Dabur Foods Limited Audited Balance Sheet and Profit & Loss ...

Dabur Foods LimitedAudited Balance Sheet and Profit & Loss Accounts for the year ended 31st March 2005

ContentsPageDirector’s Report 1Auditor’s Report 4Balance Sheet 7Profit and Loss Account 8Schedules 9Accounting Policies and Notes to Accounts 15Statment of Cash Flow 21

DIRECTOR’S REPORT (Contd...)FIXED DEPOSITS:The Company has not accepted Fixed Deposits pursuant to section 58A of the Companies Act, 1956.SUBSIDIARIES:As required by the provisions of section 212 of the Companies Act, 1956, the audited accounts together with Directors Reportand Auditors Report of the subsidiary Company are appended and forms part of the Annual Report. The statement pursuant toSection 212 of the Act is attached and forms part of this report.PARTICULARS OF EMPLOYEES :During the year under review no employee of the Company was in receipt of remuneration exceeding the limits as laid downunder section 217 (2A) of the Companies Act, 1956. Therefore, the information as required under section 217(2A) of the Act,read with the Companies (Particulars of Employees) Rules, 1975 is not being given.ACKNOWLEDGEMENT:Your Directors would like to express their grateful appreciation for the continued support and co-operation received from theCustomers, Dealers, Bankers, Government authorities and shareholders. They also wish to place on record their appreciationfor the dedication and hard work put in by the employees of the Company at all levels.For and on behalf of the BoardGhaziabadAmit BurmanP D Narang22nd April, 2005 Director DirectorAnnexure 1 to director’s reportStatement Pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies1 Name of Subsidiary Pasadensa Foods Ltd(Figures in Rupees)2 Holding Company’s Interest 50,00,000 Equity Shares of3 Extent of Holding 100%Rs. 10 each fully Paid-up4 Subsidiary Financial Year Ended 31st March, 20055Net aggregate amount of subsidiaries Profit/(Loss)not dealt within the holding company’s accounts :(I) For the financial year of the subsidiaries Rs. (2,87,76,260)(II) For the previous financial year of the subsidiary Rs. (16,20,597)since they become the holding company’s subsidiary6 Net aggregate amount of subsidiaries Profit/(Loss)dealt within the holding company’s accounts :(I) For the financial year of the subsidiaries Rs. 31,79,474(II) For the previous financial year of the subsidiary Rs. 15,53,425since they become the holding company’s subsidiaryDabur Foods Limited • Annual Report 2004-0535

AUDITOR’S REPORTToThe Members, Dabur Foods Ltd.We have audited the attached Balance Sheet of Dabur Foods Limited as at 31 st March,2005 and also the Profit and Loss Accountof the company for the year ended on that date, annexed thereto. These financial statements are the responsibility of thecompany’s management. Our responsibility is to express an opinion on these financial statements based on our audit.(1) We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.(2) As required by Companies (Auditor’s Report) Order,2003 [as amended by the Companies (Auditor’s Report) (Amendment)Order, 2004] issued by the Government of India in terms of sub-section (4A) of section 227 of the Companies Act,1956, weenclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said Order.(3) Further to our comments in the Annexure referred to above, we report that:(a) We have obtained all the information and explanations, which, to the best of our knowledge and belief were necessaryfor the purpose of our audit;(b) In our opinion, proper books of account have been kept as required by law so far as appears from our examinationof those books;(c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement withthe books of account;(d) In our opinion, the profit and loss account, balance sheet and the cash flow statement comply with the AccountingStandards specified by the Institute of Chartered Accountants of India, referred to in Section 211 (3C) of the CompaniesAct, 1956,to the extent applicable.(e) On the basis of representation received from the directors as on 31 st March 2005, and taken on records by the Boardof Directors, we report that none of the directors is disqualified as on 31 st March 2005 from being appointed as adirector in terms of clause(g) of sub-section (1) of section 274 of the Companies Act 1956.(f) In our opinion and to the best of our information and according to the explanation given to us, the said accounts givethe information required by the Companies Act, 1956 in the manner so required and also give a true and fair view inconformity with the accounting principals generally accepted in India.(i) in the case of balance sheet, of the state of affairs as at 31 st March,2005;(ii) in the case of the profit & 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 on that date.FOR JHALANI & CO.Chartered AccountantsV.K. JhalaniPartner(Membership No.:82691)Ghaziabad22nd April, 2005Dabur Foods Limited • Annual Report 2004-0546

Annexure to paragraph (2) of our report of even date on the account ofDabur Foods Limited, for the year ended 31st March 20051. (a). The Company is maintaining proper records showing full particulars including quantitative details and situation offixed assets.(b). The management has carried out a physical verification of most of its fixed assets during the year. In our opinion, thefrequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets.The discrepancies noticed on such verification were not material and have been properly dealt with in the books ofaccount.(c). In our opinion and according to the information and explanations given to us, a substantial part of fixed assets hasnot been disposed off by the Company during the year.2. (a). During the year, the inventories have been physically verified by the management except for inventory lying withthird parties which have been confirmed by the parties. In our opinion, the frequency of verification is reasonable.(b). In our opinion and according to the information and explanation given to us, the procedures of physical verificationof stocks followed by the management are reasonable and adequate in relation to the size of the Company and thenature of its business.(c). On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintainingproper records of inventories. The discrepancies noticed on physical verification of inventories as compared to bookrecords were not material and have been properly dealt with in the books of account.3. (a). According to the information and explanations given to us, the company has granted unsecured loans to one companycovered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involvedduring the year is Rs.875 Lacs and the amount outstanding at the year end is Rs.800 Lacs.(b). According to the information and explanation given to us, the rate of interest and the other terms & conditions areprima facie not prejudicial to the interest of the company.(c). According to the information and explanation given to us the loan granted is in the nature of the demand loan andthere is no stipulation regarding repayment of loan. The interest on has been regularly received.(d). In view of comments made in subclause ( c ) above, the clause pertaining to the overdue amount being more thanRupees one lac is not applicable.(e). The company has taken unsecured loans from three companies covered in the register maintained under section 301of the Companies Act, 1956. The maximum amount involved during the year is Rs.850 lacs and the amount outstandingat the year end is Rs.800 lacs.(f) According to the information and explanation given to us, the rate of interest and the other terms & conditions areprima facie not prejudicial to the interest of the company.(g) According to the information and explanation given to us the loan taken is in the nature of demand loan and there isno stipulation regarding repayment of loan. The interest on the aforesaid loan has been regularly paid.4. In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and the nature of its business with regard to the purchaseof inventories and fixed assets and with regard to sale of goods. Further, on the basis of our examination andaccording to the information and explanations given to us, we have neither come across nor have been informed ofany instance of major weaknesses in the aforesaid internal control procedures.5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts orarrangements that need to be entered into the register maintained under Section 301 have been so entered.(b) In our opinion and according to the information & explanations given to us aforesaid contract or arrangementsexceeding the aggregate amount of Rupees five lacs in respect of each party made during the year, have been madeat prices, which as informed to us by the management are not comparable as these are of specialized nature.6. The Company has not accepted any deposit within the meaning of section 58A, 58AA or any other relevant provisionsof the Companies Act, 1956 and the rules framed there under.7. Company’s internal audit is handled by the internal auditors appointed by the holding company and in our opinion,the same is commensurate with the size and nature of its business.Dabur Foods Limited • Annual Report 2004-0557

Annexure to Auditors Report (Contd...)8. The company is not required to maintain cost records u/s 209(1) (d) of the Companies Act, 1956. Accordingly paragraph4(viii) of the order is not applicable.9. (a) According to the information and explanations given to us and the records of the Company examined by us, theCompany has been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance,Income Tax, Custom Duty, Service Tax, Cess with the appropriate authorities. The provisions of other statute mentionedin the clause are not applicable to the company for the year under audit.(b) According to the information and explanations given to us and the records of the Company examined by us, there areno disputed dues of Income Tax/Wealth tax/Service tax/Custom duty/excise duty/cess. The details of disputed dues ofsales tax are as follows:Name of the Nature of the Forum where the Amount Period to whichStatute Dues demand is Pending (Rs. in lacs) amount relatesDelhi Sales Tax Sales tax Dy.Commissioner of Sales 85.52 2003-2004Tax(Appeals) –Delhi10. At the end of the financial year March 31, 2005, the company has accumulated losses of Rs.1481.13 lacs and the sameis more than the fifty percent of the net worth of the company. Further, the Company has not incurred any cash lossesduring the financial year ended March 31, 2005 and in the immediately preceding financial year.11. According to the records of the Company examined by us and the information and explanations given to us, theCompany during the year has not defaulted in repayment of dues to financial institutions and banks.12. As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debenturesand other securities, paragraph 4 (xii) of the Order is not applicable.13. The provisions of any special statute as specified under paragraph 4 (xiii) of the Order are not applicable to theCompany.14. As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4 (xiv) ofthe Order is not applicable.15. In our opinion and according to the information and explanations given to us, the Company has not given anyguarantees during the year for loans taken by others from banks or financial institutions.16. In our opinion and according to the information and explanations given to us, the term loans during the year havebeen applied for the purpose for which they were obtained.17. According to the information and explanations given to us and on an overall examination of the balance sheet of theCompany, we report that short term funds have not been used to finance long term investments.18. As the Company has not made any preferential allotment of shares during the year, paragraph 4 (xviii) of the Order isnot applicable.19. During the year, since the Company has not issued any debentures, paragraph 4 (xix) of the Order is not applicable.20. During the year, since the Company has not raised any money by way of public issue, paragraph 4 (xx) of the Order isnot applicable.21. Based upon the audit procedures performed and information and explanations given by the management, we reportthat no fraud on or by the Company has been noticed or reported during the course of our audit for the year endedMarch 31, 2005.FOR JHALANI & CO.Chartered AccountantsV.K. JhalaniPartner(Membership No.:82691)Ghaziabad22nd April, 2005Dabur Foods Limited • Annual Report 2004-0568

Balance sheet as at 31st March, 2005As at 31stAs at 31stMarch 2005March 2004Schedule (Rs. In lac) (Rs. In lac)Sources of funds :Shareholders’ funds:A) share capital A 1,000.00 1,000.00 1,000.00 1,000.00Loan funds:A) secured loans B 1,637.34 625.00B) unsecured loans C 1,727.79 1,836.463,365.13 2,461.46Total 4,365.13 3,461.46Application of funds :Fixed assets :(A) gross block E 7.52 7.39(B) less : depreciation 3.00 1.52(C) net block 4.52 5.87Investments F 500.21 - 505.21Current assets, loans and advances: GA) inventories 1,177.52 504.14B) sundry debtors 971.89 484.83C) cash & bank balances 202.54 455.12D) loans & advances 1,217.51 100.613,569.46 1,544.70Less: current liabilities and provisions DA) liabilities 1,120.25573.32B) provisions 70.09 27.831,190.34 601.15Net current assets 2,379.12 943.55Miscellaneous expenditure H - -(to the extent not written off or adjusted)Profit & loss 1,481.28 2,006.83Notes to accountsNTotal 4,365.13 3,461.46As per our report of even date attachedFor Jhalani & Co.Chartered AccountantsV.K. JhalaniPartnerFor Dabur Foods Ltd.Amit BurmanDirectorP. D. Narang DirectorNeeraj AggarwalManager Finanace&Company SecretaryGhaziabad22nd April, 2005Dabur Foods Limited • Annual Report 2004-0579

Profit and Loss account for the year ended 31st March, 2005For the year endedFor the year ended31st March 200531st March 2004Schedule (Rs. In lac) (Rs. In lac)Income :ISales less returns 12,969.97 8,579.80Other income 44.75145.35Total income 13,014.72 8,725.15Expenditure :Cost of materials J 7,508.47 5,207.93Payments to and provisions for employees K 404.04 384.56Selling and administrative expenses L 4,316.23 2,659.97Financial expenses M 214.24 198.49Miscellaneous expenditure written off 0.00 114.70Depreciation 1.48 0.98Total expenditure 12,444.46 8,566.63Balance being net profit before taxation 570.26 158.52Less provision for taxation - current 44.71 12.25Net profit after taxation 525.55 146.27Loss brought forward -2,006.83 -2,153.10Balance carried over to balance sheet -1,481.28 -2,006.83Earning per share - basic & diluted (fig.in rs.) 5.26 1.46As per our report of even date attachedFor Jhalani & Co.Chartered AccountantsV.K. JhalaniPartnerFor Dabur Foods Ltd.Amit BurmanDirectorP. D. Narang DirectorNeeraj AggarwalManager Finanace&Company SecretaryGhaziabad22nd April, 2005Dabur Foods Limited • Annual Report 2004-05810

Schedules annexed to and forming part of the balance sheet as at 31st March 2005Schedule A - Share CapitalAuthorised :As at 31stAs at 31stMarch 2005March 2004(Rs.in lac)(Rs.in lac)20000000 Equity shares of Rs.10 each 2,000.00 1,000.00(previous year 10000000 equity shares of Rs.10 each)Issued, subscribed and paid up:2,000.00 1,000.0010000000 Equity shares of Rs.10 each fully paid up 1,000.00 1,000.00(all the shares have been held by holdingcompany, Dabur India Limited and its nominees) -1,000.00 1,000.00Schedule B - Secured Loansfrom Hong-Kong & Shanghai Bank, New DelhiI) short term loans 1,284.25 625.00Ii) cash credit account 182.47 -Iii) packing credit account 170.62 -secured by :All these loans are secured by way of first charge agst.Hypothecation of revolving stocks, other movable assetsand present and future book debts. (the above loans areguaranteed by holding company, Dabur India Limited)1,637.34 625.00Schedule C - Unsecured loansLoan from body corporates 800.00 1,050.00Security deposit from dealers and others 0.14 2.51Temporary loans from canara bank 875.00 775.00(guaranteed by holding company, Dabur India Limited)Book overdraft with current account with banks 52.65 8.951,727.79 1,836.46Notes:1. Maximum amount of loan from canara bank outstanding during the year Rs.1200, repayble with in one year Rs.875Dabur Foods Limited • Annual Report 2004-05911

Schedules annexed to and forming part of the balance sheet as at 31st March 2005 (Contd...)Schedule - F Investments (At Cost)Long Term InvestmentAs at 31stAs at 31stMarch 2005 March 2004(Rs.in lac)(Rs.in lac)A) Govt. Securities(National Saving Certificates Viii Series) 0.20 0.20(Lodged With Sales Tax Department)B) Trade Investment In Subsidiary CompanyUnquotedPasadensa Foods Ltd 500.01 500.01(5000000 Equity Shares Of Rs.10/- Each Fully Paid Up, At Cost )(Book Value Of Unquoted Investment Is Rs.195.88Previous Year Rs.483.65)Share Application Money Pending Allotment - 5.00(With Pasadensa Foods Ltd) 500.21 505.21Schedule G - Current Assets, Loans and AdvancesA. Current assets :Stock-in-trade :(as taken, valued and certified by the management)- raw materials with processors 68.78 13.57- packing materials with processors 37.55 33.39- finished goods 1,071.19 457.181,177.52 504.14Sundry debtors (unsecured)- debts outstanding for a period exceeding six months :Considered good - 31.79Considered doubtful 5.89 -5.89 31.79Less : provision for doubtful debts 5.89 -- 31.79- other debts (considered good) 971.89 453.04- other debts (considered doubtful) 8.11 -980.00 484.83Less : provision for doubtful debts 8.11 -971.89 484.83Cash and bank balances :- cash in hand at head office and other offices 0.70 0.31- balance with scheduled banksIn current accounts 100.24 144.03In cash credit account - 289.60In fixed deposit accounts ( lodged with the sales tax deptt) 3.653.65- remittance-in-transit & cheques-in-hand 97.9517.53202.54 455.122,351.95 1,444.09Dabur Foods Limited • Annual Report 2004-051113

(tax deducted at source Rs. 6.64 previous year nil) 44.75145.35Schedules annexed to and forming part of the balance sheet as at 31st March 2005 (Contd...)Schedule G - Current Assets, Loans and Advances (Contd...)B. Loans and advances(unsecured and considered good)As at 31stAs at 31stMarch 2005 March 2004(Rs.in lac)(Rs.in lac)Security deposit with various authorities 8.51 6.24Advances to pasadensa foods ltd. (subsidiary co.) 800.00 -Advances to suppliers 316.38 71.43Advances to employees 13.69 13.29Duty entitlment benefit receivable 4.68 -Advance income tax 69.68 3.85Other advances - recoverable in cash or in kind 4.57 1,217.51 5.80 100.61Or for value to be receivedTotal (a+b) 3,569.46 1,544.70Schedule H - Miscellaneous expenditure(to the extent not written off or adjusted)Deferred advertisement & publicity - 114.70Less: amortised during the year - 114.70- -Schedules annexed to and forming part of the Profit and Loss account for the year ended 31st March 2005Schedule - I Sales and other incomeA. Sales :For the year ended For the year ended31st March 200531st March 2005(Rs.in lac)( Rs.in lac)domestic sales less returns 12,400.32 8,347.06export sales 569.65 232.74B. Other income :12,969.97 8,579.80premium on transfer of loan - 132.00miscellaneous receipts 12.28 13.18interest received 32.47 0.17Dabur Foods Limited • Annual Report 2004-051214

Schedules annexed to and forming part of the Profit and Loss account for the year ended 31st March 2005Schedule J - Cost Of MaterialsRaw Materials Consumed :For the year ended For the year ended31st March 200531st March 2005(Rs.in lac)( Rs.in lac)(i) Opening Stock 13.57 28.12(ii) Add : Purchases 1,033.10 247.721,046.67 275.84(iii) Less : Closing Stock 68.78 13.57977.89 262.27Packing Materials Consumed :(i) Opening Stock 33.39 53.64(ii) Add : Purchases 195.35 57.85228.74 111.49(iii) Less : Closing Stock 37.55 33.39191.19 78.10Purchase Of Finished Products 6,791.04 4,727.94Processing Charges 162.36 79.58Adjustment Of StocksOpening Stock :Stock In Process 17.850.28Finished Products 439.33 516.94Closing Stock :457.18 517.22Stock-In-Process With Processors - 17.85Finished Products 1,071.19 439.331,071.19 457.18Increase(-)/Decrease In Stock (614.01) 60.047,508.47 5,207.93Schedule K - Payments To AndProvisions For EmployeesSalaries, Wages And Bonus 365.60 340.74Contribution To Provident,Superannuation,Grauity & 34.57 35.61Other FundsStaff Welfare 3.87 8.21404.04 384.56Dabur Foods Limited • Annual Report 2004-051315

Schedules annexed to and forming part of the Profit and Loss account for the year ended 31st March 2005 (Contd...)Schedule L - Selling And Adminstrative ExpensesFor the year ended For the year ended31st March 200531st March 2005(Rs.in lac)( Rs.in lac)Rent 39.31 9.94Rates And Taxes 4.03 2.32Insurance 13.10 7.13Sales Tax 1,315.29 895.63Freight And Forwarding Charges 834.47 396.90Commission, Discount And Rebate 120.9592.64Advertising And Publicity 1,510.78 904.10Breakage/Leakage Claims 217.64 179.28Travel & Conveyance 109.50 104.30Legal & Professional 22.37 15.44Telephone , Fax Expenses 2.24 1.79General Expenses 46.36 25.97Bad Debts 20.22 21.77Auditors’ Remuneration:- Audit Fee 1.33 1.16- Tax Audit Fees 0.22 0.22- Other Matters 0.79 0.58Reimbursement Of Expenses 0.63 2.97 0.80 2.76Contribution For Scientific Research Expenses 57.00 -4,316.23 2,659.97Schedule M - Financial ExpensesInterest Paid On :Fixed Period Loan 204.60 176.34Others 0.12 12.39204.72 188.73Bank Charges 9.52 9.76214.24 198.49Dabur Foods Limited • Annual Report 2004-051416

Schedules annexed to and forming part of the accounts for the year ended 31st March 2005(Rs. In lac)Schedule N - Notes Forming Part Of The Accounts For The Year Ended 31st March,2005A. ACCOUNTING POLICIESSignificant accounting policies are summarized below:1. Accounting ConventionThe financial statements are prepared under the historical cost convention in accordance with applicable mandatoryAccounting Standards and relevant provisions of the Companies Act, 1956.2. Use of estimates• The preparation of the financial statement in conformity with generally accepted accounting policies requiresmanagement to make estimates and assumptions that effect the reported balances of assets & liabilities anddisclosure relating to contingent assets & liabilities as at the date of the financial statements and reportedamounts of income & expenses during the period.• Management assesses using external and internal sources whether there is an indication that asset may beimpaired. An impairment occurs where the carrying value exceeds the present value of future cash flows expectedto arise from the continuing use of the assets and its eventual disposal. The impairment loss to be expensed isdetermined as the excess of the carrying amount over the higher of the asset’s net sales price or present valueas determined above.• Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonablyestimated. Actual results could differ from those estimates.3. InvestmentsLong term investments are stated at cost. A provision for diminution is made to recognize a decline other thantemporary in the nature of value of investment.4. SalesSales are recognized net of returns when goods are supplied in accordance with terms of sale. Sales comprise of saleprice of goods including sales tax. Breakage and leakage claims from customers are charged as expenses uponapproval.5. Fixed Assets and Depreciation• Fixed assets are stated at cost less depreciation. Cost includes inward freight, duties and taxes and expensesincidental to acquisition.• Depreciation on Fixed Assets has been provided on written down value method at rates specified in ScheduleXIV of the Companies Act.6. InventoriesInventories, other than goods in transit, are valued at cost (on FIFO basis) or estimated net realizable value, whicheveris lower, after providing for cost of obsolescence and other anticipated losses, where considered necessary.7. Deferred Entitlement on LTC :As per the opinion of the Expert Advisory Committee of the ICAI, the Company has provided liability accruing onaccount of deferred entitlement towards LTC in the period in which the employees concerned render their serviceseven though no expenditure has been incurred on performance of journeys.8. Foreign Currency Transactions• Transactions in foreign exchange, other than those covered by forward contracts, are accounted for at theexchange rates prevailing on the date of transactions. Assets and Liabilities, if any, remaining unsettled at theend of the year, other than those covered by forwards contracts, are translated at the closing rates. Realizedgains and losses on Foreign Exchange transactions are recognized in the Profit and Loss account.• In respect of transactions covered by the forward contracts, the difference between the contract rate and thespot rate on the date of the transaction is charged to the Profit and Loss account over the period of contract.Dabur Foods Limited • Annual Report 2004-051517

Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)9. Retirement benefits• Liability of Gratuity to employees is determined on the basis of contribution made to Life Insurance Corporationof India from whom the company has taken the Group Gratuity Insurance policy.• Liability for leave encashment benefit determined on the basis of contribution made to Life Insurance Corporationof India from whom the company has taken the Leave Encashment policy• Contributions to defined contribution schemes such as Provident Fund and Family Pension Fund are charged toprofit & Loss Account as incurred.10. Borrowing CostBorrowing cost that are attributable to acquisition of qualifying assets are capitalized as part of the cost of suchassets. All other borrowing costs are charged to revenue.11. Taxes on income• Deferred tax amount is recognized subject to the consideration of the prudence on the tax effect of timingdifference between the taxable income and accounting income computed for the current accounting year andreversal of earlier year timing difference.• Deferred Tax assets are recognized and carried forward to the extent there is a reasonable certainty exceptarising from unabsorbed depreciation and carry forward losses which are recognized to the extent that there isvirtual certainty that sufficient future taxable income will be available against such deferred tax assets.12. Cash flow statementCash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects oftransactions of a non-cash nature and any deferrals of accruals of past or future cash receipts or payments. The cashflows from regular revenue generating; investing and financing activities of the company are segregated.B. NOTES TO ACCOUNTS1. The company has provided Rs 2.64 (previous period Rs 3.40) as liability accruing on account of deferred entitlementtowards LTC. (Refer Para 6 of Accounting Policies).2. Contingent Liabilities (Disclosed in terms of AS-29 issued by ICAI which becomes mandatory with effect from 01.04.2004)• Bank Guarantees issued by banks on behalf of the company Rs.3.20 (previous year Rs.12.05).• In respect of Letters of Credit Rs. 572.66 (previous year Rs. 732.30).• Sales TaxA demand of Rs.85.52 has been issued against the company due to dispute over taxability of the food products. Thecompany has filed an appeal before the DC (Appeals), Delhi and the same is pending for hearing. The company hasbeen legally advised that no provision is necessary as the probability of crystallization of the liability is very remote.• Estimated Amount of contract remaining to be executed on capital Account Rs.300 net of advance (Previous yearRs.Nil)3. The company has entered into an agreement with Dabur India Ltd., its holding company, for exclusive rights to usetrademarks Real, Hommade and Lemoneez in the domestic market.4 Balances of Sundry Creditors and Debtors are subject to confirmation.5. Particulars of consumption of Important Raw Materials(Rs. In lac)Class of Goods2004-2005 2003-2004Qty.(In MT)ValueQty.(In MT)ValueMango 1967.60 203.27 1393.10 82.14Mango Pulp 1767.00 322.19 -Others 452.43 180.13977.89 262.27Dabur Foods Limited • Annual Report 2004-051618

Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)(Rs. In lac)6. Value of Raw and Packing materials consumedRaw MaterialPacking Material2004-20052003-2004 2004-20052003-2004Val ue % Value % Value % Value %Imported 89.21 9.12 52.92 20.18 - - - -Indigenous 888.68 90.88 209.3579.82 191.19 100.00 78.10 100.00Total 977.89 100.00 262.27 100.00 191.19 100.00 78.10 100.007. Particulars of Traded/Manufactured GoodsClasses of Goods Fruit Juices Vegetable Pastes Others TotalPurchases Qty 22089.83 367.76(17086.37) (185.71)Value 5710.29 242.52 851.28 6804.09(4486.78) (106.64) (134.52) (4727.94)Opening Stock Qty 849.96 52.76(1335.83) (56.14)Value 358.10 29.47 51.76 439.33(417.76) (38.36) (60.82) (516.94)Closing Stock Qty 2160.41 47.61(849.96) (52.76)Value 714.82 30.64 344.27 1089.73(358.10) (29.47) (51.76) (439.33)Sales Qty 20779.39 372.91(17572.23) (189.09)Value 10765.2 330.43 1874.35 12969.98(7648.08) (218.74) (712.99) (8579.81)(Previous year figures given in bracket. Fruit juices unit in Kilo Liters & Vegetable Pastes in M Ton)31.03.200531.03.20048. CIF Value of Imports (Purchases)Raw Materials 93.38 43.709. Earnings in Foreign ExchangeOn account of exports at FOB 513.47 21.3110. Segment Reporting:The company has primarily engaged in the business of fruit juices and vegetable pastes, which are governed by the sameset of risk and return and therefore the entire business is covered under one Food segment. The said treatment is inaccordance with the guiding principles enunciated in the Accounting Standard on Segment Reporting (AS 17).11. Deferred Taxation:As per Accounting Standard 22, accounting for tax on income, no provision has been made for deferred taxes in view ofcarry forward loss as per Income Tax Act, 1961, and after considering the effect of timing difference, still there was lossand hence no deferred tax assets/liabilities has been created.12. In the opinion of management, fall in the value of long term investment in Pasadensa Foods Limited, (wholly ownedsubsidiary of the company) is of temporary nature. Hence provision for diminution in the value of investment is notdeemed necessary.Dabur Foods Limited • Annual Report 2004-051719

Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)(Rs. In lac)13. Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the year, to the Manager:31.03.200531.03.2004Basic Salary 6.02 5.45Contribution to Pension, PF & other Funds 1.92 1.74Other Allowances 12.9511.4620.89 18.65The above remuneration has been approved by the Central Government, hence the computation of remuneration u/s 349of The Companies Act, 1956 has not been given.14. Total outstanding dues to small scale industries have been determined to the extent such parties have been identified onthe basis of information available with the Company. The list of small scale industries to whom the Company owes anysum as on March 31, 2005 are:• Sheel Packaging Pvt. Ltd• Northern Aeromatic Ltd• Jainex India• Dayanamic Sticker Industries• Sun Control System Ltd15. Earning per share31.03.200531.03.2004EarningProfit after tax 525.55 146.27SharesWeighted Average No. of Shares 10000000 10000000E.P.S.(Basic & Diluted) 5.26 1.4616. Related Party Transactions:Particulars Holding Subsidiary Fellow Associate Key Mgt. Total OutstadingCompany Subsidiary Personnel as on31.03.05Purchases of Goods 49.37 - 6143.81 - - 6193.18 (33.97)(58.98) - (4257.50) - - (4316.48) (26.46)Sale of Goods - - 394.46 - 394.46 9.90- - (297.74) - - (297.74) (9.24)Receipt of Loan given - 75.00 - - - 75 Nil- (0) - - - (0) (Nil)Finance (incl. Loan & equity - 875.00 - - - 875 800.00Contributions in cash or kind) - (1705.00) - - (1705.00) (505.00)Remuneration Paid - - - - 20.89 20.89 Nil- - - - (18.65) (18.65) (Nil)Interest recd on Loan - 31.79 - - - 31.79 Nil- (15.53) - - - (15.53) (Nil)Corporate Guarantees 3750.00 - - - - 3750 3750.00given by Holding Company (2887.00) - - - - (2887.00) (2887.00)Note:Names of related parties and description of relationship:Dabur India Limited- Holding CompanyDabur Nepal Pvt. Limited- Fellow SubsidiaryPasadensa Foods Limited- Subsidiary CompanyMr. Sanjay Sharma - Key Management PersonnelDabur Foods Limited • Annual Report 2004-051820

Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)(Rs. In lac)17. Auditors Remuneration includes31-03-200531-03-2004Audit Fee 1.33 1.16Tax Audit Fees 0.22 0.22Reimbursement of Expenses 0.79 0.58Other Matters 0.63 0.802.97 2.7618. Foreign Exchange loss of Rs.4.08 (net of gain) has been charged to Profit & Loss Account.19. The company has not received any claim for interest from any supplier under the“Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1933”.20. Previous year figures have been regrouped and rearranged wherever considered necessary.21. Additional information as required under Part IV of Schedule VI of the Companies Act, 1956:I. Registration DetailsRegistration No. 83594State Code 55Balance Sheet Date 31.03.2005II.Capital raised during the year (Amount in Rs.thousand)Public Issue NILRight IssueNILBonus IssueNILPrivate PlacementNILPromoters/SubscribersNILIII.Position of Mobilization and Deployment of Funds (Amount in Rs.thousand)Total Liabilities 555547Total Assets 555547Sources of FundsPaid up Capital 100000Share Application MoneyNILReserves and SurplusNILSecured Loans 163734Unsecured Loans 172779Application of FundsNet Fixed Assets 452Investments 50021Net Current Assets 237912Misc. Expenditure 0.00Accumulated Losses 148128Dabur Foods Limited • Annual Report 2004-051921

Schedules annexed to and forming part of the accounts for the year ended 31st March, 2005 (Contd...)(Rs. In lac)IV. Performance of Company (Amount in Rs.thousand)Turnover 1301472Total Expenditure 1244446Profit Before Tax 57026Profit After Tax 52555Earning per share in Rupee 5.26Dividend RateNILV. Generic names of Principal Products/Services of Company(As per Monetary terms)Item Code No. (ITC Code) 220240Product DescriptionFruit JuiceItem Code No. (ITC Code) 220110Product DescriptionVegetable Pastes22. Schedules A to N form an integral part of accounts.As per our report of even date attachedAs per our report of even date attachedFor Jhalani & Co.Chartered AccountantsV.K. JhalaniPartnerFor Dabur Foods Ltd.Amit BurmanDirectorP. D. Narang DirectorNeeraj AggarwalManager Finanace&Company SecretaryGhaziabad22nd April, 2005Dabur Foods Limited • Annual Report 2004-052022

Cash Flow Statement For The Year Ended 31st March 2005A. Cash Flow From Operating ActivitiesFor the year ended For the year ended31st March 200531st March 2005(Rs.in lac)( Rs.in lac)Net Profit Before Tax And Extraordinary Items 570.25 158.52Add:Depreciation 1.48 0.98Miscellenous Exp. Written Off - 114.70Interest 214.24 198.49215.72 314.17785.97 472.69Less:Interest Received 32.47 -32.47 -Operating Profit Before Working Capital Changes 753.50 472.69Working Capital ChangesIncrease/(Decrease) In Inventories 673.38 (94.84)Increase/(Decrease) In Debtors 461.82 (210.22)Decrease/(Increase) In Trade Payables (272.76) (223.39)Increase/(Decrease) In Working Capital 862.44 (528.45)Cash Used(-)/(+)Generated For Operating Activities (A) (108.94) 1,001.15B. Cash Flow From Investing ActivitiesSale/(Purchase) Of Investments 5.00 (505.01)Interest Received 32.47 -Purchase Of Fixed Assets (0.23) (6.03)Sale Of Fixed Assets 0.10 -Cash Used(-)/(+)Generated For Investing Activities (B) 37.34 (511.04)C. Cash Flow From Financing ActivitiesInterest Paid (212.72) (198.77)Repayment(-)/Proceeds (+) Of Long Term Secured Liabilities - -Repayment(-)/Proceeds(+) From Short Term Loans 1012.34 425.00Proceeds From Deposits (2.37) (34.52)Repayment(-)/Proceeds(+) From Other Unsecured Loans (150.00) (575.00)Payment Of Other Advances (871.94) 0.23Cash Used(-)/+(Generated) In Financing Activities © (224.69) (184.29)Net Increase(+)/Decrease (-) In Cash AndCash Equivalents (A+B+C) (296.29) 305.82Cash And Cash Equivalents Opening Balance 446.18 339.13Cash And Cash Equivalents Closing BalanceCash In Hand 0.70 0.31Bank Balances (Including Cheques In Hand) 201.84 454.82Less: Book Overdraft 52 .65 149.89 8.95 446.18Dabur Foods Limited • Annual Report 2004-052123