Dabur Nepal

Dabur Nepal Private Limited

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

Contents

Page

Director’s Report 1

Independent Auditor’s Report 3

Balance Sheet 4

Profit and Loss Account 5

Schedules 6

Accounting Policies and Notes to Accounts 11

Cash Flow Statment 17

Dabur Nepal Private Limited • Annual Report 2004-05 1

Directors’ report

This report has been prepared for the purpose of annexing the Annual Accounts of the Company with the Annual Accounts ofDabur India Ltd., the holding company. The report is based on the performance of the Company during the period 1st April2004 to 31st March 2005. The financial year of the Company will end on 15th July 2005 as per the Nepali Law.

Financial ResultsThe financial results for the Company’s working are as follows:

(Nrs in Lacs) ....2004-05 2003-04

Turnover including other income 29830.24 28492.98

Profit after depreciation and before provisions 1615.45 2153.83

Less: Provision for housing facility 80.77 107.69Less: Provision for Bonus 153.47 204.61Less: Provision for Income Tax 264.53 395.93

Net Profit after Tax 1116.68 1445.60

Add: Balance in Profit & Loss account brought forwardfrom the previous year 5863.34 4846.69

Profit available for appropriation 6938.10 6282.74Appropriation:Interim Dividend 319.41 319.40Transfer to General Reserve 100.00 100.00Balance carried to Balance Sheet 6518.69 5863.34

6938.10 6282.74

OperationsThe turnover of the company has increased by 4.69% over the previous year. The Net Profit after tax has reduced by 2.28% overthe previous year due to lower contribution margin.

During the year your company has invested Rs 24.65 crore on account of fixed assets. Out of which, major amount is spenttowards installing a new packing machine in Juice Plant in Flex Pack and increasing cold store capacity. Your company hasdisposed off it’s fixed assets amounting Rs 4.51 crore during the year.

During the year, your company launched new A-3 flex pack of 1 litre and 330 ml. for Active range of juices. Your company hasalso for the first time, launched fruit-vegetable juices and Coolers during the year.

Continuing its thrust on the domestic market, your company has started manufacturing Red toothpaste and gel, Chywanprash,Vatika face-pack and Anmol Black shampoo during the year. During the year, the company’s sale from domestic market is 13%as against 8.4% in the previous year.

Medicinal plants project:In the Nursery business, your Company has now become self-sufficient in Pellitory Roots (Akarkara), one of the key ingredients,which has been imported so far.

Your Company has signed a MOU with a US based Company for plantation of Mint and extraction of Mint oil, which will be soldto the US Company. This will not only create a new area of expansion, but also act as a backward linkage for Company’s in-house requirement of Mint oil.


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

Quality & safety:Your Company has undertaken a detailed Quality Audit in its plant covering wide areas like production, processes, manpower,infrastructure etc. and has implemented almost all the recommendations given in the audit.

Your Company has also gone through Safety Audit, which was conducted by a professional firm from India.

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

AcknowledgmentThe directors wish to place on record their appreciation for the continued support and co-operation extended by Dabur IndiaLtd., Shareholders, Dealers, Customers and all the employees of the company.

They also wish to place on record their sincere appreciation for the co-operation, assistance and guidance received fromvarious officers of the His Majesty’s Government of Nepal and Government of India.

On behalf of the Board of Directors

Pradip BurmanPradip BurmanPradip BurmanPradip BurmanPradip Burman

Chairman

Kathmandu, Nepal

19th April 2005

(2062/01/06)

Directors’ Report (Contd...)


INDEPENDENT AUDITOR’S REPORT

To,

The Shareholders, Dabur Nepal Private Ltd.

We have audited the accompanying Balance Sheet of Dabur Nepal Private Limited, as of 31 March 2005, the related Profit andLoss Account and the Cash Flow Statement for the year then ended. These financial statements are the responsibility of themanagement of the Company. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Nepal Standards on Auditing. Those Standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As per the requirement of the Companies Act 2053 we report that:

a) we have obtained information and explanations, which, to the best of our knowledge and belief, were necessary forthe purpose of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears fromour examination of such books;

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

d) in our opinion, so far as appeared from our examination of the books, the business of the Company has beenconducted satisfactorily; and

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

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

Shashi SatyalShashi SatyalShashi SatyalShashi SatyalShashi Satyal

Partner

For and on behalf of

T R Upadhya & Co.T R Upadhya & Co.T R Upadhya & Co.T R Upadhya & Co.T R Upadhya & Co.

Chartered Accountants

7 April 2005

Kathmandu, Nepal


Balance Sheet As At 31 March 2005

Schedule As at 31.03.05 As at 31.03.04Nrs. In Lacs Nrs. In Lacs

Sources Of FundsShare Holders’ Funds A(A) Share Capital 798.52 798.52(B) Reserves & Surplus 7,851.06 8,649.58 7,122.66 7,921.18Loan Funds B(A) Secured Loans 5,765.90 5,776.22(B) Unsecured Loans 77.00 5,842.90 77.00 5,853.22

Total 14,492.48 13,774.40Application Of FundsFixed Assets C(A) Gross Block 14,803.75 12,789.46(B) Less: Depreciation 5,844.48 5,017.20(C) Net Block 8,959.27 7,772.26

Investments D 19.30 -Current Assets, Loans & Advances E(A) Inventories 7,097.31 5,318.12(B) Sundry Debtors 1,664.65 1,722.47(C) Cash & Bank Balances 12.70 91.78(D) Loans And Advances 2,555.71 2,001.66(E) Deposits And Other Receivables 2,873.53 4,112.81

14,203.90 13,246.84Less :Current Liabilities & Provisions F(A) Liabilities 6,549.33 5,555.79(B) Provisions 2,190.38 1,753.73

8,739.71 7,309.52Net Current Assets 5,464.19 5,937.32Deferred Expenditure G 49.72 64.82(To The Extent Not Written Off Or Adjusted)

Total 14,492.48 13,774.40Accounting Policies O

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

As Per Our Report Of Even Date Attached For Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd.

Pradip BurmanPradip BurmanPradip BurmanPradip BurmanPradip Burman Chairman

Shashi SatyalShashi SatyalShashi SatyalShashi SatyalShashi Satyal R. S. RanaR. S. RanaR. S. RanaR. S. RanaR. S. Rana Managing Director

Partner A. MehraA. MehraA. MehraA. MehraA. Mehra CFO & Co. Secretary

G. KashinathG. KashinathG. KashinathG. KashinathG. Kashinath Chief Executive Officer

For T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.


Kathmandu

7th April 2005


Profit and Loss Account for the year ended 31 March 2005

Schedule For the year ended For the year ended31-03-2005 31-03-2004Nrs. in Lacs Nrs. in Lacs

IncomeSales H 29,634.41 28,347.35Other Income I 195.83 29,830.24 145.63 28,492.98ExpenditureCost Of Materials J 21,849.55 20,354.87Excise Duty 50.58 28.82Manufacturing Expenses K 1,377.96 23,278.09 1,347.59 21,731.28

Gross Profit 6,552.15 6,761.70Payments & Benefits To Employees L 1,230.18 806.77Administrative & Selling Expenses M 1,900.00 1,445.90Financial Expenses N 663.40 940.17Amortisation Of Miscellaneous Expenses 15.10 16.42Depreciation 1,014.31 4,822.99 1,065.95 4,275.21

Net Profit Before Extraordinary Items 1,729.16 2,486.49(Profit)/Loss On Sale Of Fixed Assets (12.75) 10.74Loss On Sale Of Bonds - 120.48Assets Not In Use /Written Off 91.77 91.77Provision For Claims Receivable 34.69 109.67

Net Profit Before Provisions 1,615.45 2,153.82Provision For Housing 80.77 107.69Provision For Bonus 153.47 204.61

Net Profit Before Taxation 1,381.21 1,841.52Provision For Taxation 264.53 395.93Net Profit After Tax 1,116.68 1,445.59Surplus B/F From Previous Year 5,863.34 4,846.67Income Tax Adjustment For Previous Years 41.92 9.52

Profit Available For Appropriation 6,938.10 6,282.74

Appropriation / AllocationGeneral Reserve 100.00 100.00Interim Dividend 319.41 319.40Proposed Dividend - -Balance Carried Over To Balance Sheet 6,518.69 5,863.34

6,938.10 6,282.74Accounting Policies O

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

As Per Our Report Of Even Date Attached For Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd.

Pradip BurmanPradip BurmanPradip BurmanPradip BurmanPradip Burman Chairman

Shashi SatyalShashi SatyalShashi SatyalShashi SatyalShashi Satyal R. S. RanaR. S. RanaR. S. RanaR. S. RanaR. S. Rana Managing Director

Partner A. MehraA. MehraA. MehraA. MehraA. Mehra Cfo & Co. Secretary

G. KashinathG. KashinathG. KashinathG. KashinathG. Kashinath Chief Executive Officer

For T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.


Kathmandu

7th April 2005

Dabur Nepal Private Limited • Annual Report 2004-058

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Schedule A - Shareholders‘ FundShare CapitalAuthorised1400000 Equity Shares of Rs.100 Each(Previous Year : 1400000 Equity Shares of Rs.100 Each) 1,400.00 1,400.00

Issued800000 Equity Shares of Rs. 100 Each(Previous Year : 800000 Equity Shares of Rs. 100 Each) 800.00 800.00

Subscribed & Paid Up798520 Equity Shares of Rs.100 Each Fully Paid Up(Previous Year : 798520 Equity Shares of Rs.100 Each) 798.52 798.52Reserves & SurplusShare Premium Reserve 600.00 600.00General Reserve 759.30 659.30Profit and Loss Account 6,518.69 5,863.36

7,877.99 7,122.66Less: Bonus Adjusted in Retained Earnings 26.93 -

7,851.06 7,122.66

Schedule B - Loan FundsSecured LoansWorking Capital LoansNabil Bank Ltd. 919.34 1,513.76Standard Chartered Bank Nepal Ltd. 3,252.38 2,996.56Nepal SBI Bank Ltd. 1,121.16 796.70

5,292.88 5,307.02Trust Receipt LoansNabil Bank Ltd. 20.06 126.84Nepal SBI Bank Ltd. 236.13 202.65Standard Chartered Bank Nepal Ltd. 85.38 -

341.57 329.49(All the above loans are secured by execution of registeredmortgage by deposit of title deeds of Company’s entire landsituated at Rampur Tokani, Bara district and the entire immovableproperties, present & future, built thereon, and hypothecation &assignment of entire current assets, present and future, rankingPari - Passu amongst Nabil Bank Ltd., Std. Chartered Bank NepalLtd. and Nepal SBI Bank Ltd., subject to the priorities that Banksextending term loans (except that which is covered by guaranteesof Indian banks) shall have first charge on the fixed assets andsecond charge on current assets while the participating banksextending working capital, overdraft and cash credit shall have pari-passu first charge on the current assets and second charge on fixedassets ; and are further secured by a corporate guarantee by theCompany’s parent company, Dabur India Ltd., New Delhi, India andby personal guarantee by a Director of the Company.)

Other Long Term LoansAcceptances (Against Tetrapack Machine) 131.45 139.71

5,765.90 5,776.22

Unsecured LoansFrom A Director 77.00 77.00

77.00 77.00 77.00 77.00 77.00 77.0077.0077.0077.0077.00

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

As at As at 31st March 2005 31st March 2004

Nrs. in Lacs Nrs. in Lacs


Schedule C - Fixed assets

Name of assets Depreciation Gross Block Depreciation Net Block

(%) As at Additions Adjustment As at As at For the year Adjustment As at As at As at

01.04.04 - - 31.03.05 31.03.04 31.03.05 31.03.05 31.03.04

Land 324.50 - - 324.50 - - - - 324.50 324.50

Land for housing colony 163.42 - - 163.42 - - - - 163.42 163.42

Building, roads & bridges 5 2,615.95 299.95 - 2,915.90 596.57 104.35 - 700.92 2,214.98 2,019.38

Worker’s quarter 5 178.01 127.57 - 305.58 27.51 10.76 - 38.27 267.31 150.50

Furniture & fixture 25 466.29 95.44 9.28 552.45 235.63 66.23 9.11 292.75 259.70 230.66

Laboratory equipment 25 96.67 4.50 - 101.17 58.23 9.72 - 67.95 33.22 38.44

Office equipment 25 429.20 27.03 0.82 455.41 193.69 63.71 0.20 257.20 198.21 235.51

Vehicles 20 306.61 208.07 74.76 439.92 137.63 40.49 48.98 129.14 310.78 168.98

Electrical installation 15 508.10 62.02 - 570.12 271.24 38.28 - 309.52 260.60 236.86

Plant & machinery 15 7,274.85 1,561.28 230.43 8,605.70 3,357.42 657.39 128.74 3,886.07 4,719.63 3,917.43

Tools & implements 15 290.47 59.17 - 349.64 139.28 23.38 - 162.66 186.98 151.19

Capital work in progress 135.39 19.94 135.39 19.94 - - - - 19.94 135.39

( including capital items in

transit )

Total 12,789.46 2,464.97 450.68 14,803.75 5,017.20 1,014.31 187.03 5,844.48 8,959.27 7,772.26

Schedule D - Investments5% Special Bond 19.30 -

19.30 -

Schedule E - Current Assets,Loans and Advances

Inventories(As Taken,Valued And Certified ByThe Management)Raw Materials 3,294.07 2,359.24Packing Materials 1,452.85 1,583.50Stores And Spares 260.42 309.50Stock In Process 161.87 105.73Finished Goods 831.44 241.94Material In Transit 1,102.97 718.21

7,103.62 5,318.12Less: Provision For Damaged Stock 6.31 -

7,097.31 5,318.12

Sundry Debtors(Unsecured, Considered Good)Over Six Months 46.99 26.19Others 1,617.66 1,696.28

1,664.65 1,722.47Cash & Bank BalancesCash In Hand 1.28 1.89Balance With Banks 11.42 89.89

12.70 91.78

Nrs. In Lacs

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




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Schedule F - Current Liabilities & ProvisionsLiabilitiesCreditors For Goods 1,403.67 1,720.22Acceptances 4,509.06 3,447.64Interest Accrued But Not Due 50.10 13.12Creditors For Exps. & Other Liabilities 373.44 355.43Dividend Payable 60.80 -Advance Against Supplies & Expenses 152.26 19.38

6,549.33 5,555.79

ProvisionsProvision For Housing 673.13 592.36Provision For Bonus 153.47 150.53Provision For Earned Leave Salary 29.44 11.13Provision For Taxation 1,334.33 999.70

2,190.38 1,753.738,739.70 7,309.52

Schedule G - Deferred ExpenditureOpening Balance 64.82 5.48Addition During The Year - 75.76Less: Written-Off During The Year 15.10 16.42

Closing Balance 49.72 64.82

Schedule E - Investments (Contd...)Loans & Advances(Unsecured Considered Good UnlessOtherwise Stated)Advances Recoverable in cash or kind or forvalues to be recoveredAdvance To Employees 177.66 176.97Advance To Suppliers 926.74 806.05Margin Money With Bank 42.13 26.63Prepaid Expenses 55.08 48.30Advance Income Tax 1,115.61 697.65Other Advances 238.49 246.06

2,555.71 2,001.66Deposits And Other ReceivablesSecurity Deposit 18.61 18.61Vat Deposit 400.72 590.52Customduty Drawback Receivable 2,282.60 1,903.30Local Development Tax Deposit 49.46 217.25Bonds Receivable 110.13 19.30Interest Accrued On Bonds 0.93 -Custom Duty Deposit & Special Duty Deposit 6.31 1,332.78Insurance Claim 33.18 31.05

2,901.94 4,112.81Less: Provision For Doubtful Receivables 28.41

2,873.53 4,112.8114,203.90 13,246.86

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




9

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

Schedule H - SalesSalesDomestic Sales 3,878.85 2,401.90Export Sales 25,755.56 25,945.45

29,634.41 28,347.35

Schedule I - Other IncomeInterest Received 8.09 11.28Scrap Sales 137.42 95.58Discount Received 0.83 -Rent Received 2.93 1.82Misc Income 2.15 -Exchange Gain (Net) 44.41 36.95

195.83 145.63

Schedule J - Cost Of MaterialsCost Of Materials ConsumedRaw Material :Opening Stock 2,359.24 3,573.65Purchase 15,717.05 11,798.07Less : Closing Stock 3,294.07 14,782.22 2,359.24 13,012.48Raw Material Consumed

Packing Material :Opening Stock 1,583.60 1,483.87Purchase 7,582.22 7,143.92Less : Closing Stock 1,452.85 7,712.97 1,583.50 7,044.28Packing Material Consumed

Work In Process :Opening Stock 105.73 139.41Less : Closing Stock 161.87 (56.14) 105.73 33.68

Cost Of Materials Consumed 22,439.05 20,090.45

Cost Of Goods SoldCost Of Materials Consumed 22,439.05 20,090.45Adjustment Of Finished Goods Stock :Opening Stock 241.94 506.36Less : Closing Stock 831.44 (589.50) 241.94 264.42

21,849.55 20,354.87

Schedule K - Manufacturing ExpensesPower & Fuel 729.60 704.70Repair & Maintenance (Machinery) 62.76 18.26Repair & Maintenance (Building) 37.51 195.39Repair & Maintenance (Others) 38.36 26.27Consumable Stores 358.98 322.04Custom Duty (Others) 68.92 11.64Laboratory Expenses 6.67 1.91Cartage & Coolie 44.31 36.96Other Expenses 30.85 30.42

1,377.96 1,347.60

for the year ended for the year ended 31st March 2005 31st March 2004



Schedule L - Payments & Benefits To EmployeesSalaries & Allowances 648.26 443.82

Wages & Workmen Welfare 385.72 232.41Staff Welfare Expenses 130.36 72.00Gratuity 16.57 6.68Directors Remmuneration 7.13 18.06Employer’s Share To P.F. 42.14 33.80

1,230.18 806.76

Schedule M - Administrative & Selling ExpensesPostage, Telephone & Telegram 104.69 118.52Vehicle Running Expenses 45.94 60.45Travelling Expenses 176.07 160.67Legal & Professional Charges 82.75 49.58Insurance 110.85 87.79Auditor’s Remuneration : - Statutory Audit Fee 2.50 1.40 - Tax Audit Fee 0.40 2.90 0.75 2.15Selling & Distribution Expenses 480.64 258.22Advertisement 413.95 224.77Royalty 69.34 112.42Rent 145.66 134.98Printing & Stationery 29.70 29.71Guest House Expenses 0.32 2.60Books & Periodicals 0.88 8.13Entertainment Expenses 15.27 14.06Donation & Subscription 26.84 42.75General Charges 7.28 10.93Watch & Ward Expenses 57.56 37.14Business Development Expenses 44.17 71.60Other Administrative Expenses 85.19 19.43

1,900.00 1,445.90

Schedule N - Financial ExpensesInterestInterest On :Term Loan - 239.43Working Capital Loan 553.85 570.04

553.85 809.47

Bank Charges 109.55 130.70663.40 940.17

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




Schedule O - Significant Accounting Policies & Notes to Accounts

Significant Accounting Policies

a) Basis of accounting

Financial statements are prepared under the historical cost convention, in accordance with Accounting Standards applicablein Nepal and the requirements of Company Act, 2053.

The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basisexcept in case of significant uncertainties relating to income.

b) Fixed Assets

Fixed assets are recorded at cost less accumulated depreciation. The Company capitalizes all direct costs relating to theacquisition and installation of fixed assets.

c) Depreciation

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

d) Investments

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

e) Inventories

Inventories are valued at lower of cost or net realizable value using the following basis for determining costs:

Raw materials, Packing materials and Stores and spares On FIFO basis

Work in process At cost including proportionate factory overheads

Finished stock At costs including proportionate appropriate overheads

f) Retirement Benefits

Retirement benefits to employees comprise payments to gratuity fund, provident fund and leave salary. All contributionsto the provident fund are charged to profit & loss account as incurred and such contributions are paid to the approvedprovident fund trust managed by trustees comprising employees.

Liabilities in respect of retirement benefits to employees are provided for as follows:

• Liabilities in respect of staff gratuity on actuarial valuation method.

• Liabilities in respect of accumulated leave salary on actuarial basis.

g) Borrowing Cost

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

h) Revenue Recognition

Sales are recognized on dispatch to customers and are recorded net of Value Added Tax. Export sales do not attract anyValue Added Taxes.

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


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

i) Staff Housing and Bonus

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

j) Foreign Currency Transactions

Foreign currency transactions are accounted at exchange rates prevailing on the date of the transactions. All foreigncurrency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailingat that date.

All exchange differences in respect of foreign currency transactions are dealt with in the Profit & Loss Account exceptthose relating to acquisition of fixed assets, which are adjusted in the cost of the assets.

k) Deferred Expenditure

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

2. Notes to Accounts

a) Change in accounting estimates

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

b) Contingent Liabilities

There are contingent liabilities in respect of:

(Nrs. in Lacs)

As at As at31 March 2005 31 March 2004

Unexpired Letters of Credit 2,094.22 2,462.49Unexpired Bank Guarantees 1,802.37 1,817.43Bill Discounted 856.67 379.48Disputes regarding income tax - 1.69liabilities for additional demand -pending before Hon’b Supreme CourtDividend tax in appeal - 78.65Capital commitments on account of 59.59 111.64construction contracts net of advances Income Tax in appeal for 58-59 and 59-60 120.05 -

TOTAL 4932.90 4,851.38

c) Acceptances

Acceptances denote liabilities for suppliers’ bills accepted/discounted.

d) Royalty

As per the Joint Venture Agreement, Royalty payable to Dabur India Ltd for the year is Rs 69.34 lacs (previous year Rs112.42 lacs).

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e) Custom Duty Drawback Receivable

Custom duty paid on import of raw materials (including special taxes and local development taxes) is recoverable againstexport pursuant to statutory enactment and accordingly the Company has made necessary applications to the appropriateauthorities for its refund as per the rules and waiting for final refund order.

Rs 2,282.60 lacs (previous year Rs 1,903.30 lacs) is receivable against customs duty drawback excluding special taxes andlocal development taxes) from HMG/Nepal on the date of the Balance Sheet of which Rs 1,640.61 lacs is outstanding formore than a year.

f) Staff Housing Fund

The Company has spent Rs 163.42(Previous year Rs 163.42 lacs) on purchase of land for the staff housing colony and Rs305.58 lacs (Previous year Rs 178.01 lacs) on construction of worker’s quarters up to 31 March 2005 out of the totalprovision of Rs 673.17 lacs (previous year Rs 592.36 lacs.)

g) Inter company balances

Debtors and loans and advances include Rs 177.84 lacs (Previous year Rs 276.23 lacs) recoverable from companies wherethe directors are interested. Of the above, Rs 136.92 lacs (Previous year Rs 574.51lacs) is recoverable from M/s MachapuchreHerbals Pvt Ltd and M/s Machapuchre Enterprises. The Company considers these balances to be recoverable and accordinglyno provision for non-recovery has been made.

h) Income Tax Rebate on Investment allowances

The Company has received an investment allowance of Rs 32.47 lacs in the current year for additional investment made inthe expansion of its manufacturing facilities in 2055-56 to 2057-58. The investment allowance has been netted off againstthe current year’s tax provision of Rs 264.68 lacs

Further a claim of Rs 17.11 lacs has been lodged with the Inland Revenue Department against interest on the aboveinvestment allowance.

i) Physical Verification of Fixed Assets

The Company has appointed consultant to undertake physical verification of fixed assets. Suitable accounting adjustmentswill be made on receipt of the report from the consultant.

j) Previous year figures/Rounding off

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

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3) QUANTITATIVE DETAILS OF MAJOR PRODUCTS

1. PRODUCTIONUnit 2004-05 2003 - 04

Qty QtyLal Dant Manjan Cases 384,997 444,358

Binaca Tooth Powder Cases - 267

Dabur Red Tooth Paste Cases 6,795

Vatika Hair Oil Cases 298,034 95,437

Vatika Fairness Pack Cases 6,133

Vatika Shampoo Cases 93,997 350,095

Anmol Shampoo Cases 8,272 3,191

Amla Hair Oil Cases 151,580 307,098

Special Hair Oil Cases 5,784 6,267

Anmol Coconut oil Cases 921

Anmol Sarson Cases 36,070

Baby Olive Oil Cases 1,864 2,045

Hajmola Tablet Cases 256,744 246,556

Hajmola Candy Cases 11,514 13,351

Real Fruit Juice Cases 2,708,155 1,266,261

Glucose D&C Powder Cases 32,128 70,658

Chywanprash Cases 14,947 249

Honey Cases 8,044 -

Pachan Churan MT 421.13 217.30

Dantmukta MT 2,175.63 2,654.00

DCP Mishan MT 239.85 137.98

MCS MT 6.81 -

Sles 30% Bulk MT 40.28 -

Vatika Shampoo - Bulk MT 7.00 -

Vatika Hair Oil Bulk MT 14.81 -

Stevia Powder MT 1.60 -

Pet Bottles & Caps TH 3,168 -

Honey- Bulk MT - 674

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2. SALES

2004-05 2003-04Unit Qty Nrs in Lacs Qty Nrs in Lacs

Lal Dant Manjan Cases 384,704 3,873.10 341,859 3,533.75

Binanca Tooth Powder Cases - - 2,802 24.89

Dabur Red Tooth Paste Cases 6,016 129.64

Vatika Hair Oil Cases 299,594 2,983.48 343,752 3,189.77

Vatika Fairness Pack Cases 5,759 6.82 8,500 15.40

Vatika Shampoo Cases 92,482 834.41 316,009 2,728.30

Anmol Shine Shampoo Cases 7,603 153.39 2,332 48.23

Amla Hair Oil Cases 152,381 1,507.53 205,085 1,884.80

Special Hair Oil Cases 6,084 129.79 6,286 83.81

Anmol Coconut Oil Cases 516 10.43 506 10.64

Anmol Sarson Cases 35,691 43.18 - -

Baby Olive Oil Cases 1,866 30.30 2,805 44.87

Hajmola Tablet Cases 253,646 2,759.83 265,067 2,960.34

Hajmola Candy Cases 11,482 127.34 10,041 106.96

Real Fruit Juice Cases 2,686,010 11,673.10 1,800,324 7,836.29

Glucose C & D Powder Cases 31,789 399.61 59,253 668.33

Chywanprash Cases 6,761 194.70 - -

Honey Cases 7,010 139.68

Pachan Churan MT 429 591.81 316 392.38

Dantmukta MT 2,129 2,690.80 2,356 2,985.18

DCP Mishran MT 242 1,014.70 258 1,227.14

Taxin Resin MT - - 14 143.05

MCS MT 2.00 166.40 - -

Sles 30% - Bulk MT 41.20 20.09 - -

Vatika Shampoo-bulk MT 7.00 8.43 - -

Vatika Hair Oil - bulk MT 14.81 14.92 - -

Stevia Powder MT 1.60 1.92 0.00 0.32

Pet Bottles & Caps TH 3,168.31 61.1 6,218 150.07

Tooth Brush& others TH 417.12 22.2 102.4 14.83

Nursery - Sapplings 19.46 8.38

Wax Foundation sheet 6.49 -

Others 19.81 7.57

Honey-bulk MT - - 179 282.05

29,634.41 29,634.41 29,634.41 29,634.41 29,634.41 28,347.35 28,347.35 28,347.35 28,347.35 28,347.35


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3. CLOSING STOCK 2004-05 2003 - 04

Unit Qty Nrs in Lacs Qty Nrs. in Lacs

Lal Dant Manjan Cases 2,671 25.26 2,378 17.48

Binaca Tooth Powder Cases - - - -

Dabur Red Tooth Paste Cases 779 8.62 - -

Vatika Hair Oil Cases 960 9.13 2,520 19.49

Vatika Fairness Pack Cases 374 1.97 - -

Vatika Shampoo Cases 3,224 23.29 1,709 10.48

Anmol Shine Shampoo Cases 1,528 17.99 859 7.19

Amla Hair Oil Cases 350 3.20 1,151 10.47

Special Hair Oil Cases 206 1.61 506 5.14

Anmol Coconut Oil Cases 405 8.41 - -

Anmol Sarson Cases 379 3.40 - -

Baby Olive Oil Cases 40 0.80 42 0.58

Hajmola Tablet Cases 4,583 30.47 1,485 12.00

Hajmola Candy Cases 616 5.85 584 5.07

Real Fruit Juice Cases 24,055 95.58 1,910 7.70

Glucose C & D Powder Cases 1,071 9.53 732 7.01

Chywanprash Cases 8,186 143.68 - -

Honey Cases 1,034 22.84 - -

Pachan Curan MT 3.83 3.85 12 11.02

Dantmukta MT 47.50 45.73 1 1.10

DCP Mishran MT 0.22 0.45 2 4.70

Taxin Resin MT - - 16 121.53

MCS MT 4.81 369.79 - -

Honey-Bulk MT 1 0.99

831.44 831.44 831.44 831.44 831.44 241.95 241.95 241.95 241.95 241.95

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A. Cash Flow From Operating ActivitiesNet Profit As Per P/L Account 1,381.21 1,841.53Add :Depreciation 1,014.31 1,065.95Amortisation Of Deferred Expenses 15.10 16.42Interest 553.85 809.47Fixed Assets Written Off 91.77 91.77Loss On Sale Of Assets - 10.74Loss On Sale Of Bonds - 120.48

1,675.03 2,114.83Less :Profit On Sale Of Fixed Assets (12.75) -Interest Received (8.09) (11.28)Rent Received (2.93) (23.77) (1.82) (13.10)Operating Profit Before Working Capital Changes 3,032.47 3,943.26Working Capital Changes(Increase)/Decrease In Inventories (1,779.19) 618.69(Increase)/Decrease In Debtors 57.83 398.56(Increase)/Decrease In Loans & Advances (136.11) (178.58)(Increase)/Decrease In Deposits & Receivables 1,239.28 723.17(Decrease)/Increase In Liabilities 892.56 2,425.27(Decrease)/Increase In Provisions 145.19 78.02

Increase In Working Capital 419.56 4,065.13Cash Generated From Operation 3,452.03 8,008.39Interest Paid (516.87) (1,002.48)

Advance Tax Paid (417.96) (306.74) Income Tax Adjusted For Previous Years (41.92) (9.52) Net Cash Generated From Operating Activities (A) 2,475.28 6,689.65

B. Cash Flow From Investing Activities Purchase Of Fixed Assets (2,329.58) (1,032.10) Deferred Revenue Expenses - (75.76) Purchase Of Investments (19.30) Sale Of Fixed Assets 49.23 460.98 Sales Of Investments - 419.78 Rent Received 2.93 1.82 Cash Outflow From Investing Activities (2,296.72) (225.28)

C. Cash Flow From Financing Activities

Payment Of Working Capital Loans (2.06) (1,373.42) Repayment Of Term Loans To Banks - (607.88) Repayment Of Unsecured Loans To Banks (4,000.00) Deferred Financing From Supplier (8.26) (49.36) Payment Of Dividend (242.64) (364.23) Tax On Dividend (12.77) (19.01) Interest Received 8.09 11.28 Cash Flow Financing Activities (257.64) (6,402.62)

Net Increase In Cash Inflow (79.08) 61.75 Opening Cash & Bank Balances 91.78 30.03 Closing Cash & Bank Balances 12.70 91.78

Schedule A To O Forms An Integral Part Of This Cash Flow Statement

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Cash Flow Statement for the year ended 31st March 2005



As Per Our Report Of Even Date Attached For Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd. Dabur Nepal Pvt. Ltd.Pradip BurmanPradip BurmanPradip BurmanPradip BurmanPradip Burman Chairman

Shashi SatyalShashi SatyalShashi SatyalShashi SatyalShashi Satyal R. S. RanaR. S. RanaR. S. RanaR. S. RanaR. S. Rana Managing DirectorPartner A. MehraA. MehraA. MehraA. MehraA. Mehra Cfo & Co. Secretary

G. KashinathG. KashinathG. KashinathG. KashinathG. Kashinath Chief Executive OfficerFor T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.T. R. Upadhya & Co.Chartered AccountantsKathmandu7th April 2005

Dabur Nepal

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