Dabur India Ltd

To,

The Members,

Your Directors have pleasure in presenting the 36^th Annual Report on thebusiness and operations of the Company, together with the Audited Accounts for thefinancial year ended March 31, 2011.

FINANCIAL RESULTS

Financial results are presented in Table 1.

Table1: Financial Results

DIVIDEND

The Company has paid an interim dividend of 50% (Re.0.50 per share of Rupee one each)on November 10, 2010. We are pleased to recommend a final dividend of 65% (Rs.0.65 pershare of Rupee one each) for the financial year 2010-11. The final dividend, if approvedby the members, will be paid to members within the period stipulated by the Companies Act,1956. The aggregate dividend for the year will amount to 115% (Rs.1.15 per share of Rupeeone each) as against 200% (Rs.2.00 per share of Rupee one each) on pre bonus capital,declared last year. The dividend payout ratio for the current year, inclusive of corporatetax on dividend distribution, is at 49.43%.

Pursuant to the provisions of Section 205A (5) of the Companies Act, 1956, finaldividend for the year 2002-03 and interim dividend for the year 2003-04 which remainedunpaid or unclaimed for a period of 7 years, amounting to Rs.924423/- andRs.647640/-respectively has been transferred by the Company to the Investors Education andProtection Fund. The due dates for transfer of unpaid dividend for subsequent years isgiven in Table 12 under Corporate Governance Report.

OPERATIONS AND BUSINESS PERFORMANCE

Kindly refer to Management Discussion & Analysis and Corporate Governance, whichform part of this Report.

AMALGAMATION OF FEM CARE PHARMA LTD WITH THE COMPANY

During the year, amalgamation of Fem Care Pharma Limited (FEM) with the Company wascompleted on 18^th June, 2010 (being effective date) upon filing of the Order ofHon’ble Delhi and Mumbai High Courts with the respective offices of Registrar ofCompanies. The appointed date of merger was 1^st April, 2009.

OVERSEAS ACQUISITION –HOBI GROUP (TURKEY) & NAMASTE GROUP (US)

During the year the Company has acquired Turkey‘s leading personal care productsmaker Hobi Kosmetik Group through Dabur International Limited, a wholly owned subsidiaryof the Company. Hobi Kosmetic Group comprises of three companies namely- Hobi KozmetikImalat Sanayi Ve Ticaret Anonim Sirketi, Ra Pazarlama Limited Sirketi and Zeki PlastikImalat Sanayi Ve Ticaret Limited Sirketi.

The second overseas acquisition of the year was of Namaste Group of US, a leadingethnic hair care group based in Chicago with operations in US, Europe and Africa, throughDermoviva Skin Essentials Inc, a wholly owned subsidiary of the Company. Namaste Group ofUS comprises of Namaste Laboratories LLc, US and its three subsidiaries namely - HairRejuvenation & Revitalization Nigeria Ltd, Healing Hair Lab International LLc, US andUrban Lab International LLc.

CORPORATE GOVERNANCE

Dabur is committed to focus on good corporate governance in line with emerging localand global standards. Dabur understands and respects its fiduciary role in the corporateworld and besides adhering to the prescribed corporate practices, it voluntarily governsitself as per the highest national and international standards of corporate governance.Strong governance practices at Dabur has earned for it recognition and has strengthenedits bond of trust not only with the stakeholders but with the society at large.

The compliance Report on Corporate Governance and a certificate from Auditors of theCompany regarding compliance of the conditions of Corporate Governance, as stipulatedunder Clause 49 of the Listing Agreement with the Stock Exchanges, is attached as‘Annexure 1‘ and forms part of this report.

Certificate of the CEO/CFO, inter alia, confirming the correctness of the financialstatements, compliance with Company‘s Code of Conduct, adequacy of the InternalControl measures and reporting of matters to the Audit Committee in terms of Clause 49 ofthe Listing Agreement with the Stock Exchanges, is attached in the corporate governanceReport and forms part of this report.

CREDIT RATING

During the year under review the Company has sustained its long term credit rating ofAAA. The highest credit rating of AAA awarded by CRISIL reflects the Company’sfinancial discipline and prudence. The Company’s short term credit was rated P1+ byCRISIL. This indicates a very strong degree of safety with regard to timely payment ofinterest & principal.

DIRECTORS

In terms of Article 103 and 104 of the Articles of Association of the Company, Mr MohitBurman, Mr Sunil Duggal, Mr P N Vijay and Mr R C Bhargava will retire by rotation at theensuing Annual General Meeting, and being eligible, offer themselves for re-appointment interms of the provisions of Article 106 of the Articles of Association of the Company.

The brief resumes of the Directors who are to be appointed/reappointed, the nature oftheir expertise in specific functional areas, names of companies in which they have helddirectorships, committee memberships/ chairmanships, their shareholding etc., arefurnished in the explanatory statement to the notice of the ensuing Annual GeneralMeeting.

Your Directors recommend their appointment/ re-appointment at the ensuing AnnualGeneral Meeting.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, withrespect to Directors’ Responsibility Statement, the Directors confirm: i) That in thepreparation of the annual accounts, the applicable accounting standards have been followedand no material departures have been made from the same; ii) That they had selected suchaccounting policies and applied them consistently, and made judgements and estimates thatare reasonable and prudent, so as to give true and fair view of the state of affairs ofthe Company at the end of the financial year, and of the profit of the Company for thatperiod; iii) That they had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956,for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; iv) That they had prepared the annual accounts on a going concernbasis.

CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES

The Company’s shares are listed on the National Stock Exchange of India Limited(NSE) and Bombay Stock Exchange Limited (BSE) and are actively traded.

In the year under review, the following shares were allotted and admitted for tradingin NSE and BSE:-

- Equity shares allotted against the options exercised by employees pursuant toEmployees Stock Option Scheme of the Company;

• 955240 equity shares allotted on April 22, 2010.

• 204144 equity shares allotted on May 20, 2010.

• 232065 equity shares allotted on August 23, 2010.

- Equity shares allotted pursuant to merger of Fem Care Pharma Limited with the company

• 1384620 equity shares allotted on July 22, 2010.

- Equity shares allotted pursuant to Bonus issue in the ratio of 1:1.

• 870361899 equity shares allotted on September 14, 2010.

AUDITORS AND THEIR REPORT

M/s G. Basu & Company, Chartered Accountants, Statutory Auditors of the Company,will retire at the conclusion of the ensuing Annual General Meeting and, being eligible,offer themselves for re-appointment as statutory auditors for the financial year 2011-12.The Company has received a letter dated April 11, 2011 from them to the effect that theirre-appointment, if made, would be within the limit prescribed under section 224(1B) of theCompanies Act, 1956, and that they are not disqualified for such re-appointment within themeaning of Section 226 of the Companies Act, 1956.

The Auditors have vide their letter dated 21.04.2011 also confirmed that they havesubjected themselves to the peer review process of Institute of Chartered Accountants ofIndia (ICAI) and holds a valid certificate issued by the peer Review Board of the ICAI.

The observations of the Auditors, together with the notes to Accounts referred to inthe Auditors‘ Report, are self-explanatory and do not call for any furtherexplanation from the Directors.

COST AUDITORS

M/s Ramanath Iyer & Company, Cost Accountants, were re-appointed as Cost Auditorsto conduct cost audit of the accounts maintained by the Company, in respect of theFormulations and Cosmetics & Toiletries products for the financial year 2011-12.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with the Accounting Standard 21 on Consolidated Financial Statements,this Annual Report also includes Consolidated Financial Statements for the financial year2010-11. Consolidated Turnover grew by 20.47% to Rs.4142.60 crore as compared to Rs.3438.69 crore in the previous year. Similarly, net profit after tax and after minorityinterest for the year at Rs.568.57 crore is higher by Rs.67.30 crore as compared to Rs.501.27 crore in the previous year.

INTERNAL CONTROL SYSTEM

The Company has a well placed, proper and adequate internal control system, whichensures that all assets are safeguarded and protected and that the transactions areauthorised, recorded and reported correctly. The Company’s internal control systemcomprises audit and compliance by in-house Internal Audit Division, supplemented byinternal audit checks from Price Waterhouse Coopers Private Limited, the Internal Auditorsand various transaction auditors. The Internal Auditors independently evaluate theadequacy of internal controls and concurrently audit the majority of the transactions invalue terms. Independence of the audit and compliance is ensured by direct reporting ofInternal Audit Division and Internal Auditors to the Audit Committee of the Board.

To further strengthen the internal control process, the Company has developed a verycomprehensive legal compliance manual called ‘e-nforce‘, which drills down fromthe CEO to the executive level person who is responsible for compliance. This process isfully automated and generate alerts for proper and timely compliance.

FIXED DEPOSITS

During the year under review, the Company has not accepted any fixed deposits from thepublic, and as on March 31, 2011 the Company had no unclaimed deposits or interest thereondue to any depositor.

NATURE OF BUSINESS

There has been no change in the nature of business of the Company and any of itssubsidiary companies during the year.

SUBSIDIARIES

During the year Fem Care Pharma Ltd. has ceased to be subsidiary of the Company due toits amalgamation with the Company.

Further Hobi Kozmetik Imalat Sanayi Ve Ticaret Anonim Sirketi, Ra Pazarlama LimitedSirketi, Zeki Plastik Imalat Sanayi Ve Ticaret Limited Sirketi, Namaste Laboratories LLc,US, Hair Rejuvenation & Revitalization Nigeria Ltd, Healing Hair Lab InternationalLLc, US, Urban Lab International LLc, US and Dabur Egypt Trading Limited have become stepdown subsidiaries of the Companies.

In terms of general approval granted by the Central Government under Section 212(8) ofthe Companies Act, 1956, copies of Balance Sheet, Profit and Loss Account, Report of theBoard of Directors and the Report of the Auditors of the subsidiary companies have notbeen attached with the Balance Sheet of the Company. The Company will make available thesedocuments and related detailed information upon request by any shareholder of the Companyor subsidiary interested in obtaining the same.

However, pursuant to Accounting Standard AS-21 issued by the Institute of CharteredAccountants of India, Consolidated Financial Statements presented by the Company includethe financial statements of its Subsidiaries. The Financial Statements of the subsidiarycompanies are also available for inspection by the shareholders at the Registered Officeof the Company and also that of its respective subsidiaries. The Financial Statements ofeach subsidiary shall also be available on Company’s website www.dabur.com.

The following information in aggregate for each subsidiary has been disclosed in theconsolidated balance sheet (a) capital (b) reserves (c) total assets (d) total liabilities(e) details of investment (except in case of investment in subsidiaries) (f) turnover (g)profit before taxation (h) provision for taxation (i) profit after taxation (j) proposeddividend.

A statement of the holding company’s interest in the subsidiary companies isattached as ‘Annexure 2’ and form part of this report.

EMPLOYEES STOCK OPTION PLAN

During the year, 19300617 options in 4 tranches were granted to eligible employees ofthe Company in terms of Employees Stock Option Plan (Dabur ESOP 2000). During the year,1391449 options were exercised by the employees after vesting. Accordingly, the Companymade the allotment of 955240 equity shares on April 22, 2010, 204144 equity shares on May20, 2010 and 232065 equity shares on August 23, 2010, against the options exercised by theemployees.

The particulars of options issued under the said Plan as required by SEBI (EmployeeStock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are appended as‘Annexure 3’ and forms part of this report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of section 217(2A) of the Companies Act, 1956 read withCompanies (Particulars of Employees) Rules, 1975, the names and other particulars ofemployees are set out in the Annexure to the Directors Report. However having regard tothe provisions of Section 219(1)(b)(iv) of the companies Act, 1956 the Annual Reportexcluding the aforesaid information is being sent to all the members of the company andothers entitled thereto. Any member interested in obtaining a copy of such particulars maywrite to the Company Secretary at the Registered office of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Conservation of energy:

a) Energy conservation measures taken:-

Various energy conservation techniques were initiated at large scale and successfullyimplemented. Energy was used more efficiently (2.96 GigaJoules to 2.33 GigaJoules comparedto LY). This was despite increase in tariff rates of Power & Fuel and absorbing costof owned generated power for 5 new manufacturing facilities at Baddi, Pantnagar and Jammucommissioned in 2010 – 11. Some of the key initiatives were as follows-In theexisting manufacturing units various initiatives were undertaken to conserve/ reduceenvironmental impact, by adapting to green manufacturing and concept of "Reduce,Reuse and Recycle", viz.

• Installation of Herbal Extractors across units by replacing boiling pansresulted in low consumption of steam and man days, better quality of extract in terms ofTSS, fast process, etc.

• Installation & Commissioning of Briquette/Herbal waste fired boiler.

• Use of thermic fluid heating system in place of boiler in Fluid Bed Evaporator(FBE) of Hajmola manufacturing.

• Replacement of Old Air Compressors with new Screw Type efficient Compressors.

• Efficient Maintenance of Capacitor Bank for improvement of Power Factor.

• Replacing energy inefficient equipments with new technologies which are energyefficient.

Some new initiatives taken, where the projects are under implementation;

- Herbal waste used as a fuel in boiler in major units eg: Conversion of herbal wasteinto dry bio briquettes,

Crushing herbal waste and using the same in the USAB reactor in ETP (Effluent TreatmentPlant) to generate more methane (Bio gas) which in turn is used as boiler fuel and usingdirectly herbal waste as a fuel in the boiler b) Additional investments and proposals, ifany, being implemented for reduction of consumption of energy:-

- Herbal Extractor have been ordered in place of Boiling pans in major units at Baddi,for saving energy and manpower.

- Replacement of power capacitor in units at Sahibabad, to improve power factor. c)Impact of measures at (a) and (b) above for reduction of energy consumption and consequentimpact on the cost of production of goods:-

• The energy conservation measures taken during the year have resulted into yearlysaving of approximately Rs 180 Lacs and thereby lowered the cost of production by theequivalent amount. These measures have also lead to better pollution control, reducedmaintenance time and cost, improved hygienic condition and consistency in quality andimproved productivity. d) Total energy consumption and energy consumption per unit ofproduction as per Form A

- Attached herewith as Annexure 4

B. Technology Absorption:

Efforts made in technology absorption as per Form B is attached herewith as Annexure 5.

C. Foreign Exchange earnings and outgo:

i) Activities and initiatives relating to exports:

The Company’s key markets for international business are the Middle East, Africa,UK and South Asian geographies, with manufacturing plants located across regions. TheCompany also has a private label business in USA and UK, along with Guar gum exports,which takes place from its Indian plants.

International business:

The Company’s International Business Division (including recently acquired Hobiand Namaste group companies) recorded an impressive sales growth of 43.3% from Rs. 631.4crores in 2009-10 fiscal to Rs. 904.8 crores in 2010-11 fiscal, contributing to 22% ofconsolidated sales. Excluding the acquisitions, the International Business Divisionrecorded sales of Rs. 731.6 crores in 2010-11, growing by 15.9%. The operating margins ofthe business improved significantly during the year reflecting the strength of the brandseven though the external conditions were tough and the environment was plagued bypolitical turmoil and instability in key countries of Middle East and North Africa regionleading to demand contraction coupled with inflationary pressures due to commodity costinflation.

Robust sales growth in international markets was possible due to:

- Strong Brand portfolio positioned on herbal and natural platform

- Aggressive new product launches and brand extensions

- Geographical expansion into new markets

- Strong Sales and Distribution network

- Strong manufacturing backbone and expansion of own manufacturing in key geographies

- Localised and efficient supply chain.

The company has built strong and robust brand architecture with brands like Dabur Amlaand Vatika across geographies. As per Nielsen Retail Audit in Saudi Arabia, Dabur Amla isthe largest brand in the hair oil segment there. Dabur Amla franchise has been extendedinto Hair Creams and variants have been launched in hair oils and hair serums. Vatika hasalso maintained its growth trajectory with Vatika Hair Creams emerging as the biggestbrand based on Nielsen Retail Audits in Saudi Arabia and Egypt. This was inspite of stiffcompetition from established brands through aggressive consumer promotions and price cuts.

Vatika Dermoviva – the new brand launched for the Personal Wash and Skin Caresegment has grown in strong double digits in Soaps and has managed to create consumerequity in a category dominated by strong MNC players. Vatika Dermoviva was extended intoHand Wash category during the year.

Dabur Herbal Toothpaste posted a strong performance in Nigeria where it has become theno. 2 player in terms of market share basis Nielsen Retail Audit. The brand has beenre-launched in MENA during the year and it has seen fast growth.

The key contributing markets to the International Business growth have been GCC, Egypt,Nigeria, Algeria, Morocco, Jordan, Syria and Kenya.

GCC, the largest region in the International Business Division and despite being amature market, has grown by 21% over last year fuelled by innovations and new productlaunches in the Hair Care, Personal Wash and Oral Care segments.

Dabur Egypt Limited has witnessed another spectacular performance with 34% growth insales in spite of disturbances in the region and temporary shut down during the fourthquarter of fiscal 2010-11. The plants in Egypt have however become operational as thepolitical situation has improved.

African Consumer Care, Nigeria has grown by 34%, aided by strong growth of Dabur HerbalToothpaste and Dabur Herbal Gel in the Oral Care category.

Asian Consumer Care, Pakistan has grown by 17%, with Hajmola and Dabur Amla emerging asthe two strong brands for the region.

Markets of North Africa, Levant and Yemen have seen an impressive performance with 39%growth over previous year.

Asian Consumer Care, Bangladesh, has performed well with a growth of 47% during thefiscal 2010-11. The growth has been led by focus on five key brands – Amla Hair Oil,Vatika Hair Oil and shampoos, Dabur Honey and Meswak.

Dabur Nepal Pvt Limited which manufactures fruit juices and also caters to localconsumer market in Nepal recorded growth of 4% in 2010-11 in its sales to the domesticmarket of Nepal.

Efficient operations of the manufacturing plant in Ras Al Khaimah ensured 22 new SKUlaunches in 2010-11 fiscal and augmentation in capacity with new warehouse and newmanufacturing lines for Hamam Zaith and other hair care products. In Egypt, Hair Creammanufacturing capacity was doubled and new Toothpaste mixer was commissioned while newLines for Hair Oil & Hair Cream packing are under installation. In Nigeria, ISOcertificates were received for Green Gel and Promise Red Toothpaste.

Exports from India

The company also exports guar gum and private label oral care products from India.During 2010-11 the company recorded Guar gum exports to the tune of Rs.52.7 crores ascompared to Rs.43.3 crore in 2009-10 fiscal. Sales have grown aided by recovery in globalenvironment.

Sales in USA (Dabur Branded and Private label) grew impressively from Rs. 38 crores toRs 45 crores. In Private label, key new markets were opened, such as Denmark, Switzerland,Canada and France. For the first time we could enter European Retail chains. New productcategories of Mouthwash and Denture Adhesives were started. Dabur Branded Ethnic grew withthe launch of new products such as Sesame Oil, Juices and a host of products from both theIBD platform as well as the India Domestic platform. Mainstream Retail penetration ofDabur Ethnic products took place in both USA (Stop n Shop) and in Canada (Loblawsnetwork).

ii) Development of new markets for Products & Services:

New avenues for growth were opened up with expansion into the new markets of Congo,Armenia, Kazakhstan and Burkina Faso. The Sales & Distribution infrastructure has beenaugmented by appointing new distributors in Malaysia, Uganda, Mozambique and Ethiopia.Local resources have been deployed in key markets of Middle East & North Africa,Nigeria, Egypt and South East Asia to strengthen the S&D structure.

iii) Export Plans:

The focus, going forward, is to continue expanding the Company’s presence acrossgeographies and to exploit the opportunities that exist in existing and potentialsegments. The Company will continue to invest in brand building, manufacturing and humancapital in order to maintain and improve the existing robust growth path.

Total Foreign Exchange used during 2010-11: Rs. 2460 lac.

Total Foreign Exchange earned during 2010-11: Rs. 13416 lac.

GROUP FOR INTER SE TRANSFER OF SHARES

Pursuant to an intimation received from the Promoters, under Clause 3 (1) (e) ofSecurities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations, 1997 persons constituting Group (within the meaning as defined in theMonopolies and Restrictive Trade Practices Act, 1969) for the purpose of availingexemption from applicability of the provisions of Regulation 10 to 12 of aforesaid SEBIRegulations, are given in the Annexure 6 attached herewith and forms part of this report.

OPERATIONS REVIEW

For detailed operational review kindly refer to Management Discussion and Analysis andthe Report on Corporate Governance, which forms part of this Annual Report.

HEALTH SAFETY AND ENVIRONMENTAL REVIEW

Dabur India Ltd. has reaffirmed its commitment towards Health, Safety and Environmentthrough its Policy. Health, Safety and Environment is integrated with the businessprocesses, which focuses on People, Technology and Facilities, supported by ManagementCommitment as the prime driver. The Health, Safety and Environment Management Systems inall manufacturing units conform to the requirements of the International Standards basedon OHSAS and ISO. With its health, Safety and Environment management system Dabur aims toeffectively control risks and prevent people from being injured or harmed during thecourse of their work.

Dabur has the aim to certify all its operational locations with the IntegratedManagement system OHSAS (Occupational Health & Safety Advisory Services) 18001 and ISO14001 — Occupational Health, Safety and Environment. With this aim, Dabur has gotcertified its three (3) manufacturing location by TUV NORD. This standard is thefoundation of the overall health, safety and environment framework of Dabur.

The environmental agenda was marked by a shift towards reducing environmental impact ofCompany’s operations. This was achieved by environment management program through acombination of energy & water conservation, rainwater harvesting and solid wasterecycling. Some sites modified their boilers to use bio-fuels, resulting in significantenvironmental benefits by reducing the Sox emission in environment.

Dabur India Ltd. has always been aware of its responsibilities as a good citizenaction, in health, safety and environment management, is in the process of furtherstrengthening its current resources.

Key Initiatives taken during the year.

• Got certified its 3 manufacturing location with OHSAS 18001 and ISO 14001integrated management system.

• In a process of preparing 5 more manufacturing location for the certification ofOHSAS 18001 and ISO 14001 integrated management system.

• Risk assessment of all manufacturing location done with a system of plannedinspection product wise, resulted in the reduction of all injury rate (AIR) and TotalRecordable Frequency rate (TRFR)

• Legally Complied at unit level w.r.t to Safety and Environment Act and Rules.

• Environmental Monitoring was carried out at unit level to check the impact onthe environment.

• Different Guidelines and Standard were rolled out for implementation at unitlevel and Focus on the training – on job and off job to minimize the TRFR.

• Installation of Fire Hydrant and Detector System as per the latest technologiesavailable.

• Emergency Preparedness plan is in place and executed the plan through mockdrill.

• Different test has been carried out at unit level to check the efficiency ofPPE’s used at work place.

• Health Check up for all employees carried out at unit level.

AWARDS & RECOGNITIONS:

Dabur has received many Awards and Accolades in recognition of its achievements atvarious levels. During the year Dabur bagged various Awards and Recognitions in differentcategories and for different Brands. These include:

For The Company-

• Ranked as the organisation that offers best return to investors by the 6^thSocial & Corporate Governance Awards, presented by the Bombay Stock Exchange.

• Listed among the enterprises that are ‘Doing India Proud’ in LimcaBook of Records, 2010.

• Ranked as 7^th Most Respected Company in the Fast Moving ConsumerGoods space in India.

• Ranked 63 in the list of Top 100 Beauty Companies in the world.

• Ranked 182 in the ET-500 list of India Inc’s Heroes.

• Ranked 62 in Business Today’s BT 500 list of India’s Most ValuableCompanies.

• Dabur stock ranked 14^th in Value 100 list, a ranking ofattractively-priced stocks of firms with ‘real’ earnings.

• Ranked 200 in the Fortune India 500 list that ranks India’s 500 largestcorporations.

• Awarded the Best Run award in Supply Chain by SAP.

• Listed as a Top Green Company in Greenpeace Safe Food Guide version 2.0 for itsresponsibility towards the GM food issue.

• Moved up to take the 78^th spot in the Super-100 list, released byBusiness India.

• Ranked among Top 10 Best Companies To Work For in the Consumer Goods andDurables Sector.

• Ranked as India’s Most Customer Responsive FMCG Company.

• The Burman family, promoters of Dabur, ranked 20^th in Forbes‘The 100 Richest Indians’ list.

• Dr. Anand Burman, chairman ranked amongst India’s Most Powerful CEO’S.Have been placed at No. 41 in the list.

Its Brands

• Real fruit juices & Vatika Hair Oil bagged Reader’s Digest TrustedBrand Gold Award 2010.

• Dabur Amla, Hajmola have been listed in 100 Most trusted Brands 2010 list.Babool and Real are also amongst the trusted brands.

• Dabur Chyawanprash Immune India Campaign and Dabur Glucose-D Ace of Pace baggedinternational Promotion Marketing Award of Asia 2010.

• Dabur Amla Hair Oil & Real voted as Most Loved FMCG Brands with highesttop-of-the-mind recall.

• Meswak, Vatika Almond Hair Oil, Dabur Amla Flower Magic Hair Oil and Dabur Uvedabagged National Awards for Excellence in Packaging.

• Dabur ranked 27 in India’s Most Valuable Brands 2010 list by Brand Finance.

• Chyawanprash, Hajmola, Real chosen by Indian consumers as ‘Power Brands2010-11’.

• Dabur Amla Hair Oil bagged India’s Top 50 Marketers Award for successfullytapping the bottom of the pyramid.

• Dabur Amla Hair Oil entered Limca Book of Records for hosting longest–evernon-stop hair massage marathon.

• Dabur awarded bronze in respective categories of Glucose-D Ace of Pace andVatika Kesh Sundari contest.

• Ranked 45 among Most Trusted Brands in India, according to Brand Trust Report,India Study, 2011.

Its Chief Executive Officer

• Mr. Sunil Duggal ranked amongst India’s most valuable CEOs.

INDUSTRIAL RELATIONS

The Company maintained healthy, cordial and harmonious industrial relations at alllevels. The enthusiasm and unstinting efforts of employees have enabled the Company toremain at the leadership position in the industry. It has taken various steps to improveproductivity across organization.

ACKNOWLEDGEMENTS

Your Directors place on record their gratitude to the Central Government, StateGovernments and Company’s Bankers for the assistance, co-operation and encouragementthey extended to the Company. Your Directors also wish to place on record their sincerethanks and appreciation for the continuing support and unstinting efforts of Investors,Vendors, Dealers, Business Associates and Employees in ensuring an excellent all aroundoperational performance.

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARYCOMPANIES

Annexure ‘3’

Disclosure regarding Employees Stock Option Plan pursuant to the SEBI (Employees StockOption Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and forming part ofthe Directors’ Report for the year ended 31^st March, 2011.

12. The Company had been using intrinsic value method of accounting ESOP expenses asprescribed by SEBI

(Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines 1999, toaccount for stock options issued under Dabur ESOS 2000, the Company’s stock optionscheme. Under this method, compensation expenses is recorded on the basis of excess of themarket price of share at the date of grant of option over exercise price of the option.

As allowed by the above referred SEBI Guidelines the company has decided to continue toapply the intrinsic value method of accounting and accordingly the disclosure required asper para 12 (l) of the Guidelines are given herein below:-

14. The fair value of each option is estimated using the Black Scholes model afterapplying the following weighted average assumptions:-

FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

B. Consumption per unit of production

The Company is engaged in production of variety of products, hence the figures ofconsumption per unit of production are not ascertainable.

1. Specific area in which R & D carried out by the Company

The R&D efforts are dedicated to development of new products and continuousimprovement in process, quality and cost of existing products. The combined effortsensured a strong product portfolio in all categories including Ayurvedic, Health Care,Foods, Home Care and Personal Care products.

Ayurvedic:

Key areas of R&D were:

a) Formulation development including new product development and process validation:

Development of both OTC and classical Ayurvedic new products were carried out. OTCproducts span across Proprietary Ayurvedic products, health supplements and Pharmaceuticalproducts. Besides the above, research was also carried out in process validation andtechnology transfer of Ayurvedic products. b) Efficacy and safety evaluation of theproducts: Latest scientific tools like in-vitro studies, cell based assays and in-vivostudies to generate claim support data were applied on both existing and new products.Clinical studies for both regulatory and marketing purposes were also conducted.

Although, in general, ayurvedic products are normally perceived to be safe, yet datawas generated on safety using reliable scientific procedures in the larger interest ofdiscerning consumers. c) Development of quality standards of raw materials and finishedproducts: R&D centre was closely associated with Pharmacopoeia Commission of IndianMedicines and Indian Pharmacopoeia Commission for developing quality standards ofclassical Ayurvedic formulations as well as raw materials of herbal origin. This is adynamic process. Upgrading the quality standards on continuous basis to ensure batch tobatch consistency was also undertaken. d) Bio Resources Development: Bio ResourcesDevelopment (BRD) group has been involved in designing, development and implementation ofstrategic initiatives to ensure material security for future business needs. Theseprogrammes are essentially centred on medicinal plant species-facing variable degrees ofsupply constraints.This group is involved in development of agronomy protocols besides thepromotion of contract farming. Latest technologies like plant tissue culture are also usedfor the purpose. This group is actively associated with National Medicinal Plants Boardand National Mission of the Medicinal Plants.

Food:

Focus of R&D efforts was on development of new products and cost reduction ofexisting products for the brands Real, Activ, Burrst, Hommade, Lemoneez and Dabur -Chyawan Junior, Glucose, Hajmola, Honey and other health foods.

The key areas taken up for development during the year were:

• Two new fruit variants for Activ juices.

• New fruit variants with Apricot and five fruit blends for Real.

• New formulations for still lemon Drink, Fizz Lemon Drink, and Fizz Apple Drinkin Burrst.

• New formulations for drinking yogurt.

• Development & commercialization of Fiber fortified beverages in active,Vitamin fortified beverages in Real.

• Cost reduction in Burrst, Real, Activ juices and nectars and other productsthrough alternative RM development.

• Development of six variants of Bar syrups.

• Development of two variants of culinary pastes, Pasta sauces and other sauces.

• Redevelopment of Ketchup and sauces which are ready for launch in packagingformat.

• Development of new flavor variants in Hajmola candy Mint Masti and PudinaChutney, Glucose Powder Litchi and Rose.

• Development of New products like mouth fresheners and masala Mixes.

Home Care:

R&D was carried out in categories of Air Care, Personal repellents, Hard surfacecleaners & Fabric Care.

Personal Care:

R&D was carried out for enhancing the existing product range and introduction ofnew products in Hair Care, Oils, Skin care and Oral care in Indian and many overseasmarkets.

2. Benefits derived as a result of the above R & D

Ayurvedic:

a) Company has been able to launch several new products, viz.

Proprietary Ayurvedic products

• Dabur Chyawanprash in two new flavors Orange & Mango.

• Pudin Hara Lemon Fizz. - a tasty effervescent formulation for gas and acidity.

• Nature Care Orange – A tasty formulation containing Isabgol and orangeflavour for constipation.

Nutraceutical products

• Dabur Nutrigo Total - comprising vitamins, minerals and herbal supplements thatprovides all day energy with stamina & strength for active men

• Dabur Nutrigo Women - containing vitamins, minerals, herbal supplements to caterthe specialty needs of women like all day stamina, emotional well-being, bone, skin andhair health with a healthy heart.

OTC Pharma products

• Honitus Day & Night - a combo pack containing two distinct tablets for dayand night use to treat cold, a unique concept launched first time in India.

Classical Ayurvedic products

• Saptavinshati Guggulu - for Piles, fistula and wound healing

• Pushpadhanwa Ras - an aphrodisiac

• Gandhak Rasayan - for Skin ailments

Apart from the above improved Honitus lozenges through enrichment of herbalextracts.has also been developed.

b) Efficacy and safety evaluation of the products:

The R&D centre conducts required safety studies as well as proof-of-efficacystudies for products. A few studies conducted using modern scientific tools are:

- In-vitro assessment of Dabur Chyawanprash suggested that it possessesimmuno-modulatory and antiallergic activities. These studies also proved that DaburChyawanprash has potent curative anti-allergic action also, other than its preventivepotential.

- Dabur Hajmola tablet demonstrated digestive stimulant properties by increasingactivities of enzymes which plays crucial role in digestion of fats, proteins andcarbohydrates. Thus it was established scientifically that Dabur Hajmola is not just atasty chew tablet, but also has digestive properties.

- The study on Dabur Mensta syrup indicated its estrogen stimulation activity governedby functional ovaries and its use for the management of dysmenorrhoea. Both these resultssuggested that Dabur Mensta syrup is useful in the treatment of Dysmennorrhoea,Metrorrhagia and mennorrhagia and also mechanism of action for the same was established.

- The In vitro assessment of Tuvarak (Chaulmogra) Tail suggested its melanogenesisstimulatory activity. The study proved scientifically the mechanism of action of DaburTuvarak Tail in vitiligo.

c) Development of quality standards of raw materials and finished products:

R&D centre has been co-ordinating with Ayurvedic pharmacopoeia committee to developquality standards of five Bhasmas viz., Abhraka Bhasma, Mandura Bhasma, Kantalauha Bhasma,Swarna Makshika Bhasma and Tamra Bhasma. This is an ongoing process and the standards thusdeveloped would become part of Ayurvedic Pharmacopoeia of India in a due course of time.Indian Pharmacopoeia Edition 2010 has included several monographs of medicinal plants outof which significant contribution on the Neem and Lavang monographs have been made byR&D Division and same has been acknowledged in Indian Pharmacopoeia.

d) Bio Resources Development:

- As a result of well-conceived programmes of backward integration, self sufficiencyhave been achieved for three endangered, temperate medicinal plants -viz. Chirayata(Swertia chirata), Kuth (Saussurea lappa) and Pushkarmool (Inula racemosa). Contractfarming projects in Himachal Pradesh and other states have been commissioned. Suchprojects have also been expanded to three more species during the year. Two of theseprojects put wastelands into use- for cultivation of Bhumi amalaki (Phyllanthus amarus)and Nagarmotha (Cyperus scariosus) deploying novel-agro technologies.

- Bio Resources development group has also been commissioned by National MedicinalPlants Board for development of plant parts substitution. A project has been initiated toreplace the use of barks with renewal of plant parts in case of five species.

- Bio Resources group has embarked upon an ambitious project to develop and commissionGreen House and seed production complex which would provide us about five millionssaplings in future. The complex shall be provided with latest environmental controlsystems.

Broadly the benefits derived are as follows:

• Development of new products in beverage and Culinary category, new fruit juiceand beverages, Pastes, Bar syrups variants will increase the product folio and sales.

• Fizz variants under Burrst brand will be lauched in Q1 2011. This will help tointroduce new Fizz products in PET bottle formate.

• New product variants in Hajmola candies and Glucose is expected to be launchedby Q2 2011 which will help in increasing the sales volume by introduction of differentialvariants.

• Introduction of post meal mouth freshener as a product extension in Hajmola willhelp to enter "Hajmola" brand in new category of products in near future.

Home care:

In Air Care segment the Company has entered the room freshener electrical segment bygiving various fragrance options on continuous basis. Research has also been carried outon various long lasting fragrances in aerosol and the products have been launchedsuccessfully. In the Odonil blocks segment, technology has been worked out to double thefragrance levels & build aesthetic shapes. In the personal repellents category,varianting of odomos with different fragrances such as rose and jasmine have beendeveloped. Optimisation of the active level in Oil has been successfully carried out toenhance the duration of efficacy. In Sanifresh, a technology to stabilize fragrance inAcid has been developed which will add value to the toilet cleaner. Fabric Softenerimprovements with respect to viscocity & fragrance lasting has been carried out.

Personal Care:

The R&D efforts have lead to the development and launch of following products:

Denture Adhesive Cream has been developed for US Pvt Label market. A few valueengineering projects have been initiated in the leading brands.

Rationalization of formulation has been carried out in the Fem range of products(Bleaches, Liquid Hand wash), Vatika Shampoos, Hair oils etc.

Ayurvedic:

To continue to provide the benefits of Ayurvedic healthcare system to masses bycontinuing R & D efforts. The developmental endeavor shall be designed to address theconsumer needs in the specific context of lifestyle ailments and such other niche areas.Bio Resources Development programme would continue to receive adequate thrust in times tocome. The programme shall be extended to other species while expanding the areas undercultivation and ensuring sustained deliveries from the existing projects.

Foods:

Future plans in this category are:

- Commercialization of new fruit beverages and milk based under Burrst, Real &Activ.

- Development of Coconut water, Sugar cane juice, Milk and fruit beverages, Fruit Iceteas, Smoothies, Gravy mixes and Bhuna masalas under Hommade.

- Tomato paste for institutional market.

- Commercialization of different variants in candy, Glucose powder and Dabur Honey.

- Develop digestive Hajmola jellies, chewing gums etc.

Home Care:

Upgradation of current Aerosols into Malodor & Antibacterial solutions shall beworked out. New & novel methods of room freshening through Air conditioners, blowers,etc shall be explored. In personal application, development of a more trendy &convenient aerosol product is on cards. Concept of Toilet protection technology shall betaken up further to prototyping from the drawing board. In the Fabric care category lightduty detergents & post wash applications shall be also explored.

Personal Care:

New technologies and products shall continue to be focused in all the major categoriesof Personal care for Indian and Overseas business.

Cost effectiveness will be pursued vigorously in vendor development, processengineering and all other key areas of product development to improve the Net contributionof brands.

4. Expenditure on R&D (2010-11)

Technology Absorption, Adoption and Innovation

Energy Conservation and Efficiency improvement

> Use of energy efficient CFL lamps in all plants.

> Use of ETP (Effluent Treatment Plant) treated water in cooling tower for makeuppurpose and for gardening.

> Installation of Bio Briquette fired boiler by replacing the Furnace oil firedboiler.

> Four number of tilting kettles provided for making amla pishti resulting in energysaving (steam consumption) and safer operation at Katni.

Upgradation in manufacturing

> Use of Ambiator system instead of Air conditioning for comfort conditions.

> Recycling of Vacuum pump cooling water for environment savings.

> Installation of herbal extractors by replacing old boiling pans.

> conventional sleeving machine for Dabur Chywanprash replaced with rotary pucks forbetter and even sleeving quality and increased productivity.

> FBE (Fluid Bed Evaporator) 1300 with Thermic fluid heater, Pneumatic conveying& shrink wrap machine implemented in the Hajmola project at Jammu.

> Successful installation of FFS (Form Fill Seal) machines of 4 ml & 70 ml DaburAnmol Coconut Oil Pack at Pithampur

> Installation and commissioning of Vacuum Booster in concentration plant in orderto improve the productivity & quality at Jalpaiguri

> Honey processing through Centi Therm (CT-6) machine installed.

> Usage of Earthen Pot in place of Crucibles in Bhasma manufacturing process atSahibabad.

Waste Management

> In-house manufacturing of Bio Briquettes started from the Herbal Waste generatedfrom Boiling Section at Sahibabad.

> ETP process modified – Gravimetric dosing of lime in place of power drivendosing at Sahibabad.

2. Benefits derived as a result of the above efforts e.g. product improvement, costreduction, product development, import substitution etc.

> Reduction in power usage and thereby reducing cost of production.

> Improved efficiencies and productivity.

> Power Factor incentive of Rs. 104083/- received from State Electricity Board.

> Saving of LPG in canteen by using bio gas from ETP.

> Bio briquettes are environment friendly and involves low cost. Saving ofsubstantial amount in Fuel cost due to change in Boiler fuel.

> Reduction in consumption of fuel

> Product improvement

> Resulted in cost saving

> Reduced Steam consumption

> Safe Working Condition

> Improved quality

> Cleaner environment.

> Better waste disposal.

> Improved hygiene conditions.

> Increased productivity

3. In case of imported technology (imported during the last 5 years reckoned from thebeginning of this financial year) following information may be furnished:

Annexure ‘6’

Group for interse transfer of shares under clause 3(1) (e) of Securities & ExchangeBoard of India (Substantial Acquisition of Shares and T akeovers) Regulations, 1997

1 Mr Ashok Chand Burman

2 A C Burman HUF

3 Dr Anand Burman

4 Mrs Minnie Burman

5 Mr Aditya Burman

6 Mrs. Shivani Burman

7 Ms Anisha Burman

8 Mr Vivek Chand Burman

9 Mrs Monica Burman

10 Mr Mohit Burman

11 Mr Gaurav Burman

12 Mrs. Karima Burman

13 Ms Sujata Burman

14 V C Burman HUF

15 Mrs Asha Burman

16 Mr Amit Burman

17 Mrs Divya Burman

18 Master Adhiraj Burman

19 Ms Diya Burman

20 Mrs Gauri Tandon

21 Mr Sandeep Tandon

22 G C Burman HUF

23 Mr Pradip Burman

24 Mrs Meera Burman

25 Mr Chetan Burman

26 Mrs Pooja Burman

27 Master Kamran Burman

28 Ms Eishana Burman

29 Ms Devika Burman

30 Pradip Burman HUF

31 Mr Sidharth Burman

32 Mrs Indira Burman

33 Mr Saket Burman

34 Sidharth Burman (HUF)

35 A.B. Propmart Pvt. Ltd.

36 A.V.B. Finance Pvt.Ltd.

37 Acee Enterprises

38 Althea Lifesciences Limited

39 Angel Softech Pvt. Ltd.

40 B R Bee Products Pvt Ltd.

41 B.A. Holdings Pvt Ltd

42 Burman Resorts Pvt Ltd.

43 Burmans Finvest Pvt.Limited

44 Chowdry Associates

45 CNS Infotech (I) Pvt Ltd.

46 Consortium Consumercare Pvt.Ltd.

47 Dabur Ayurvedic Specialities Ltd.

48 Dabur GI Invest Corp

49 Dabur Invest Corp

50 Dabur Investment Corporation

51 Dabur Pharmaceuticals Ltd.

52 Dabur Securities Pvt Ltd

53 Eastern Enterprises

54 Elephant India Advisors Pvt. Ltd.

55 Elephant India Finance Pvt Ltd.

56 Jetage Infrastructure Limited.

57 Excellent (India) Private Limited

58 Green Valley Products Pvt Ltd

59 Gyan Enterprises Private Limited

60 IMB Infrastructures Pvt ltd.

61 Interx Laboratories Private Limited

62 KBC India Private Limited

63 Lite Bite Foods Pvt Ltd.

64 M.B. Finmart Pvt Limited

65 Malhotras Trading Company Pvt. Ltd.

66 Milky Investment & Trading Company

67 Moonlight Ranch Private Ltd.

68 Newage Capital Services Pvt Ltd.

69 Northern Herbal Farms Pvt Ltd

70 Puran Associates Private Limited

71 Ratna Commercial Enterprises Pvt. Ltd.

72 Sahiwal Investment & Trading Company

73 Sanat Products Limited

74 Shree Investments Private Limited

75 Southern Enterprises

76 Sunshine India Pvt Ltd

77 Upvan Farms & Services Pvt. Ltd.

78 Vansh Holdings Pvt. Ltd

79 Vertex Broadcasting Co. Pvt Ltd

80 VIC Enterprise Private Limited

81 Welltime Gold & Inv Pvt. Ltd.

82 Western Enterprises

83 Windy Investments Pvt Ltd

84 Wrapster Foods Pvt. Ltd.

85 Milky Investment

86 Windy Investment

87 M.B. Investment

88 M. Burman Investment

89 Burman Brothers