withthe Stock Exchanges. It determines the Company’s policy on all elements of remuneration packages of all theDirectors including salary, benefits, bonus, stock options, pension rights and compensation payment etc.,details of fixed component and performance linked incentives alongwith performance criteria, service contracts,notice period, severance fees etc., stock option details, if any, and also to determine the remuneration of theNon Executive Directors. It also reviews all other aspects of benefits and compensation to employees throughoutthe Company including policies on the same.

Two meetings of the Remuneration Committee were held during the year. Attendance at meetings during the year:


Mr. P. Murari 2

Mr. Ashok Dayal 2

Mr. Simon J. Scarff 2

Mr. P. Dwarakanath 2

REMUNERATION TO DIRECTORS FOR THE YEAR 2005 (Rs.)

S.No. Name Designation / Salary Benefits* Performance GrandPosition Incentive Total

1. Mr. Nicholas J. Massey Managing Director 42,00,000 37,86,284 - 79,86,284

2. Mr. G. K. Chakraborty Director - Finance & 56,30,910 55,73,129 14,88,000 1,26,92,039Information Technology

3. Mr. P. S. Mukherjee Director - Legal & 42,33,870 1,05,07,734 11,95,748 1,59,37,352Corporate Affairs

4. Mr. P. Dwarakanath Director - H.R. & 48,47,640 1,02,15,411 14,53,172 1,65,16,223Administration

5. Mr. David S. Allen Director - Operations 24,00,000 47,27,318 - 71,27,318

* Includes payment on account of leave salary. It also includes contribution to Superannuation Fund and accrualsfor Long term Incentive Plan. Please refer Notes 16 and 27 on Schedule 16 to the Accounts.


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(Rs.)

S.No. Name Particulars Sitting Fees Commission Total

1. Mr. Ashok Dayal Non Executive Director - Independent 1,20,000 2,00,000 3,20,000

2. Mr. A. S. Lakshmanan Non Executive Director - Independent 70,000 2,00,000 2,70,000

3. Mr. Kunal Kashyap Non Executive Director - Independent 1,10,000 2,00,000 3,10,000

4. Mr. P. Murari Non Executive Director - Independent 60,000 2,00,000 2,60,000

5. Mr. Subodh Bhargava Non Executive Director - Independent 1,00,000 2,00,000 3,00,000

6. Mr. Simon J. Scarff Non Executive Director 1,10,000 2,00,000 3,10,000

Payment of Commission and Sitting Fees to the Non Executive Directors and payment of Salary, Commissionand Perquisites to the Wholetime Directors are made in accordance with industry norms and subject to theoverall ceilings imposed by the Companies Act, 1956 and other applicable statutes, if any. The basis is alsodetermined by carrying out an annual analysis of the industry trends by an independent and reputed HRManagement Consultant firm which is scrutinized and recommended by the Remuneration Committee.Performance linked incentives and bonus paid to the Wholetime Directors are determined on the basis ofachievement of overall financial and other objectives set for the Company at the beginning of the year and theachievement of individual objectives.

The retirement age of the Wholetime directors of the Company is 60 years while for Non Executive Directors itis 75 years. The Notice period for the Wholetime directors is three months’ notice on either side. The Servicecontracts are in the range of 3 to 5 years.

ANNUAL GENERAL MEETINGS

Location and time for the last three AGMs:

Year Date Venue Time

2003 April 17, 2003 Punjab Public School Auditorium, 10.00 a.m.The Punjab Public School (Senior Wing),Nabha 147 201 (Punjab)

2004 April 30, 2004 - same as above - 10.00 a.m.

2005 April 29, 2005 - same as above - 10.00 a.m.

Special Resolutions passed in previous three AGMs

AGM held on April 17, 2003 - No Special Resolution was passed in the AGM.

AGM held on April 30, 2004 - Delisting of Shares of the Company from the stock exchanges at Ludhiana,Delhi, Kolkata and Chennai.

AGM held on April 29, 2005 - Payment of Commission and Sitting Fees to Non Executive Directors exceptthose employed with GSK group of Companies.

POSTAL BALLOT RESOLUTION FOR BUY BACK

The Board of Directors in their meeting held on December 10, 2004, passed a resolution, subject to the approvalof shareholders, to buy back equity shares of Rs.10 each of the Company, at a price not exceeding Rs.370 perequity share and for an amount not exceeding Rs.1,23,02.81 Lakhs which constitutes 25% of the Paid UpEquity Share Capital and Free Reserves of the Company as on December 31, 2003.

As per the requirements of Section 192 A of the Companies Act, 1956, the resolution was sent to the shareholdersfor their approval as a Special Resolution through Postal ballot on December 15, 2004 which was returnable byJanuary 19, 2005. The results of the Postal Ballot were subsequently declared at the meeting held on January20, 2005 at the Registered Office of the Company at Patiala Road, Nabha 147 201 (Punjab).

A Buy back Committee was constituted by the Board of Directors in their meeting held on December 10, 2004to conduct the process of Buy back of the shares. The Committee comprised of Mr. Ashok Dayal, Mr. NicholasJ. Massey, Mr. Gautam K. Chakraborty, Mr. P. Dwarakanath, Mr. P. S. Mukherjee and Mr. Kunal Kashyap. Mr.Surinder Kumar, Company Secretary, acted as Secretary to the Committee.


13

Mr. Ashok Arora, Practising Company Secretary, was appointed as the Scrutinizer for conducting the postalballot process.

Pursuant to the Company’s Letter of Offer dated March 2, 2005, for buy back of 33,25,083 equity shares, theCompany received offers for buy-back of 78,22,873 equity shares, 135% more than the shares to be boughtback by the Company. The Buy back Committee followed the method of proportional acceptance of the sharesand 33,25,083 shares offered were accepted for buy back by the Buy Back Committee in their meeting held onApril 21, 2005. Post completion of the buy back process, the shares bought back were extinguished andconsequently the share capital of the Company stands reduced to Rs.42,05,55,380 comprising 4,20,55,538equity shares of Rs.10 each.

The buy-back was implemented by the Company by the methodology of a Tender Offer. The Company compliedwith all the requirements of the Companies Act, 1956 as amended and the SEBI (Buy back of Securities)Regulations, 1998, in connection with the Company’s buy back of shares.

DISCLOSURE

During the year 2005, the Company has related party transactions as envisaged under the Corporate GovernanceCode which have been mentioned in Note 26 under Schedule 16 to the Accounts.

There has not been any non compliance, penalties or strictures imposed on the Company by the Stock Exchanges,SEBI or any other statutory authority on any matter related to capital markets, during the last year.

WHISTLE BLOWER POLICY

The Company adopted a Whistle Blower policy on April 15, 2005. The purpose of the Policy is to deter anddetect misconduct and to ensure any genuine concerns of misconduct / unlawful conduct which an individualbelieves may be taking place are raised at an early stage in a responsible and confidential manner. The membersof the Committee are Mr. Nicholas J. Massey, Managing Director, Mr. P. Dwarakanath, Director - HR &Administration, Mr. P. S. Mukherjee, Director - Legal & Corporate Affairs, Mr. Gautam K. Chakraborty, Director- Finance & IT and Mr. David S. Allen, Director - Operations. Apart from these members, the Committee has aCoordinator who is changed once in a year. The Audit Committee is kept informed of all the proceedings of theWhistle Blower Committee at regular intervals.

CODE OF CONDUCT

The Company adopted a Code of Conduct for Directors and Senior Management in the meeting of its Board ofDirectors held on October 21, 2005. The Code of Conduct has been posted at the website of the Company forgeneral viewing.

POLICY FOR INSIDER TRADING

The Company has a Policy for the prevention of Insider trading in the securities of the Company. The policyapplies to all persons connected or deemed to be connected (Directors, officers and employees of the Companyetc.) with the Company who are required to comply with the same.

MEANS OF COMMUNICATIONSHalf yearly Report to each household of shareholders

Half-yearly report is provided to shareholders on a request being made to the Company in this regard.

Quarterly Results

Wide publicity is accorded to the Quarterly Results by publishing them in a widely circulated English daily(Financial Express) and a Punjabi daily (Punjabi Tribune) as per the requirements of the Listing Agreement withthe Stock Exchanges. The results are also faxed to the Stock Exchanges where the Company is listed. TheCompany also has its own official press releases in various newspapers through its Public Relations Agency.

The Quarterly results of the Company are also displayed on the website of the Company at www.gsk-ch.in.

Presentations made to institutional investors or to analysts

Regular meetings & teleconferences were held with the Financial Institutions, Foreign Institutional Investorsand Analysts. About eight meetings and seven teleconferences were held during the year with different FinancialAnalysts. They are also provided with a copy of the quarterly results after the same have been faxed to theStock Exchanges.

Management Discussion and Analysis is reported in this Annual Report.


14

GENERAL SHAREHOLDER INFORMATION

Annual General Meeting: Date, time & venue

The Forty Seventh Annual General Meeting is scheduled to be held on April 29, 2006 at 10.00 a.m. at thePunjab Public School Auditorium, The Punjab Public School (Senior Wing), Nabha 147 201 (Punjab) as pernotice enclosed with the Annual Report.

Financial Calendar

S. No. Particulars Date of Board meeting

1. Quarter ending March 31, 2006 End April, 2006

2. Quarter ending June 30, 2006 End July, 2006

3. Quarter ending September 30, 2006 End October, 2006

4. Quarter ending December 31, 2006 End January, 2007

Date of book closure

The books will be closed for the purposes of the Annual General Meeting from April 20, 2006 to April 28, 2006(both days inclusive).

Dividend payment date

No final dividend has been recommended by the Board of Directors for the year ended 31st December, 2005. Aninterim dividend of Rs. 8 per equity share of Rs. 10 each was paid to the shareholders for the year endedDecember 31, 2005.

Dividend Date of Declaration Date of Payment Rate per equity share

Interim October 21, 2005 November 18, 2005 Rs. 8/-

Listing on Stock Exchanges & Stock Code

Presently the shares of the Company are listed at three Stock Exchanges in India, the addresses of which aregiven below. The application for delisting of shares is pending with Calcutta Stock Exchange.

Stock Exchange Stock Code

The Stock Exchange, Stock Exchange Towers, Dalal Street, Fort, Mumbai - 400 023 Physical 676Demat 50676

The National Stock Exchange Ltd., Exchange Plaza, Bandra - Kurla Complex, GSKCONSBandra (East), Mumbai - 400 051

The Calcutta Stock Exchange Assn. Ltd., Lyons Range, Kolkata – 700 001 Physical 29047Demat 10029047

The Listing Fee for the year 2005-2006 has been paid to the Stock Exchanges where the shares of theCompany are listed except The Calcutta Stock Exchange where the Company has filed the applicationfor delisting and is awaiting approval.

Market price data: High and Low during each month in last financial year from January, 2005 – December, 2005on the Stock Exchange, Mumbai

MONTH HIGH LOW MONTH HIGH LOW

January, 2005 344.00 317.20 July, 2005 448.00 372.15

February, 2005 348.90 328.00 August, 2005 473.00 412.00

March, 2005 357.95 318.05 September, 2005 508.00 427.50

April, 2005 354.75 322.10 October, 2005 530.00 457.05

May, 2005 385.00 334.10 November, 2005 535.00 477.10

June, 2005 390.00 356.20 December, 2005 590.90 519.10


15

Performance in comparison to BSE Sensex

Taking the January, 2005 indexed at 100, the BSE sensex moved to140.70 through December, 2005 whereas GSKCH moved to 168.63during the same period.

Registrar and Transfer Agents

We have no Registrar and Transfer Agents as we have an in-house share transfer system including Electronicconnectivity for both NSDL and CDSL located at:

GlaxoSmithKline Consumer Healthcare Ltd., DLF Plaza Tower, DLF City - I, Gurgaon – 122 002

We are also the Share Transfer Agents for GlaxoSmithKline Pharmaceuticals Ltd.

Share transfer system

Your Company is working on the share package “COSAC” developed by Dolphin Infotek (Pvt.) Ltd. and isadequately fulfilling our needs.

Distribution of shareholding as on 31st December, 2005

No. of Shares No. of Shareholders No. of Shares Percent of total shares

01 to 250 16,992 15,40,190 3.66251 to 500 5,053 17,11,388 4.07501 to 1000 1,540 10,82,791 2.581001 to 2000 475 6,82,857 1.622001 to 3000 147 3,64,173 0.873001 to 4000 78 2,78,671 0.664001 to 5000 47 2,13,915 0.515001 to 10000 99 7,18,412 1.7110001 and above 140 3,54,63,141 84.32In transit - - -

Total 24,571 4,20,55,538 100.00

S.No. Particulars No. of Shares Held Percent of shares held (rounded off)1. Promoters - M/s Horlicks Limited 1,81,52,243 43.162. Mutual Funds & UTI 23,73,116 5.643. Banks, Financial Institutions & 73,23,077 17.41

Insurance Companies4. Foreign Institutional Investors 33,70,653 8.025. Private Corporate Bodies 26,37,935 6.276. Indian Public 80,84,231 19.237. NRIs / OCBs 1,14,283 0.278. Any others - -

Total 4,20,55,538 100.00


16

Dematerialisation of shares and liquidityWe have dematerialised 48.70% of our equity share capital, whilst 43.16% is held by Horlicks Ltd. in physicalform. Therefore, apart from the Horlicks Ltd. holding, only 8.14% of the equity share capital is held in physicalform.

Outstanding GDRs/ADRs/warrants or any convertible instruments, conversion date and likely impact on equityWe have no GDRs/ADRs or any commercial instrument.Plant locationsNabha Plant: GlaxoSmithKline Consumer Healthcare Limited, Patiala Road, Nabha – 147 201

(Punjab)Rajahmundry Plant: GlaxoSmithKline Consumer Healthcare Limited, Industrial Area,

Dowleswaram - 533 124 (Andhra Pradesh)Sonepat Plant: GlaxoSmithKline Consumer Healthcare Limited, 14 km Stone, Sonepat – Meerut Road,

Village Khewra, P.O. Bahalgarh – 130 121, District Sonepat (Haryana)

Address for correspondenceRegistered Office: GlaxoSmithKline Consumer Healthcare Limited, Patiala Road, Nabha – 147 201 (Punjab)Head Office & Share Department: DLF Plaza Tower, DLF City, Phase I, Gurgaon – 122 002 (Haryana)Name, Address and contact numbers of the Compliance Officer:Surinder Kumar, Company Secretary, DLF Plaza Tower, DLF City, Phase I, Gurgaon - 122 002Telephone: (0124) 409 7202 or (0124) 254 0724, Facsimile: (0124) 254 0734Email for Investors: [email protected]’s website address: www.gsk-ch.in


Place : Gurgaon S. J. ScarffDated : January 24, 2006 Chairman

AUDITORS’ CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCEUNDER CLAUSE 49 OF THE LISTING AGREEMENT(S)

To the Members of GlaxoSmithKline Consumer Healthcare Limited

We have reviewed the implementation of Corporate Governance procedures by GlaxoSmithKline ConsumerHealthcare Limited during the year ended December 31, 2005, with the relevant records and documents maintainedby the Company, furnished to us for our review and the report on Corporate Governance as approved by theBoard of Directors.

The compliance of conditions of corporate governance is the responsibility of the management. Our examinationwas limited to a review of procedures and implementation thereof, adopted by the Company for ensuring the complianceof the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financialstatements of the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor theefficiency or effectiveness with which the management has conducted the affairs of the Company.On the basis of our review and according to the information and explanations given to us, the conditions ofCorporate Governance as stipulated in Clause 49 of the listing agreement(s) with the stock exchange(s)have been complied with in all material respects by the Company and that no investor grievance is pendingfor a period exceeding one month against the Company as per the records maintained by the InvestorsGrievance Committee.

V. Nijhawan

Partner

Membership No. F 87228

For and on behalf of

Place : Gurgaon Price Waterhouse

Dated : January 24, 2006 Chartered Accountants


17

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian food processing sector has demonstrated exponential growth and continues to take advantage ofthe favourable current economic climate to further leverage growth opportunities. The Government has acted asan important catalyst in bringing greater investment to this sector and has granted fiscal relief and incentives toaugment production and exports. The Milk and Milk Product segment continues to grow as before as Indiamaintains its status of being the largest producer of milk in the world accounting for more than 15% of the totalmilk produced and processed in the international organised sector.

The Food Safety and Standards Bill 2005 was placed in the Parliament this year and referred to the ParliamentaryStanding Committee. It seeks to set up a single regulator that will oversee the establishment of food standardscommensurate with global norms and regulate manufacturing, import, processing, distribution and sale of foodproducts. The Bill further incorporates the salient provisions of the Prevention of Food Adulteration (PFA) Act andis aligned with international legislation, instrumentalities and the Codex Alimentarius Commission of WHO (relatedto food safety norms).

OPPORTUNITIES & THREATS

Innovation continues to be the focal point in your Company’s manufacturing, sales, marketing and variousbrand building efforts. Increased health consciousness within the stressful urban lifestyle offers encouragingopportunities for science based nutritional products. Leveraging the health platform, new products have beenintroduced this year e.g. Horlicks Lite, in Regular, Malt and Coffee flavours, a product for health consciousadults and also suitable for diabetics under appropriate medical supervision. Horlicks was restaged during theyear, following intense market research and product development activities, with an improved formulation whichis clinically tested to make children “Taller, Sharper & Stronger”. The introduction of new Boost Chocoblast, anew variant of Boost, in select markets helped to gain market share. In line with the increased buoyancy acrossthe FMCG segment, your Company continues to perform well with Sales growth of 10.9% over 2004.

It has been your Company’s continuous endeavour to explore possibilities to effectively manage the challengesof inflation on material inputs, media and people cost etc.

RISKS & CONCERNS

Your Company annually reviews “risk maps” to help identify potential business threats. The capability of theserisk mitigation plans, developed to redress identified threats, is honed to protect the interests of all stakeholdersincluding shareholders. Crisis management plans are well documented and simulation tests across criticalbusiness sites have already begun.

As with any agro based industry, input costs are influenced by the vagaries of nature and may vary from year-to-year. Your Company continues to recognize the importance of the price-value equation and the need to besensitive to retail price changes to counter the volatility of input costs.

FINANCIAL RISK

The Company has no loan outstanding as on December 31, 2005.

The Company has minimal import requirements for its production process. The Company exports during theyear stood at Rs.56,28.94 Lakhs (which includes Rs.19,15.55 Lakhs exported to Nepal & Bhutan). Hence, norisk is envisaged to the business on account of currency fluctuations.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Standard Operating Procedures and detailed role responsibilities across various levels in all functions ensureseffective management. Robust Management Information Systems along with a strong Internal Audit Functionnot only ensures adherence with best practices and procedures but also helps in early diagnosis of potentialareas of concern. Additionally, the following measures ensure proper control:

· Annual submission of structured self assessment questionnaires (SAQs) covers all functions in theCompany. Apart from ensuring compliance with laid down internal control systems, it helps the businessto align the control mechanism with global best practices.

· Any material variance from budgets require approval of the Management Team.· All major policy changes are approved by the Managing Director.· Business Continuity Plans are being reviewed/revisited to make them contemporary.

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FINANCIAL PERFORMANCE AND RESULTS OF OPERATIONS

(A) Results of Operations

(1) SalesSales for 2005 increased by 10.9%, driven primarily by volume increases.

(2) Other IncomeOther Income declined marginally by Rs.69.02 Lakhs primarily due to higher write backs of provisionsin the previous year which were no longer required and higher interest on Income Tax Refunds in 2004.

(3) ExpenditureDuring the year, input cost of Raw Material, Packing Material and Finished Goods, as a percentage tosales has reduced to 29% as against 31.8% last year mainly due to lower input costs (particularlyliquid milk and skimmed milk powder). This decline also includes a considerable reduction in thePurchase of Finished Goods Viva / Maltova from Jagatjit Industries Ltd. for the purpose of exports(from Rs.8,08.75 Lakhs in 2004 to Rs.1,57.38 Lakhs in 2005).Staff Cost includes an amount of Rs.4,57.7 Lakhs towards one-time encashment of accumulatedleave balances, being a change in leave encashment policy for eligible management personnel.The Company continued to invest behind the brands and consequently Advertisement and Promotionexpenses increased as a percentage of Sales from 10.3% to 11.6%.

(4) Profit before TaxationProfit before Taxation amounted to Rs.1,62,42.02 Lakhs and has increased by 40.4% over previous year.

(5) Provision for TaxationThe Company has made provisions for taxation for the year amounting to Rs.58,74.99 Lakhs (Includingdeferred tax and provision for fringe benefit tax) on Profits before Tax. The effective tax rate for theyear is 36.2% as against the 36.9% last year mainly due to the favourable impact on Deferred Tax andreduction in the Corporate Taxation rates. Provision for Fringe Benefit Tax, introduced during the year,amounted to Rs.4,16.00 Lakhs.

(B) Financial Condition

OverviewThe Financial statements have been prepared in compliance with the requirements of the Companies Act,1956 and the Generally Accepted Accounting Principles (GAAP) and the Accounting Standards issued bythe Institute of Chartered Accountants of India.

(1) Reserves and SurplusThe Reserves and Surplus decreased during the year by Rs.50,91.48 Lakhs. This has been mainly onaccount of utilization of Rs.1,23,02.81 Lakhs on account of buy back of 33.25 Lakh equity shares,creation of the Capital Redemption Reserve Rs.3,32.51 Lakhs and the transfers made from the Profit& Loss account to General Reserves during the year amounting to Rs.68,78.82 Lakhs. The transferwas made after providing for a dividend payment of Rs.38,36.28 Lakhs including Dividend Tax amountingto Rs.4,74.85 Lakhs for the year 2005.

(2) Fixed AssetsAdditions of Rs.16,04.81 Lakhs during the year include primarily Plant and Machinery (Rs.6,66.11Lakhs) and Furniture & Fixture (Rs.1,94.41 Lakhs).

(3) Inventories

Inventories amounted to Rs.1,30,13.85 Lakhs as at December 31, 2005 as against Rs.85,16.79 Lakhsas at previous year end. The increase is primarily on account of an increase in Finished Goods fromRs.55,33.32 Lakhs in 2004 to Rs.89,16.97 Lakhs in 2005. The inventories do not include any obsoleteand unserviceable items lying at the locations.

(4) Sundry DebtorsSundry debtors amounted to Rs.24,11.54 Lakhs as at end December, 2005 as against Rs.25,22.77Lakhs as at end December, 2004. The debtors are net of provision for bad and doubtful debts amountingto Rs.1,83.89 Lakhs.

19

The debtors as at end December, 2005 represent 8 days sale value as against 9 days last year.

(5) Cash and Bank Balances

Cash and Bank balances with scheduled banks amounting to Rs.1,85,79.57 Lakhs includes thecollections in transit for cheques which have been deposited in banks but not realised till December31, 2005 and short term deposits of Rs.1,53,52.32 Lakhs with various scheduled banks.

(6) Loans and Advances

Loans and advances amounting to Rs.58,79.67 Lakhs includes advances paid for raw and packingmaterials, stores and services, pre-paid insurance, loans and advances paid to employees and advancespaid to Excise Authorities and advance tax (Net of provisions).

(7) Current Liabilities

Sundry Creditors amounting to Rs.1,41,29.94 Lakhs include creditors for advertising and promotionspends, raw materials, packing materials, creditors for capital purchases, amounts payable on accountof consignment agency sales and liabilities to wholesalers for dedicated working capital retained.

Other liabilities amounting to Rs.30,44.15 Lakhs include statutory dues for miscellaneous taxes andduties payable to various Government Agencies.

(8) Net Working Capital

The Company had a Working Capital (excluding Cash and Bank balances) of Rs.33,12.61 Lakhs as atDecember 31, 2005 as against a negative Working Capital as at December 31, 2004 due to an increasein Inventory.

(9) Provisions

Provision for Gratuity has been made in accordance with the actuarial valuation as atDecember 31, 2005.

(10) Return on Capital Employed

Consequent to the increase in Profits of the Company the return on capital employed (average) duringthe year increased to 32.3% from 22.6% last year.

The percentage has been computed by dividing PBT by the average capital employed (shareholders’funds plus loan funds) during the year.

(11) Debt Equity Ratio

Your Company being a cash surplus organisation has no outstanding loan and consequently has zerodebt equity ratio.

MATERIAL DEVELOPMENTS ON HUMAN RESOURCE / INDUSTRIAL RELATIONS FRONT

Please refer to the Board of Directors Report on Human Resource Development.

The Company had 2605 permanent employees on its payroll as on December 31, 2005.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report may contain certain statements that might be consideredforward looking. These statements are subject to certain risks and uncertainties. Actual results may differmaterially from those expressed in the statement as important factors could influence the Company’s operationssuch as Government policies, local, political and economic development, risks inherent to the Company’sgrowth and such other factors.


Place : Gurgaon S. J. ScarffDated : January 24, 2006 Chairman


20

TO THE MEMBERS OF GLAXOSMITHKLINECONSUMER HEALTHCARE LIMITED

1. We have audited the attached Balance Sheetof GlaxoSmithkline Consumer HealthcareLimited, as at December 31, 2005, and therelated Profit and Loss Account and Cash FlowStatement for the year ended on that dateannexed thereto, which we have signed underreference to this repor t. These financialstatements are the responsibility of theCompany’s management. Our responsibility isto express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with theauditing standards generally accepted in India.Those Standards require that we plan andperform the audit to obtain reasonableassurance about whether the financialstatements are free of material misstatement.An audit includes examining, on a test basis,evidence suppor ting the amounts anddisclosures in the financial statements. An auditalso includes assessing the accountingprinciples used and significant estimates madeby management, as well as evaluating theoverall financial statement presentation. Webelieve that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditor’s Report)Order, 2003, as amended by the Companies(Auditor’s Report) (Amendment) Order, 2004,issued by the Central Government of India interms of sub-section (4A) of Section 227 of theCompanies Act, 1956 of India (the ‘Act’) and onthe basis of such checks of the books andrecords of the Company as we consideredappropriate and according to the information andexplanations given to us, we give in theAnnexure a statement on the matters specifiedin paragraphs 4 and 5 of the said Order.

4. Fur ther to our comments in the Annexurereferred to in paragraph 3 above, we report that:

(a) We have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary for thepurposes of our audit;

(b) In our opinion, proper books of account asrequired by law have been kept by thecompany so far as appears from ourexamination of those books;

(c) The Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this

AUDITORS’ REPORT

report are in agreement with the books ofaccount;

(d) In our opinion, the Balance Sheet, Profit andLoss Account and Cash Flow Statementdealt with by this report comply with theaccounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representationsreceived from the directors, as on December31, 2005 and taken on record by the Boardof Directors, none of the directors isdisqualified as on December 31, 2005 frombeing appointed as a director in terms ofclause (g) of sub-section (1) of Section 274of the Act;

(f) In our opinion and to the best of ourinformation and according to the explanationsgiven to us, the said financial statementstogether with the notes thereon and attachedthereto give in the prescribed manner theinformation required by the Act and give atrue and fair view in conformity with theaccounting principles generally accepted inIndia:

(i) in the case of the Balance Sheet, of thestate of affairs of the Company as atDecember 31, 2005;

(ii) in the case of the Profit and Loss Account,of the profit for the year ended on that date;and

(iii) in the case of the Cash Flow Statement,of the cash flows for the year ended onthat date.

V. NijhawanPartner

Membership No. F 87228For and on behalf of

Place : Gurgaon Price WaterhouseDated : January 24, 2006 Chartered Accountants

ANNEXURE TO AUDITORS’ REPORT

[Referred to in paragraph 3 of the Auditors’ Report ofeven date to the members of GlaxoSmithKlineConsumer Healthcare Limited on the financialstatements for the year ended December 31, 2005]

1. (a) The Company is maintaining proper recordsshowing full par ticulars includingquantitative details and situation of fixedassets.

21

(b) The fixed assets are physically verified bythe management according to a phasedprogramme designed to cover all the itemsover a period of three years, which in ouropinion, is reasonable having regard to thesize of the Company and the nature of itsassets. Pursuant to the programme, apor tion of the fixed assets has beenphysically verified by the managementduring the year and no materialdiscrepancies between the book records andthe physical inventory have been noticed.

(c) In our opinion and according to theinformation and explanations given to us, asubstantial part of fixed assets has not beendisposed of by the Company during the year.

2. (a) The inventory (excluding certain stocks withthird parties) has been physically verifiedby the management during the year. Inrespect of inventory lying with third partiesand not physically verified, confirmationshave been obtained. In our opinion, thefrequency of verification is reasonable.

(b) In our opinion, the procedures of physicalverification of inventory followed by themanagement are reasonable and adequatein relation to the size of the Company andthe nature of its business.

(c) On the basis of our examination of theinventory records, in our opinion, theCompany is maintaining proper records ofinventory. The discrepancies noticed onphysical verification of inventory ascompared to book records were not material.

3. (a) The Company has not granted any loans,secured or unsecured, to companies, firmsor other parties covered in the registermaintained under Section 301 of the Act,accordingly clauses 3 (a) to (d) of the Orderare not applicable.

(b) The Company has not taken any loans,secured or unsecured, from companies,firms or other parties covered in the registermaintained under Section 301 of the Act,accordingly clauses 3 (e) to (g) of the Orderare not applicable.

4. In our opinion and according to the informationand explanations given to us, having regard tothe explanation that certain items purchased areof special nature for which suitable alternativesources do not exist for obtaining comparativequotations, there is an adequate internal control

system commensurate with the size of theCompany and the nature of its business for thepurchase of inventory, fixed assets and for thesale of goods and services. Further, on the basisof our examination of the books and records ofthe Company, and according to the informationand explanations given to us, we have neithercome across nor have been informed of anycontinuing failure to correct major weaknessesin the aforesaid internal control system.

5. According to the information and explanationsgiven to us, there have been no contracts orarrangements referred to in Section 301 of theAct during the year to be entered in the registerrequired to be maintained under that Section.

6. The Company has not accepted any depositsfrom the public within the meaning of Sections58A and 58AA of the Act and the rules framedthere under.

7. In our opinion, the Company has an internal auditsystem commensurate with its size and natureof its business.

8. We have broadly reviewed the books of accountmaintained by the company in respect ofproducts where, pursuant to the Rules made bythe Central Government of India, themaintenance of cost records has beenprescribed under clause (d) of sub-section (1)of Section 209 of the Act and are of the opinionthat prima facie, the prescribed accounts andrecords have been made and maintained. Wehave not, however, made a detailed examinationof the records with a view to determine whetherthey are accurate or complete.

9. (a) According to the information andexplanations given to us and the records ofthe Company examined by us, in our opinion,the Company is generally regular indepositing the undisputed statutory duesincluding provident fund, investor educationand protection fund, employees’ stateinsurance, income tax, sales tax, wealth tax,service tax, customs duty, excise duty,cess and other material statutory dues asapplicable with the appropriate authorities.

(b) According to the information andexplanations given to us and the records ofthe Company examined by us, theparticulars of dues of income tax, sales tax,wealth tax, service tax, customs duty,excise duty and cess as at December 31,2005 which have not been deposited onaccount of disputes, are as follows -

AUDITORS’ REPORT

22

Name of the Statute Nature of dues Amount under Period to Forum wheredispute not which the the dispute

yet deposited amount relates is pending(Rs. Lakhs)

Excise Duty

The Central Excise Additions for interest 71.02 2001 Customs, Excise, ServiceAct, 1944 on duty on Freight and Tax Appellate Tribunal,

Insurance New Delhi

The Central Excise Valuation Cases and 6,27.00 1991-2003 First Appellate AuthoritiesAct, 1944 Others of Vizag, Chennai,

Kolkata and Pune

The Central Excise Valuation cases- Post 31.11 1995-1996 Deputy Commissioner ofAct, 1944 Manufacturing Central Excise

Expenses and Others

Sub Total 7,29.13Sales Tax

Kerala General Sales Delayed Payment of 4.31 1996-1997 Kerala High CourtTax Act, 1963 penal interest

Andhra Pradesh Turnover Tax on Milk 13.18 1997-1999 Hyderabad High CourtGeneral Sales Tax PurchasesAct, 1957

Tamil Nadu General Additions on account of 1.58 1990-1999 Madras High CourtSales Tax Act, 1959 concessional rates of Tax

As per Statutes Addition on account 52.87 1990-2001 Sales Tax Appellateapplicable in the of Concessional Tribunal/Revenue Boardfollowing states- Rates and OthersChattisgarh, MadhyaPradesh, Tamil Nadu,West Bengal andPunjab

As per Statutes Miscellaneous 3,05.99 1998-2003 First Appellate Authoritiesapplicable in the demands of various statesfollowing states-Bihar,West Bengal, Orissa,Rajasthan, Jharkhandand Uttar Pradesh

As per Statutes Miscellaneous 2.37 2002- 2005 Adjudication Levelapplicable in the demandsfollowing states-Uttar Pradesh,Punjab and Delhi

Sub Total 3,80.30

AUDITORS’ REPORT

23

Name of the Statute Nature of dues Amount under Period to Forum wheredispute not which the the dispute

yet deposited amount relates is pending(Rs. Lakhs)

Income Tax

Income Tax TDS deducted under 6.44 2001-2005 Income Tax AppellateAct,1961 section 194 C instead Tribunal

of 194 J

Income Tax Additions made during 4,95.86 2000-2001 Income Tax AppellateAct, 1961 Scrutiny assessment, Tribunal

primarily for Section 80and other expenses

Income Tax Additions made during 2,37.65 2002-2003 Commissioner of Income TaxAct, 1961 Scrutiny assessment, (A)

primarily for Section80 and other expenses

Sub Total 7,39.95

Grand Total 18,49.38

Note: The above details exclude Departmental Appeals to higher authorities as there is no stay on the order of lowerauthority favouring the Company and the amount is not ascertainable.

10. The Company has no accumulated losses asat December 31, 2005 and it has not incurredany cash losses in the financial year ended onthat date or in the immediately precedingfinancial year.

11. According to the information and explanationsgiven to us and the records of the Companyexamined by us, the Company has not availedany loan from financial institutions or banks ordebenture holders as at the balance sheet date.Accordingly, there have been no defaults inrepayment of dues.

12. The Company has not granted any loans andadvances on the basis of security by way ofpledge of shares, debentures and other securities.

13. The provisions of any special statute applicableto chit fund / nidhi / mutual benefit fund /societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer ortrader in shares, securities, debentures andother investments.

15. In our opinion and according to the informationand explanations given to us, the Company hasnot given any guarantee for loans taken by othersfrom banks or financial institutions during the year.

16. The Company has not obtained any term loans.

17. On the basis of an overall examination of thebalance sheet of the Company, in our opinion

and according to the information andexplanations given to us, there are no fundsraised on a short-term basis which have beenused for long-term investment.

18. The Company has not made any preferentialallotment of shares to parties and companiescovered in the register maintained under Section301 of the Act during the year.

19. The Company has not issued any debentureduring the year accordingly, no securities orcharges have been created.

20. The Company has not raised any money bypublic issues during the year.

21. During the course of our examination of thebooks and records of the Company carried outin accordance with the generally acceptedauditing practices in India, and according to theinformation and explanations given to us, wehave neither come across any instance of fraudon or by the Company, noticed or reported duringthe year, nor have we been informed of suchcase by the management.

V. NijhawanPartner

Membership No. F 87228For and on behalf of

Place : Gurgaon Price WaterhouseDated : January 24, 2006 Chartered Accountants

AUDITORS’ REPORT

24

Schedule As at As atNo. December 31, December 31,

2005 2004(Rs. Lakhs) (Rs. Lakhs)

SOURCES OF FUNDSSHAREHOLDERS’ FUNDS

Share Capital 1 42,05.55 45,38.06Reserves and Surplus 2 4,33,05.63 4,83,97.11

4,75,11.18 5,29,35.17

DEFERRED TAX LIABILITIES (Net) 27,59.99 31,98.10Schedule 16 [Notes 1(i) (b) and 17]

27,59.99 31,98.105,02,71.17 5,61,33.27

APPLICATION OF FUNDSFIXED ASSETS

Gross Block 3 5,06,90.96 4,97,32.72Less: Depreciation 2,33,94.96 1,97,23.89Net Block 2,72,96.00 3,00,08.83Capital Work in Progress 10,82.94 7,30.06

2,83,78.94 3,07,38.89INVESTMENTS 4 0.05 0.05

CURRENT ASSETS, LOANS AND ADVANCESInventories 5 1,31,03.85 85,16.79Sundry Debtors 6 24,11.54 25,22.77Cash and Bank Balances 7 1,85,79.57 2,63,22.82Other Current Assets 8 2,04.25 2,81.22Loans and Advances 9 58,79.67 55,81.58

4,01,78.88 4,32,25.18Less: CURRENT LIABILITIES AND PROVISIONS

Current Liabilities 10 1,76,58.31 1,68,45.19Provisions 11 6,28.39 9,85.66

1,82,86.70 1,78,30.85NET CURRENT ASSETS 2,18,92.18 2,53,94.33

5,02,71.17 5,61,33.27

Notes to the Accounts 16

This is the Balance Sheet referred The schedules referred to above form anto in our report of even date. integral part of the Balance Sheet.

V. Nijhawan S. J. Scarff G. K. ChakrabortyPartner Chairman Kunal KashyapMembership No. F 87228 P. S. MukherjeeFor and on behalf of Nicholas J. Massey DirectorsPrice Waterhouse Managing DirectorChartered Accountants

Place : Gurgaon Surinder KumarDated : January 24, 2006 Company Secretary

BALANCE SHEET

AS AT DECEMBER 31, 2005

25

Schedule Year ended Year endedNo. December 31, December 31,


INCOMESales [Schedule 16 (Note 6)] 10,89,01.66 9,81,71.67Less: Excise Duty on Sales 1,22,16.92 9,66,84.74 1,19,54.63 8,62,17.04Other Income 12 24,30.74 24,99.76

9,91,15.48 8,87,16.80EXPENDITUREConsumption of Raw Materials 2,50,28.85 2,16,17.25Purchased Finished Goods 1,57.38 8,08.75Packing Material Expenses 99,89.09 81,46.67Employees’ Cost 13 1,14,46.36 1,00,62.65Expenses 14 3,56,50.02 3,17,22.27Depreciation- On Patents and Trade Marks 4,60.62 4,60.62- On Other Fixed Assets 37,24.43 41,85.05 36,85.76 41,46.38Adjustment due to (Increase)/Decrease inStock of Finished Goods and Goods in Process 15 (35,83.29) 6,45.31

8,28,73.46 7,71,49.28

PROFIT BEFORE TAX 1,62,42.02 1,15,67.52Tax for the year - Current Tax 58,97.10 38,86.00

- Deferred Tax Charge / (Credit) (4,38.11) 3,81.89- Fringe Benefit Tax 4,16.00 -- Adjustment of previous years (3,48.07) (16.10)

Schedule 16 [Notes 1(i) and 17]

PROFIT AFTER TAX 1,07,15.10 73,15.73

APPROPRIATIONS:Dividend- First interim 33,64.43 14,97.57- Second interim - 16,79.09Corporate Dividend Tax 4,71.85 4,15.14Transferred to General Reserve 68,78.82 37,23.93

1,07,15.10 73,15.73Earnings Per Share (Nominal value of Rs 10 each)- Basic/Diluted (Rs.) Schedule 16 [Note 19] 24.84 16.12

Notes to the Accounts 16

This is the Profit and Loss Account referred The schedules referred to above form anto in our report of even date. integral part of the Profit and Loss Account.

V. Nijhawan S. J. Scarff G. K. ChakrabortyPartner Chairman Kunal KashyapMembership No. F 87228 P. S. MukherjeeFor and on behalf of Nicholas J. Massey DirectorsPrice Waterhouse Managing DirectorChartered Accountants

Place : Gurgaon Surinder KumarDated : January 24, 2006 Company Secretary

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2005

28

SCHEDULES

FORMING PART OF THE ACCOUNTS

As at As at

December 31, December 31,

2005 2004

(Rs. Lakhs) (Rs. Lakhs)

1. SHARE CAPITAL*

AUTHORISED

6,00,00,000 Equity Shares of Rs.10 each 60,00.00 60,00.00

ISSUED AND SUBSCRIBED

4,20,55,538 (Previous year 4,53,80,621) Equity

Shares of Rs.10 each fully paid-up 42,05.55 45,38.06

Notes :

1. 2,17,386 Equity Shares of Rs.10 each were allotted

as fully paid-up pursuant to a contract for

consideration other than cash.

2. 2,77,60,539 Equity Shares of Rs.10 each were allotted as

fully paid-up bonus shares by capitalisation of reserves

Rs.27,10.02 Lakhs and share premium Rs.66.03 Lakhs in the

year 1995.

3. 1,70,17,733 Equity Shares of Rs.10 each were allotted as

fully paid-up bonus shares by capitalisation of reserves

Rs.17,01.77 Lakhs in the year 1997.

* Schedule 16 [Note 22]

2. RESERVES AND SURPLUS

GENERAL RESERVE

As per last Balance Sheet 4,83,97.11

Less : Utilisation on account of Buy Back * (1,19,70.30)

Less : Transferred to Capital Redemption Reserve * (3,32.51) 3,60,94.30 4,46,73.18

Transferred from Profit and Loss Account 68,78.82 37,23.93

4,29,73.12 4,83,97.11

CAPITAL REDEMPTION RESERVE

As per last Balance Sheet -

Add : Transferred from General Reserve * 3,32.51 3,32.51 -

4,33,05.63 4,83,97.11

*Schedule 16 [Note 22]

29

3. FIXED ASSETS *

GROSS BLOCK DEPRECIATION NET BLOCKCost as at Additions Deductions Cost as at Upto During On Upto As at As at

January during during December December the Year Deductions December December December1, 2005 the Year the Year 31, 2005 31, 2004 31, 2005 31, 2005 31, 2004

(Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs)

Tangible Assets

Land (Freehold) 2,25.13 - - 2,25.13 - - - - 2,25.13 2,25.13Buildings*** 84,08.62 2,43.00 0.30 86,51.32 10,99.49 2,57.53 0.27 13,56.75 72,94.57 73,09.13Plant & Machinery ** 2,77,41.63 6,66.11 1,02.35 2,83,05.39 1,02,52.53 26,11.54 89.39 1,27,74.68 1,55,30.71 1,74,89.10InformationTechnologyEquipments 28,94.30 2,04.88 2,21.61 28,77.57 25,64.81 2,23.42 2,20.98 25,67.25 3,10.32 3,29.49Furniture & Fixtures/Office Equipments 25,86.17 1,94.41 1,21.68 26,58.90 10,58.69 3,25.31 69.11 13,14.89 13,44.01 15,27.48Motor Vehicles 8,19.51 1,88.16 2,00.63 8,07.04 3,31.68 1,56.85 1,34.23 3,54.30 4,52.74 4,87.83Leasehold Improvements 4,15.64 1,08.25 - 5,23.89 1,16.44 1,49.78 - 2,66.22 2,57.67 2,99.20

Intangible AssetsPatent and TradeMarks *** 66,41.72 - - 66,41.72 43,00.25 4,60.62 - 47,60.87 18,80.85 23,41.47

4,97,32.72 16,04.81 6,46.57 5,06,90.96 1,97,23.89 41,85.05 5,13.98 2,33,94.96 2,72,96.00 3,00,08.83

Previous Year 4,85,86.19 19,40.50 7,93.97 4,97,32.72 1,62,30.73 41,46.38 6,53.22 1,97,23.89

Capital work in progress includes Capital Advances - Rs.1,30.93 Lakhs (Previous Year Rs. 2,76.95 Lakhs) 10,82.94 7,30.06

2,83,78.94 3,07,38.89

* Schedule 16 [Notes 1(b) and 20]

* * Includes Rs. 64.49 Lakhs (Previous Year Rs.64.49 Lakhs) paid to State Electricity Board for electrical installations not represented by physicalassets owned by the Company and depreciated over a period of 5 years.

*** Includes Dwelling Units valuing Rs.1,23.95 Lakhs (Previous Year Rs.1,23.95 Lakhs ) and Patents and Trade Marks valuing Rs. 66,41.72 Lakhs(Previous Year - Rs.66,41.72 Lakhs) for which registration is awaited.

SCHEDULES


As at As atDecember 31, December 31,


4. INVESTMENTS *Long Term - Other InvestmentsUnquoted Government Securities at Cost7 - Year National Savings Certificates(Lodged with Government Authorities) 0.05 0.05

0.05 0.05* Schedule 16 [Note 1(d)]

5. INVENTORIES *At lower of Cost and Net Realisable Value

Raw materials [Includes Goods in Transit Rs.45.65Lakhs (Previous year - Rs.68.75 Lakhs)] 18,19.11 13,00.73Packing materials [Includes Promotional materialRs.1,33.64 Lakhs (Previous Year Rs.68.04 Lakhs)] 8,26.49 5,41.43Goods in process 9,23.91 5,11.05Finished goods 89,78.02 55,33.32Less : Provision for Obsolescence 61.05 89,16.97 - 55,33.32Purchased finished goods - 0.75Stores and spare parts 5,56.75 5,82.29By-products (at Net Realisable Value) 60.62 47.22

1,31,03.85 85,16.79* Schedule 16 [Note1(e)]

30



6. SUNDRY DEBTORSOver six months

Secured - Considered good 20.84 26.37Unsecured - Considered good 53.37 1,98.69Unsecured - Considered doubtful 1,83.89 1,84.54Less: Provision for doubtful debts (1,83.89) 74.21 (1,84.54) 2,25.06

OthersSecured - Considered good 13,14.23 6,47.92Unsecured - Considered good 10,23.10 23,37.33 16,49.79 22,97.71

24,11.54 25,22.77

7. CASH AND BANK BALANCESCash and cheques in hand 8.78 3.00With Scheduled Banks:

On Current Accounts 30,46.99 30,17.36[Net of book overdrafts - Rs. Nil(Previous year- Rs.1,23.94 Lakhs)]On Dividend Accounts 1,70.38 1,49.04On Margin Money 2.32 2.32On Fixed Deposit Accounts 1,53,50.00 2,31,50.00With Post Office in Savings Bank Accounts (Lodgedas security deposits) [Maximum amount during the yearRs.1.10 Lakhs (Previous year Rs.1.10 Lakhs)] 1.10 1.10

1,85,79.57 2,63,22.82

8. OTHER CURRENT ASSETSAccrued Interest 58.58 1,05.50Others Receivables 1,45.67 1,75.72

2,04.25 2,81.22

9. LOANS AND ADVANCES(Considered Good,unless otherwise specifically indicated)Advances recoverable in cash or in kind or forvalue to be received

- Unsecured 34,83.42 37,62.63- Secured 2,48.33 2,90.06

Deposits with excise authorities 2,03.57 2,17.48Advance Tax [Net of provisions of Rs.4,04,38.63 Lakhs(Previous Year Rs.4,31,29.12 Lakhs)] 19,44.35 13,11.41

58,79.67 55,81.58Included in advances, amount due from Directors and anofficer of the Company. - -Maximum amount due during the year 7.90 11.66

SCHEDULES


31



10. CURRENT LIABILITIESSundry creditors

- Total outstanding dues of small scale industrial undertakings* 3,07.15 1,87.00- Total outstanding dues of creditors other than small scale industrial undertakings 1,38,22.79 1,26,22.67

Other liabilities 30,44.15 34,58.04Advances from customers 3,13.84 4,28.44Unclaimed dividend 1,70.38 1,49.04

1,76,58.31 1,68,45.19* Schedule 16 [Note 24]

11. PROVISIONS*Provision for Fringe Benefit Tax(Net of Advance Tax - Rs. 2,66.00 Lakhs) 1,50.00 -Gratuity 3,92.61 82.15Accrued leave 85.78 9,03.51

6,28.39 9,85.66* Schedule 16 [Note 1(g), (i ) & (l)]

Year ended Year endedDecember 31, December 31,


12. OTHER INCOMEScrap sales 2,96.37 2,94.39Selling commission 3,26.06 3,16.48Insurance and other claims 2,39.40 2,90.46Miscellaneous income 93.47 1,28.37Release of accruals/refunds 5,82.40 6,25.02Exchange fluctuations 2.53 (49.06)Interest Income (Gross)

[Tax Deducted at Source Rs.1,82.58 Lakhs](Previous Year Rs.1,69.79 Lakhs)]- Loans/Deposits 27.62 20.05- Bank Deposits 8,39.85 7,89.80- Income tax refunds 0.09 61.70- Others 22.95 8,90.51 22.55 8,94.10

24,30.74 24,99.7613. EMPLOYEES’ COST*

Salaries, Wages and Bonus 89,87.22 82,45.14Contribution to Provident and Other Funds 14,41.97 8,38.72Welfare Expenses 17,15.55 16,72.41Less : Recoveries made (6,98.38) (6,93.62)

1,14,46.36 1,00,62.65* Schedule 16 [Notes 15, 16, 21 and 27]

SCHEDULES


32



14. EXPENSESStores consumed 93.91 94.59Conversion charges to third parties 44,82.35 35,56.67Repairs - Building 1,99.82 1,19.11

- Machinery 4,70.75 4,46.67- Others 4,65.89 5,54.27

Power and fuel 27,34.26 24,85.19Rent 9,54.40 10,15.83Rates and taxes 17,73.26 18,98.04Insurance 6,47.50 7,10.58Travelling expenses 9,65.66 9,95.42Carriage and freight 45,37.95 39,25.61Service charges paid to selling agents 11.87 11.29Discounts - Sales 4,28.65 4,21.57Donations 35.56 15.15Advertising and promotions* 1,26,30.07 1,01,45.01Royalty 38,05.26 33,27.72Idle Assets Written Off - 40.30Loss on sale of Fixed Assets 43.61 1.02Development and Scientific research 1,02.80 64.98Interest Expense - Others 4,21.83 5,25.41Amortisation - 4,91.25Provision for Doubtful Debts 0.15 17.36Advances Written Off 7.22 -Provision for Stock Obsolescence* 61.05 -Stocks Written Off 56.71 1,33.73Other general expenses*` 25,02.04 23,31.03Less : Recoveries made ** (17,82.55) (16,05.53)

3,56,50.02 3,17,22.27* Schedule 16 [Note 10]** Schedule 16 [Note 15]

15. ADJUSTMENT DUE TO (INCREASE) / DECREASE INSTOCK OF FINISHED GOODS AND GOODS IN PROCESSOpening Stock

Finished Goods 55,33.32 56,48.49Goods in Process 5,11.05 9,48.54Purchased Finished Goods 0.75 41.58By-products 47.22 60,92.34 34.62 66,73.23

Less : Closing StockFinished Goods 89,16.97 55,33.32Goods in Process 9,23.91 5,11.05Purchased Finished Goods - 0.75By-products 60.62 99,01.50 47.22 60,92.34

Excise duty adjustment for movementof finished goods inventory 2,25.87 64.42Net (Increase)/Decrease (35,83.29) 6,45.31

SCHEDULES


33

16. NOTES TO THE ACCOUNTS

1. Signigicant Accounting Polices:

a. Accounting Convention

The financial statements are prepared under the historical cost convention on an accrual basis and inaccordance with the mandatory accounting standards issued by the Institute of Chartered Accountantsof India and the relevant provisions of the Companies Act, 1956.

b. Fixed Assets and Depreciation

All tangible fixed assets are stated at cost less accumulated depreciation. Cost includes all incidentalexpenditure net of CENVAT wherever applicable. The Company follows the Straight Line Method ofcharging depreciation, on all its tangible fixed assets, on pro-rata basis except for assets costing lessthan Rs.5,000 which are fully charged off in the year of purchase. The Company has provided depreciationat higher of the rates determined by the management or those specified in Schedule XIV to theCompanies Act, 1956. The depreciation rates which are different from the principal rates specified inSchedule XIV to the Companies Act, 1956 are as follows : -

(Rates in Percentages)

Assets acquired Assets acquired Assets acquired Assets acquiredafter December 31, after April 30, after March 31, upto March 31,

1994 1986 but upto 1983 but upto 1983December 31,1994 April 30, 1986

Buildings

- Factory - - 3.5 2/3.5/5.5

- Non - factory 2 2 2 2/2.5

- Tubewells 10 10 10 10/100

Plant and Machinery

- Triple Shift 12.5 12.5 - -

- Double Shift 10/12.5 10/12.5 - -

- Single Shift 10/12.5/20/33.33 10/12.5 - -

Information TechnologyEquipments 25/33.33 25 25 25

Motor Vehicles 14.28/20 14.28/20 14.28/20 14.28/20/25

Furniture and Fixturesand Office Equipments 10/12.5/20/25 10/20 10/20 10/20

Patents and Trade Marks are accounted at their cost of acquisition and amortized over their estimatedeconomic life not exceeding 10 years. Leasehold improvements are charged to the Profit and LossAccount over the primary period of lease.

c. Foreign Currency Transactions

Transactions in Foreign Exchange other than those covered by forward contracts are accounted for atthe exchange rates prevailing on the date of transactions. The exchange differences arising out of thesettlements, other than those on liabilities relating to fixed assets are dealt with in the Profit and LossAccount. Foreign currency assets and liabilities other than those covered by forward contracts arerevalued at the year end rates. Resultant gains or losses are recognized in the Profit and Loss accountexcept exchange differences arising on settlement and/or translation of foreign currency liabilities onacquisition of fixed assets which are adjusted against the carrying costs of corresponding fixed assets.

d. Investments

Long term investments are stated at cost less provision, if any, for diminution in the value of suchinvestments other than temporary. Current investments are valued at lower of cost and net realisable/fair value.

SCHEDULES


34

SCHEDULES


e. Inventories

Inventories are valued at lower of cost and net realisable value, except for ghee, a by-product, whichis valued at selling price.

Cost is determined on the basis of the weighted average method. It includes all the appropriate allocableoverheads and excise duty wherever applicable.

f. Research and Development

The revenue expenditure is charged against the profits for the year in which it is incurred. Capitalexpenditure is treated in the same way as fixed assets.

g. Retirement Benefits

The Company has various schemes of retirement benefits namely Provident, Superannuation and GratuityFunds recognized by the Income Tax Authorities. These Funds are administered through Trustees andthe Company’s contributions thereto are charged to revenue every year. Contribution to Employees’Pension Scheme, 1995 is deposited with the respective authority and is charged to revenue every year.Accruals are made for leave encashment for workers, superannuation on account of Grandfathering andgratuity on the basis of actuarial valuation done at the year end. (Also refer to Note 16)

h. Revenue Recognition

Sales comprise of value of sale of goods, excluding sales tax but including excise duty. Sales arerecognized at the point of despatch to the customers. Interest income and insurance claims arerecognized on accrual basis.

i. Taxation

Tax expense/(saving) is the aggregate of current year tax and deferred tax charged/(credited) to theProfit and Loss Account for the year.

a) Current Year Tax

Provision for taxation for the Company’s financial year ended December 31, 2005 has beendetermined based on the results for 3 months ended March 31, 2005 (Assessment Year 2005-2006) and for the 9 months ended December 31, 2005 (Assessment Year 2006-2007). The ultimateliability for the Assessment Year 2006-2007, however, will be determined on the total income ofthe Company for the year ending on March 31, 2006.

The Provision for taxation is based on assessable profits of the Company as determined under theIncome Tax Act, 1961. The Company also provides for such disallowances made on completion ofassessments pending appeals, as considered appropriate depending on the merits of each case.

b) Deferred Tax

The Company provides for deferred tax using the liability method based on the tax effect of timingdifferences resulting from the recognition of items in the financial statements and in estimating itscurrent income-tax provision. The tax rates adopted are the rates that have been enacted orsubstantially enacted by the Balance Sheet date.

c) Fringe Benefit Tax

The provision for Fringe Benefit Tax has been made in respect of employee benefits and otherspecified expenses as determined under the Income Tax Act, 1961.

j. Interest on Borrowings

The interest on working capital management is charged against the profits for the year in which it isincurred. Interest on borrowings for capital assets is capitalized till the date of commencement ofcommercial use of the asset.

k. Leases

Lease rental in respect of asset taken on cancellable operating leases are charged to the Profit andLoss Account on accrual basis.

l. Provisions

A provision is recognized when there is a present obligation as a result of past event. It is probable thatan outflow of resources will be required to settle the obligation and in respect of which a reliableestimate can be made. These are reviewed at each balance sheet date and adjusted to reflect thecurrent best estimates.

35



2. a. Estimated amount of Contracts remaining to be executedon capital account (net of advances) and not provided for 3,55.51 9,88.08

b. Contingent Liabilities not provided for :- Cheques Discounted with banks 25,75.39 22,27.06- In respect of contractual obligations to Contract Packerswhere future cash flows are determinable only on receipt ofjudgment/decisions pending with the repective authority 1,75.67 -



3. Managerial RemunerationAmount paid/payable to Directors:

Salaries and allowances 3,49.79 2,29.12Contribution to Provident and Superannuation Funds 1,40.57 69.31Value of other perquisites 1,12.23 77.98Directors’ sitting fees 5.70 5.10Commission to non-executive directors 12.00 10.50

6,20.29 3,92.01

NOTES :

i. The contribution to Gratuity funds has been made on a group basis and separate figures applicable to anindividual employee are not available and therefore, contribution to Gratuity funds has not been consideredin the above computation.

ii. Remuneration to a director amounting to Rs. Nil (Previous Year Rs.0.50 Lakhs) is awaiting shareholders’approval. In the previous year the appointment of the executive director was subject to shareholders’ approval.

Computation of net profit under Section 198/349 of the Companies Act, 1956 and calculation of commissionpayable to non-executive directorsProfit before Taxation 1,62,42.02 1,15,67.52Add : Directors’ Remuneration 6,02.59 3,76.41

Directors’ sitting fees 5.70 5.10Commission to non-executive directors 12.00 10.50Provision for Doubtful Debts and Advances 0.15 17.36Provision for Obsolescence 61.05 -Idle Assets Written Off - 40.30Loss on sale of Fixed Assets (Net) 43.61 1.02

Net Profit under section 198/349 on which commission is payable 1,69,67.12 1,20,18.21

Commission payable to non-executive directors:Maximum allowed as per the Companies Act, 1956 at 1% 1,69.67 1,20.18Restricted by the Board of Directors to 12.00 10.50

NOTE:The Company depreciates fixed assets based on estimated useful lives that in certain cases are lower thanthose implicit in Schedule XIV of the Companies Act, 1956. Accordingly, the rates of depreciation used by theCompany in such cases are higher than the minimum rates prescribed by Schedule XIV.

SCHEDULES


36



4. Provisions and/or payments in respect of Auditors’ Remuneration(i) Statutory Audit (including service tax) 14.33 14.73(ii) Tax Audit (including service tax) 11.02 19.29(iii) In other capacity (including service tax) 14.29 12.37(iv) Out-of-pocket expenses 7.36 6.64

47.00 53.03

5. Expenditure indicated below allocated to other Revenue Accounts

Consumption of stores and spares 15,60.04 15,17.44

Insurance 2,59.74 2,68.90

Development and Scientific research 7,39.20 6,05.41

Year ended Year endedDecember 31, 2005 December 31, 2004

Unit Quantity Value Quantity Value(Rs. Lakhs) (Rs. Lakhs)

6. TurnoverClass of Goods :

(i) Malt Based Food/ MaltedFood ** DOZS* 1,07,52,701 10,33,49.82 98,60,697 9,29,09.10

(ii) Biscuits DOZS* 69,40,742 45,29.79 61,56,745 39,67.43(iii) Ghee (By product) MT 593 7,62.57 668 8,24.65(iv) Milk MT 1,692 1,91.33 2,121 2,35.81(v) RTD (Traded) TH 378 37.86 1,016 96.82(vi) Others - 30.29 - 1,37.86

10,89,01.66 9,81,71.67

* Converted into uniform pack size** Includes traded quantities of Malt Based Food / Malted Food

7. Details of Purchased Finished Goods

Opening stock Purchases Closing Stock *

As on As on Year Ended Year Ended As on As on

January 1, 2005 January 1, 2004 December 31, 2005 December 31, 2004 December 31, 2005 December 31, 2004

Unit Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value(Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs)

Malt Based Food/

Malted Food MT 0.17 0.10 70.00 41.58 161.00 93.22 1,215.60 7,30.50 Nil Nil 0.17 0.10

RTD (Traded) TH 9.27 0.65 Nil Nil 884.04 64.16 1,060.16 78.25 Nil Nil 9.27 0.65

0.75 41.58 1,57.38 8,08.75 Nil 0.75

* Closing Stock is net of samples, internal consumption and other stock losses.

SCHEDULES


37


Unit Quantity Value Quantity Value(Rs. Lakhs) (Rs. Lakhs)

8. Raw Materials Consumed (Refer Note 10):(Includes goods processed by third parties)Milk Powder MT 6,275 53,56.61 5,866 58,66.64Milk Fluid MT 51,573 58,14.23 47,863 54,78.80Malt and Malt Extract MT 41,400 61,54.25 32,236 38,03.08Flour (Wheat) MT 23,394 23,18.04 19,668 18,77.43Others 61,76.26 52,70.86

2,58,19.39 2,22,96.81


Percentage Value Percentage Value(Rs. Lakhs) (Rs. Lakhs)

9. Imported and Indigenous Raw Materials,Spare Parts and Components consumed:(a) Raw Materials (Refer Note 10):

Imported 1.83 4,72.70 - -Indigenous 98.17 2,53,46.69 100.00 2,22,96.81

100.00 2,58,19.39 100.00 2,22,96.81

(b) Spare Parts and Components consumed:Imported 1.15 18.94 0.74 11.86Indigenous 98.85 16,35.01 99.26 16,00.17

100.00 16,53.95 100.00 16,12.03

10. Raw Materials consumed as shown under Note 8 and 9 (a) above includes Rs.5,57.52 Lakhs (PreviousYear Rs. 4,34.82 Lakhs) being the cost of materials consumed on samples used for promotional purposesincluded under Advertising and Promotion expenses (Schedule 14), Rs.1,71.97 Lakhs (Previous Year Rs.2,28.01 Lakhs) being the cost of stock breakages recoverable from Insurance company and Rs. Nil (PreviousYear Rs. 16.73 Lakhs) being cost of stock allocated for Tsunami relief included under Other general expenses(Schedule 14) and also Rs.61.05 Lakhs (Previous Year Rs.Nil) being cost of raw material consumed forBulk stocks provided for obsolescence (Schedule 14).



11. Value of Imports calculated on C.I.F. basis:Raw Materials 4,40.67 -Spares 1.33 -Capital Goods (including capital spares) 98.97 34.83Software 7.55 -

5,48.52 34.8312. Expenditure in Foreign Currency on account of (Cash basis):

Travelling 29.43 37.32Advertisement/Promotions 2,03.96 3,27.70Consultancy 29.00 55.45Others 7.61 22.83

2,70.00 4,43.30

SCHEDULES


38



13. Amount remitted in Foreign Currencies for Dividend:

(a) Number of non-resident shareholders 1 1

(b) Number of shares held (Equity Sharesof Rs.10 each) 1,81,52,243 1,81,52,243

(c) Dividend remitted

- Current Year 14,52.18 12,70.66

- Previous Year - 6,71.64

14. Earnings in Foreign Exchange:

- Value of export of goods on F.O.B. basis 56,28.94 54,30.41 [Including sales to Nepal and Bhutan Rs.19,15.55 Lakhs (Previous Year Rs.20,25.62 Lakhs)]

- Royalty 15.95 -

15. During the year, the Company shared the services of some of its employees and facilities with two othercompanies. The value of share of costs attributable to these companies, calculated in accordance with theservice agreements based on the recommendations of an independent study, has been recovered.

16. Employees’ cost for the year ended December 31, 2005, includes an amount of Rs.4,58 Lakhs towardsone-time encashment of accumulated leave balances for eligible management personnel due to change inthe scheme of leave encashment for the said category. Henceforth, from April 2005, only workers would beentitled to leave encashment.

17. The Company estimates the deferred tax charge/(credit) using the applicable rate of taxation based on theimpact of timing differences between financial statements and estimated taxable income for the currentyear. The movement of provision for deferred tax is given below:

(Rs. Lakhs)

Provision for Deferred Tax Opening As Charge/(Credit) Closingat 01.01.05 Movements As at 31.12.05

during the year

Depreciation 38,55.23 (5,65.69) 32,89.54

Total Deferred Tax Liability (A) 38,55.23 (5,65.69) 32,89.54

Section 43B Disallowance (3,77.81) 1,35.59 (2,42.22)

VRS Payment (2,11.79) 41.78 (1,70.01)

Provision For Doubtful Debts (67.53) 5.62 (61.91)

Others - (55.41) (55.41)

Total Deferred Tax Asset (B) (6,57.13) 1,27.58 (5,29.55)

Net Deferred Tax Liability (A)-(B) 31,98.10 (4,38.11) 27,59.99

18. Segmental Reporting :

The Company is focused in the business segment of Nutritionals in India. Therefore, there is no reportablesegment as per the Accounting Standard 17 “Segment Reporting” issued by the Institute of CharteredAccountants of India.

SCHEDULES


39

19. Earnings Per Share (EPS) – The numerator and denominator used to calculate Basic and Diluted Earningsper Share


2005 2004

- Profit attributable to the Equity Shareholders (Rs.) - (A) 1,07,15,09,884 73,15,72,688

- Basic/Weighted average number of Equity Shares

outstanding during the year - (B) 4,31,36,190 4,53,80,621

- Nominal value of Equity Shares (Rs.) 10.00 10.00

- Basic/Diluted Earnings per Share (Rs.) - (A)/(B) 24.84 16.12

20. As at December 31, 2005, the Company has reviewed the future earnings of all its cash generating units inaccordance with the Accounting Standard 28 “Impairment of Assets” issued by the Institute of CharteredAccountants of India. As the carrying amount of assets does not exceed the future recoverable amount,consequently, no adjustment to the carrying amount of assets is considered necessary by the management.

21. In continuation of restructuring process, the Company had in the previous year provided for exgratia paymentto its temporary workers at Nabha Plant amounting to Rs. 4,33.50 Lakhs. The Company has fully dischargedthe above liability during the year.

22. The Company, during the year, bought back 33.25 Lakhs fully paid up equity shares of a face value ofRs.10 each at Rs. 370 per equity share in accordance with the provisions of the Companies Act, 1956 andthe Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998. Accordingly, asum equal to the nominal value of the shares purchased aggregating Rs.3,32.51 Lakhs has been transferredfrom free reserves to Capital Redemption Reserve Account as required by Section 77A of the CompaniesAct, 1956. Further, free reserves aggregating Rs.1,19,70.30 Lakhs representing premium amount havebeen utilized for payment of buy-back of shares.

23. The Company had an arrangement for a working capital facility with a consortium of scheduled banks,whereby it had secured by way of hypothecation of all the current assets of the Company, namely stocksof raw materials, goods in process, semi finished & finished goods, stores and spares, bills receivable andbook debts and all other moveable goods both present and future. However, during the year, the consortiumhas been disbanded and working capital facilities are being availed from the erstwhile consortium memberbanks. There are no loans, secured or unsecured, that are outstanding as at the year end.

24. The names of Small Scale Industrial Undertakings to whom the Company owes a sum, which is outstandingfor more than 30 days as on December 31, 2005 are Prestige Products, Samarat Parmachem Ltd., ChandigarhFlour Mills, Canton Laboratories, Amrita Mouldings Pvt. Limited, Essen Plastics Pvt. Limited, India PackagingPvt. Limited, Manish Offset, Massanto Containers Pvt. Limited, Printers Den Packaging and Rajit Chemicals.These amounts are not due for payment as per the terms and conditions of the purchase order/contract.

25. Class of GoodsANNUAL CAPACITY ACTUAL PRODUCTION* STOCK OF GOODS PRODUCED

Licensed pluspermitted Year Year OPENING CLOSING

Liberalisation Installed ended ended31.12.05 31.12.04 31.12.05 31.12.04 31.12.05 31.12.04 AS ON 01.01.05 AS ON 01.01.04 AS ON 31.12.05 AS ON 31.12.04

QTY QTY QTY QTY QTY QTY QTY VALUE QTY VALUE QTY VALUE QTY VALUE

MT MT MT MT MT MT MT RS. LAKHS MT RS. LAKHS MT RS. LAKHS MT RS. LAKHS

1. MALT BASED FOOD/

MALTED FOODS 91,100 91,100 90,800 86,300 58,693 52,305 6,158 47,05.46 5,866 46,98.76 8,728 67,59.52 6,158 47,05.46

2. MILKOSE BABY

FOODS 228 228

3. POWDERED MILK 3,528 3,528

4. ENERGY & 1,440 1,440

PROTEIN HEALTH

FOODS 1,000 1,000 578 553 103 1,10.15 72 90.88 134 2,06.28 103 1,10.15

5. GHEE 6,000 6,000 3,076 3,076 600 664 42 47.22 27 34.62 49 60.62 42 47.22

6. BISCUITS 10,224 8,825 642 2,47.04 432 1,80.77 1,674 6,88.59 642 2,47.04

7. MALT BASED FOOD

/MALTED FOODS 9,663 5,984 724 4,70.67 927 6,78.08 1,615 12,62.58 724 4,70.67

55,80.54 56,83.11 89,77.59 55,80.54

* Actual production does not include Trial Production

SCHEDULES


} }

40

SCHEDULES

FORMING PART OF THE ACCOUNTSNOTES:

1. The installed capacities and the permitted liberalisation of licensed capacities are as per certificates given by the Director-Operations and not verified by the Auditors, being a technical matter.

2. Production figures are net of captive consumption.

3. Powdered Milk /Boost Intermediate/Horlicks Intermediate are for captive consumption and accordingly the same have beenincluded in Goods in Process in Schedule 5 & 15

4. Production capacity listed under Serial No. 1, 3, 4 & 5 above are in respect to all the three factories of the company and arecovered by Industrial Entrepreneurs’ Memorandums (IEMs) in terms of Notification No. 477 (E) dated 25th July, 1991 of theDepartment of Industrial Development, Ministry of Industry, Government of India. Capacity of 228 MT listed under Serial No.2 and capacity of 3,528 MT included under Serial No 3 pertains to licences granted under the Industrial (Development andRegulation) Act, 1951.

5. The Products under Serial No. 2 to 4 are manufactured in an integrated plant and, therefore, installed capacity cannot be givenseparately.

6. The Products listed under Serial No. 6 & 7 are processed by Third Parties.

7. Closing Stock is net of samples, internal consumption and other stock losses.

26. (A) In accordance with the requirements of Accounting Standard (AS) – 18 ‘Related Party Disclosures’ thenames of the related party where control exists/able to exercise significant influence along with the aggregatetransactions and year end balances with them as identified and certified by the management are given below:

A Holding Company

Horlicks Limited (a subsidiary of GlaxoSmithKline Plc, U.K.) holds 43.16% of equity shares in thecompany.

B Other related parties in GSK group where common control exits.

(a) GlaxoSmithKline Asia Private Limited (o) SB (Mauritius) Ltd.

(b) GlaxoSmithKline Pharmaceuticals India Limited (p) SB Exports Ltd. (U.K.)

(c) GlaxoSmithKline Exports (Mauritius) (q) SB Corporate Centre

(d) Sterling Drugs (Malaya) Sdn Bhd (r) SB Research Ltd.

(e) GlaxoSmithKline Services Unlimited (s) GlaxoSmithKline (Nigeria)

(f) GlaxoSmithKline Consumer Healthcare (t) Glaxo Operations Ltd. (U.K.)Sdn Bhd (Malaysia) (u) GSK Bangladesh Ltd.

(g) GlaxoSmithKline Mackwoods Ltd. (Sri Lanka) (v) SB Corp CB (U.S.A.)

(h) GlaxoSmithKline Exports Ltd. (U.K.) (w) GSK South Africa Pty

(i) GSK Financial Services (U.K.) (x) GSK (Ireland)

(j) GSK Caribbean (Jamaica) Ltd. (y) GSK Australia Pty

(k) GSK Caribbean (Trinidad & Tobago) Ltd. (z) Tianjin SKF (China)

(l) GSK Hong Kong Ltd. (aa) GlaxoSmithKline Consumer

(m) GlaxoSmithKline Pte Ltd. (Singapore) Healthcare (Korea)

(n) GSKCH - L.P.

C. Trusts under Control of the Company

a. Senior Staff Gratuity Fund

b. Employees’ Gratuity Fund

c. Provident Fund

d. Indian Senior Executives Superannuation Fund (Scheme)

D. Directors / Key Managerial Personnel

a. Nicholas J. Massey

b. S. J. Scarff

c. G. K. Chakraborty

d. P. S. Mukherjee

e. P. Dwarakanath

f. David S. Allen

41

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sia

Pri

vate

Lim

ited

-1

,16

,79

.08

--

1,1

6,7

9.0

8-

1,0

5,4

9.6

9-

-1

,05

,49

.69

Gla

xoS

mith

Klin

e P

ha

rma

ceu

tica

ls

Lim

ited

-4

9,0

3.7

2-

-4

9,0

3.7

2-

47

,86

.45

--

47

,86

.45

Pu

rch

ase

of

Go

od

/Vac

cin

es/

Med

icin

es f

or

emp

loye

esG

laxo

Sm

ithK

line

Ph

arm

ace

utic

als

Lim

ited

-3

.76

--

3.7

6-

1.9

7-

-1

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Fix

ed a

sset

s so

ldG

laxo

Sm

ithK

line

Asi

a P

riva

te L

imite

d-

--

--

-2

2.3

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end

erin

g o

f se

rvic

es(C

ross

Ch

arg

e R

eco

vere

d)*

-2

7,4

7.8

6-

-2

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25

,02

.15

--

25

,02

.15

Gla

xoS

mith

Klin

e A

sia

Pri

vate

Lim

ited

-2

3,6

8.0

6-

-2

3,6

8.0

6-

22

,44

.30

--

22

,44

.30

Gla

xoS

mith

Klin

e P

ha

rma

ceu

tica

ls L

imite

d-

3,6

5.9

3-

-3

,65

.93

-2

,46

.72

--

2,4

6.7

2O

the

rs-

13

.87

--

13

.87

-1

1.1

3-

-1

1.1

3S

ha

red

Se

rvic

es

Gla

xoS

mith

Klin

e P

ha

rma

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ls L

imite

d-

8.1

2-

-8

.12

-8

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--

8.5

2R

eim

bu

rsem

ent

for

Exp

ense

s(R

ec

eiv

ed

/Re

ce

iva

ble

)-

8,2

5.9

2-

-8

,25

.92

-9

,98

.78

--

9,9

8.7

8G

laxo

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ithK

line

Asi

a P

riva

te L

imite

d-

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-2

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.38

-5

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--

5,7

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ithK

line

Ph

arm

ace

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als

Lim

ited

-2

,32

.19

--

2,3

2.1

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2,5

2.6

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-2

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.69

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K H

on

gko

ng

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-8

9.7

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29

.09

--

29

.09

Oth

ers

-2

,37

.62

--

2,3

7.6

2-

1,4

6.6

2-

-1

,46

.62

Rei

mb

urs

emen

t o

f ex

pen

ses

(Pa

id/P

ay

ab

le)

-7

.75

--

7.7

5-

8.7

5-

-8

.75

Gla

xoS

mith

Klin

e S

ervi

ces

Unl

imite

d-

5.9

5-

-5

.95

-8

.75

--

8.7

5S

B C

orp

CB

(U

.S.A

.)-

1.8

0-

-1

.80

--

--

-A

gen

cy a

rran

gem

ents

(Sel

ling

Co

mm

issi

on

In

com

e) *

-3

,48

.60

--

3,4

8.6

0-

3,2

9.1

0-

-3

,29

.10

Gla

xoS

mith

Klin

e A

sia

Pri

vate

Lim

ited

-7

7.8

0-

-7

7.8

0-

68

.79

--

68

.79

Gla

xoS

mith

Klin

e P

ha

rma

ceu

tica

ls L

imite

d-

2,7

0.8

0-

-2

,70

.80

-2

,60

.31

--

2,6

0.3

1R

ent

pai

dG

laxo

Sm

ithK

line

Asi

a P

riva

te L

imite

d-

1,2

9.5

8-

-1

,29

.58

-1

,23

.40

--

1,2

3.4

0R

ent

rece

ived

-3

.22

--

3.2

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15

.47

--

15

.47

Gla

xoS

mith

Klin

e A

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Pri

vate

Lim

ited

-0

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--

0.9

4-

1.8

3-

-1

.83

Gla

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mith

Klin

e P

ha

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tica

ls L

imite

d-

2.2

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icen

se a

gre

emen

ts(R

oya

lty

Pai

d/P

ayab

le)

*Gla

xoS

mith

Klin

e A

sia

Pri

vate

Lim

ited

-4

0,4

0.7

3-

-4

0,4

0.7

3-

34

,05

.30

--

34

,05

.30

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van

ce G

iven

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mith

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e A

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vate

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--

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ce R

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ved

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kG

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a P

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8-

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end

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ks P

lc,

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14

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12

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Inte

rest

Rec

eive

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20

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20

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50

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a P

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6

SCHEDULES


42

SCHEDULES

FORMING PART OF THE ACCOUNTSY

ear

end

ed D

ecem

ber

31,

200

5Ye

ar e

nded

Dec

embe

r 31

, 20

04

Par

ticu

lars

Ho

ldin

gC

om

pan

ies

Dir

ecto

rs/K

ey T

rust

To

tal

Ho

ldin

gC

om

pa

nie

sD

irec

tors

/Key

Tru

stTo

tal

Co

mp

any

un

der

co

mm

on

Man

ager

ial

Co

mp

an

yun

der

com

mon

Ma

na

ge

ria

lco

ntr

ol

Per

son

nel

con

tro

lP

ers

on

ne

l

Rem

un

erat

ion

pai

d**

--

6,0

2.5

9-

6,0

2.5

9-

-3

,91

.66

-3

,91

.66

Nic

hola

s J.

Mas

say

--

79

.86

-7

9.8

6-

-7

6.0

5-

76

.05

G.

K.

Cha

krab

orty

--

1,2

6.9

2-

1,2

6.9

2-

-7

8.9

0-

78

.90

P. D

war

akan

ath

--

1,6

5.1

6-

1,6

5.1

6-

-8

9.2

1-

89

.21

P. S

. M

ukhe

rjee

--

1,5

9.3

7-

1,5

9.3

7-

-9

1.9

8-

91

.98

Dav

id S

. A

llen

--

71

.28

-7

1.2

8-

-5

5.5

2-

55

.52

An

nu

al C

on

trib

uti

on

mad

eb

y th

e C

om

pan

y-

--

20

,89

.32

20

,89

.32

--

-1

8,7

0.9

41

8,7

0.9

4P

rovi

dent

Fun

d Tr

ust

--

-1

5,7

5.7

61

5,7

5.7

6-

--

14

,03

.25

14

,03

.25

Sen

ior

Sta

ff G

ratu

ity F

und

--

-4

4.7

54

4.7

5-

--

1,1

2.7

91

,12

.79

Em

ploy

ees’

Gra

tuity

Fun

d-

--

1,1

6.2

21

,16

.22

--

-6

6.5

46

6.5

4In

dia

n S

en

ior

Exe

cutiv

es

Su

pe

ran

nu

atio

n F

un

d (

Sch

em

e)

--

-3

,52

.59

3,5

2.5

9-

--

2,8

8.3

62

,88

.36

Pay

men

ts m

ade

by

the

Co

mp

any

toth

e em

plo

yees

on

beh

alf

of

Tru

stto

war

ds

thei

r se

ttle

men

t-

--

24

,19

.48

24

,19

.48

--

-1

0,3

8.2

31

0,3

8.2

3P

rovi

dent

Fun

d Tr

ust

--

- 2

1,9

4.5

52

1,9

4.5

5-

--

8,6

1.0

68

,61

.06

Sen

ior

Sta

ff G

ratu

ity F

und

--

-1

,05

.49

1,0

5.4

9-

--

49

.74

49

.74

Em

ploy

ees’

Gra

tuity

Fun

d-

--

97

.79

97

.79

--

-7

2.0

87

2.0

8In

dia

n S

en

ior

Exe

cutiv

es

Su

pe

ran

nu

atio

n F

un

d (

Sch

em

e)

--

-2

1.6

52

1.6

5-

--

55

.35

55

.35

Rec

ove

ries

mad

e fr

om

Tru

sts

on

acco

un

t o

f se

ttle

men

t an

d i

nve

stm

ents

--

-2

4,0

9.7

82

4,0

9.7

8-

--

9,6

6.0

69

,66

.06

Pro

vide

nt F

und

Trus

t-

--

21

,51

.41

21

,51

.41

--

-8

,29

.48

8,2

9.4

8S

enio

r S

taff

Gra

tuity

Fun

d-

--

1,2

7.9

51

,27

.95

--

-2

7.2

52

7.2

5E

mpl

oyee

s’ G

ratu

ity F

und

--

-9

5.8

89

5.8

8-

--

66

.86

66

.86

Ind

ian

Se

nio

r E

xecu

tive

sS

up

era

nn

ua

tion

Fu

nd

(S

che

me

)-

--

34

.54

34

.54

--

-4

2.4

74

2.4

7B

alan

ces

as a

t D

ecem

ber

31,

200

5-

--

Re

ce

iva

ble

s-

6,8

9.0

8-

76

.05

7,6

5.1

3-

5,3

0.0

8-

66

.40

5,9

6.4

8G

laxo

Sm

ithK

line

Mac

kwoo

ds L

td.

(Sri

Lank

a)-

3,0

0.2

6-

-3

,00

.26

-1

,18

.42

--

1,1

8.4

2G

laxo

Sm

ithK

line

Asi

a P

riva

te L

imite

d-

2,5

0.0

0-

-2

,50

.00

-3

,17

.36

--

3,1

7.3

6S

B C

orpo

rate

Cen

tre

--

--

--

41

.26

--

41

.26

Pro

vide

nt F

und

Trus

t-

--

68

.93

68

.93

--

-2

5.8

12

5.8

1S

enio

r S

taff

Gra

tuity

Fun

d-

--

--

--

-2

2.5

02

2.5

0In

dia

n S

en

ior

Exe

cutiv

es

Su

pe

ran

nu

atio

n F

un

d (

Sch

em

e)

--

--

--

--

12

.88

12

.88

Oth

ers

-1

,38

.82

-7

.12

1,4

5.9

4-

53

.04

-5

.21

58

.25

Pa

ya

ble

s-

(8,9

5.47

)-

(6,6

0.53

)(1

5,56

.00)

-(5

,28.

46)

-(2

,26.

40)

(7,5

4.86

)G

laxo

Sm

ithK

line

Asi

a P

riva

te L

imite

d-

(3,5

2.0

7)

--

(3,5

2.0

7)

--

--

-G

laxo

Sm

ithK

line

Pha

rmac

eutic

als

Lim

ited

-(5

,42

.46

)-

-(5

,42

.46

)-

(5,2

3.6

7)

--

(5,2

3.6

7)

Pro

vide

nt F

und

Trus

t-

--

(1,1

4.1

8)

(1,1

4.1

8)

--

-(1

,24

.44

)(1

,24

.44

)S

enio

r S

taff

Gra

tuity

Fun

d-

--

(2,6

5.1

0)

(2,6

5.1

0)

--

-(3

3.3

0)

(33

.30

)E

mpl

oyee

s’ G

ratu

ity F

und

--

-(1

,27

.51

)(1

,27

.51

)-

--

(48

.84

)(4

8.8

4)

Ind

ian

Se

nio

r E

xecu

tive

sS

up

era

nn

ua

tion

Fu

nd

(S

che

me

)-

--

(1,5

3.7

4)

(1,5

3.7

4)

--

-(1

9.8

2)

(19

.82

)O

the

rs-

(0.9

4)

--

(0.9

4)

-(4

.79

)-

-(4

.79

)

*T

he a

mou

nt i

s in

clus

ive

of S

ervi

ce T

ax.

**T

he c

ontr

ibut

ion

to G

ratu

ity F

und

has

been

mad

e on

a g

roup

bas

is a

nd s

epar

ate

figur

es a

pplic

able

to

an i

ndiv

idua

l em

ploy

ee a

re n

ot a

vaila

ble.

The

refo

re,

the

sam

e ha

s no

t be

enco

nsi

de

red

ab

ove

.

43

SCHEDULES


27. The Company has initiated a long term incentive plan to maintain its competitiveness in attracting andretaining Senior Grade Managers. In terms of this plan, the eligible employees will receive cash equivalentto the market price of the shares of GSK Plc. at the end of the three years restricted period provided eligibleemployees are in continuous employment with the Company during that time. Accordingly, a sum ofRs.1,89.04 Lakhs (Previous Year Rs.70 Lakhs) has been charged in these financial statements representingone-third of the approximate value of the incentive (Schedule 13 - Employees’ Cost).

28. Company has unpaid disputed Excise Duty, Sales Tax and Income Tax demands outstanding at the yearend amounting to Rs.7,29.13 Lakhs, Rs.3,80.30 Lakhs and Rs.7,39.95 Lakhs respectively against whichsuitable provisions, wherever necessary, have been made in these accounts.

29. The previous year’s figures have been regrouped, wherever necessary, to conform to this year’s classification.

44

I. REGISTRATION DETAILS

Registration No. 0 2 2 5 7 State Code 1 6

Balance Sheet Date 3 1 1 2 0 5

II. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands)Total Liabilities Total Assets

6 8 5 5 7 8 8 6 8 5 5 7 8 8

SOURCES OF FUNDS *Paid -up Capital Reserves & Surplus

4 2 0 5 5 5 4 3 3 0 5 6 3

Secured Loans Unsecured Loans

N I L N I L

* Do not include Deferred Tax Liabilities/(Assets)

APPLICATION OF FUNDSNet Fixed Assets Investments

2 8 3 7 8 9 4 0 5

Net Current Assets Misc. Expenditure

2 1 8 9 2 1 8 N I L

Accumulated Losses

N I L

IV. PERFORMANCE OF THE COMPANY (Amount in Rs. Thousands)Turnover (Sales* and Other Income) Total Expenditure

9 9 1 1 5 4 8 8 2 8 7 3 4 6

* Sales are net of Excise Duty

Profit/Loss Before Tax Profit/Loss After Tax

1 6 2 4 2 0 2 1 0 7 1 5 1 0

Earning per share in Rs ** Dividend @%

2 4 . 8 4 8 0 . 0 0

** Basic/Diluted

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANYItem Code No. (ITC Code) 1 9 0 1 1 0 . 0 1Product Description M A L T B A S E D

F O O DItem Code No. (ITC Code) 1 9 0 5 3 0 . 0 3Product Description B I S C U I T S

+ +

BALANCE SHEET ABSTRACT

AND COMPANY’S GENERAL BUSINESS PROFILE

CHAIRMAN MANAGING DIRECTOR DIRECTORS CONTENTS Board of Directors, etc. 1 Financial Statistics 2...

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Transcript of CHAIRMAN MANAGING DIRECTOR DIRECTORS CONTENTS Board of Directors, etc. 1 Financial Statistics 2...