Third Quarter - Dabur India Limited

Dabur India LimitedInvestors/Analysts Conference CallJanuary 30, 2006Conference Call on the Unaudited Financial Results for the Quarter / Nine Months Ended31st December, 2005 performance of Dabur India Ltd.Dabur India Ltd.’s ParticipantsMr. Sunil Duggal, CEO (Chairperson)Mr. Rajan Varma, CFOMr. N. Venkatakrishnan, VP-CommercialMr. D. K. Chhabra, AGM-Financial PlanningMr. Ashok Jain, AGM(Finance) & CompanyMrs. Gagan Ahluwalia, DGM-Corporate AffairsSunil Duggal : Ladies and gentlemen, I have pleasure in welcoming you to this conference callon our results for the period ended 31 st December 2005. The company’s performance in the 9-month period ending December 2005 has been quite satisfactory. Its sales grew by 24.3% on aconsolidated basis and the net profit grew by 46.5%. The strong growth momentum has beenmaintained with the growth drivers like foods, healthcare, international and Balsara businessescontributing strong top line growth as well as the creditable bottom line improvement.Sales in the consumer care division experienced resurgence during the quarter led by goodmomentum in demand from the rural sector. Coming to various segments of the consumer carebusiness, the hair care segment has done well. The lead brand here Dabur Amla hair oil posteda growth of 5.2% and recorded gains in market share from 71 to 72.6 in the heavy perfumed oilscategory. The hair oil under Anmol brand has also done well with coconut oil growing at 39%and mustard oil at 14. Vatika hair oil has been a little sluggish due to its price differential in aninherently low price scenario, which is currently prevalent in the coconut oil market.In the shampoo category, Vatika shampoos grew by 7.5% led by a 13% growth in Vatika hennacream shampoo. The antidandruff variant reported good growth of 23% in quarter 3 post freshmarketing inputs.In the oral care segment, the toothpaste category preformed well with 13% growth. Babool andMeswak have grown at 31 and 49% respectively. The Red toothpaste posted a growth of 7%achieving a market share of 3 per cent during December. Including the Balsara oral careportfolio, Dabur now has a 7% market share in toothpaste. Red toothpowder performed well inthe third quarter, registering a growth of 14%. However, since the brand reported a decline inthe first half of the year, it still has the overall decline of 7% during the 9 months endingPage 1 of 27

consolidated business. The company is continuing to capture the tax benefits and efficienciesensuing from its new manufacturing unit. In addition, the margin improvement due to materialcost savings resulting from efficiencies in procurement of items such as coconut oil, raw honey,mustard oil, etc. The net profit increased by 30% in Dabur India and 46.5% for the group as awhole on a consolidated basis. The working capital has reduced during the quarter withreduction in inventory and receivables and now stands at minus 5 days as compared to beingmarginally positive at the end of September. The debt level went down by around Rs.15 croresas some of the loans were repaid.In the Board of Directors meeting held on 27 th January a decision was taken for the merger ofthe 3 Balsara companies into Dabur India. This would conclude and complete the integration ofBalsara with Dabur as the legal entities will be subsumed into the parent company. The intercompany investment of Balsara entities and Dabur India Limited will be canceled in the processand the overall capital employed will reduce by about Rs.160 crores leading to an increase inthe ROCE of the company.Overall, the company’s performance was in line with our efforts and expectations. With the rightstrategies in place our endeavor is to continue to pursue strong growth and leverage theopportunities that come up.Mr. Amnish Aggarwal from Refco Sify Securities : Yeah, good afternoon sir.Sunil Duggal : Good afternoon.Amnish Aggarwal : Congrats on good set of numbers.Sunil Duggal :Thank you.Amnish Aggarwal : Sir I have got a couple of questions. Firstly on the growth rates we aretalking about, are these for 9 month period or 3 month period?Sunil Duggal : We have largely spoken about 9 months period. You want to know about thequarterly growth anything specific we can let you know.Amnish Aggarwal : Okay, and all these growth rates are in value terms or volume terms?Sunil Duggal : Value.Amnish Aggarwal : Value, okay. Sir my main question is that if you look at the foods business,in this quarter there has been a decline in profitability on a sequential basis. So what reasoncan we attribute to this?Gagan Ahluwalia : Hello Amnish, Gagan here. This is mainly because, if you see there hasbeen lot of export turnover in foods. There have been some product mix changes, which havebrought down the margin to some extent, but if you see the YTD margins, PBT margin is farahead of last year, i.e. as compared to the same period last year.Page 3 of 27

Amnish Aggarwal : Okay. What my feeling is, isn’t it the competition like buy one get one freeand all those things, have they started impacting some sort in terms of realization in margins?Gagan Ahluwalia : No, there is no change in pricing of the products.Sunil Duggal : See the real brand, our branded business margins are around the same as whatthey were last year in percentage terms. There has been some growth, not significant, but theprofit increase has been driven largely by revenue growth, but the margins have remainedstable, some improvement, but there has been no shrinkage in margins for the brandedbusiness if that is to answer your question.Gagan Ahluwalia : For the 9 month.Sunil Duggal : For the 9 month period.Amnish Aggarwal : Okay.Sunil Duggal : Even for the 3 month period. The mix has changed because we have a highercomponent of low margin commodity export business, but otherwise the brand margins areintact.Amnish Aggarwal : Okay. Sir my second question is that how has Balsara performed in termsof numbers, if you can give something about sales and profitability in that and what is the likelygrowth potential beyond this year?Sunil Duggal : Yeah, the sales growth specifically…Gagan Ahluwalia : The Balsara sales are 138 crores, and the business is up by around 21% indomestic and total business is up by 14%.Sunil Duggal : And profit is around 11 crores.Rajan Varma : Profit is 10.13 crores as against a significant loss last year.Amnish Aggarwal : This 10.13 is at net level?Rajan Varma : PAT level.Amnish Aggarwal : Okay, and sir what kind of growth rate we can look forward in FY07because.Sunil Duggal : Yeah, again without getting into the guidance part, we see the Balsara business,particularly the home care business as one of the key drivers of growth. We would look forwardto even higher growth rates for home care particularly in the next year because we are gettinginto new areas. We have several new initiatives in home care, so that is very scaleablebusiness because it is so under penetrated and we will be looking at very aggressive growthsgoing forward.Page 4 of 27

Amnish Aggarwal : Okay, thanks a lot sir.Sunil Duggal : Welcome.Mr. Meherwan Kotwal from B&K Securities : Good afternoon sir.Sunil Duggal : Good afternoon Kotwal.Kotwal : Sir, I wanted to know if we exclude Balsara from the CCD, what growth has divisionshown?Sunil Duggal : Now if you take, I can answer the question for the company, lets say in quarter3, Dabur India on a like-to-like basis if you exclude Balsara grew 17% in quarter 3 and 12.3% forthe year as a whole, and CCD growth in quarter 3 was around 10% and approximately 7.5% forthe 9 months. So basically the growth have revved up in quarter 3 for the domestic businessparticularly in the consumer care, which was little sluggish particularly in the first quarterbecause of VAT related issues etc, etc. We are seeing significant pick up happening in our corebusiness, core CCD business in the third quarter, hopefully this momentum will continue in thefourth.Kotwal : And sir what is the outlook on say consumers accepting greater price hikes becausewhat I believe is at the beginning of this quarter you all had initiated price hikes, you know, fewsmaller categories…Sunil Duggal : Small increases…Kotwal : Yeah, but have they by any means impacted volumes or not…?Sunil Duggal : You see, price increase is about 4% in Chyawanprash, 4 in Amla, 4 in Redtoothpaste, it is around 4-5% for few brands and you know zero in others.Kotwal : But there has been no significant impact on volumes.Sunil Duggal : No, I don’t think it has had any impact on volumes. If you take all these brandswhether it is Red toothpaste, or Chyawanprash, or Amla hair oil, the performance has been verygood. So this kind of price increase won’t impact the tonnage.Kotwal : Okay sir. Sir, and in which areas are we looking at increasingly getting more capacityin, are we trying to further in-source production that is outside to say within Dabur India, or arewe looking at new areas to set up more capacity for capex?Sunil Duggal : I think our plants, with comparatively low investment, can take our requirementsup to the year 2008. We are looking at one more Greenfield site perhaps to come in the NorthEast next year. We will take a decision post budget depending upon how the budget pans out,but there is intent to have a manufacturing unit in the East to cater to the East and Southgeographies. But capacities are not a issue, I mean, if that is to answer your question, exceptfor maybe juices where we need to invest somewhat to ramp up capacities.Page 5 of 27

Kotwal : Sir you had also mentioned about ramping up your contract manufacturing activitiesfor toothpaste first and then later on into single product health supplements…Sunil Duggal : Actually not contract manufacturing. We intend to, no, we intend to produceourselves. There are strong reasons to make products in our own units both in terms offinancial benefits as well as in terms of control over quality and cost. So we don’t intend tooutsource, in fact 80% of our production is now in-sourced.Kotwal : Sir I meant to say you would be contract manufacturing for foreign companies. Hasthat picked up in a big way?Sunil Duggal : Private label ? Okay, if you mean private labels, that is a comparatively smallactivity for which we are now going to invest a lot of time and attention. Last year we didn’thave right people in place, but private label basically for toothpaste and perhaps for certainselected herbal health supplements will be a focus activity next year. But this is an area whichwe have to learn a lot about, but if we feel that it is scaleable, it is potentially huge market andwe will be looking at that, but other than private label we will not do other contractmanufacturing.Kotwal : Okay sir. Thank you very much.Sunil Duggal : You are welcome.Mr. Princy Singh from CitiGroup : Hi this is Princy from CitiGroup.Sunil Duggal : Hi Princy.Princy : How are you doing? Great numbers.Sunil Duggal : Thank you.Princy : I just had one specific question on Dabur and a general question on the sector,specifically is there any impact of excise savings on a YOY basis left at all, or are these puremargins on the occasional level that we are seeing in third quarter? And secondly, you know,we have seen in the few consumer companies, which have declared so far one key surpriseelement has been clearly strong pick up in the top line. I just wanted your views, are you seeingany general pick up in demand, and if so, what segments is it coming from?Sunil Duggal : See in some companies you would find pick up in demand consequent to theimposition of VAT, you know the VAT rates are significantly lower for many companies than thesales tax rates, so which means that your top line perks up because nobody has reduced pricesconsequent to the advent of the lower VAT regime. These are companies, which have a more ofexposure in the south and the west where the sales tax rates were higher, particularly in thesouth. In our case that didn’t impact because VAT rates and the old sales tax rates were moreor less the same, but aside from that there has been resurgence in demand and that is feltacross the sector. So we expect that the top lines could continue to remain robust. How muchwill this further accelerate or would this sort of taper off, but certainly third quarter has been thebest one which we have seen for the long time.Page 6 of 27

Princy : Actually where is this coming from, I mean, is it across the board or is it more?Sunil Duggal : Unlike last two to three years where demand was significantly from the urban,and rural demand was stagnant or even declining, this year we have seen significant upsurge indemand from rural areas. Just to take a few categories, in toothpaste, the urban growth hasbeen 2.7%, the rural growth has been 3.8. I am talking about category as a whole. In hair oils,10% in urban, 14% in rural. Chyawanprash minus 2% in urban, 8% in rural, etc.Princy : All. right. Okay, also on your margin expansion, which we are seeing on a year-onyearbasis, is there any element of excise in this or this is purely business related margins?Sunil Duggal : See, out of the 310 points improvement in margins, 170 points came fromexcise.Princy : Okay.Sunil Duggal : So 17.3 crores is what we estimate to be our net excise savings in the 9 monthperiod on a total profit base of 160 odd crores. So it is significant, but it is not the single mostimportant driver of our profitability. And of course we would have captured this almost fully bythe fourth quarter.Princy : Sure. Sir my next question is if we have to take a margin outlook going forward, wouldone be safe in assuming that because there is ample leverage, one on Balsara, and secondlyon your international and the foods businesses which are also going to be scaling up to optimalsizes, on a consolidated basis one would still see margins continue to expand?Sunil Duggal : You would see the margin continue to expand, but at a lower rate because nextyear the one driver of expansion, which is excise would be fully captured by the end of this year.So now you would have the other drivers you are right, international, foods etc., but thosedrivers existed even this year, so I suspect the rate of increase of margins would slow downeven though we would continue to look at margin expansion.Princy : Okay finally just your outlook on your advertising expenditure, I mean, do you see anypressures building up on ad expenditures because again you know if you look at the results formost consumer companies in this quarter, ad expenditures as percentage of sales have goneup quite significantly, so in your case would you see any pressure on ad expenditure or are youcomfortable holding it at the level where it is currently?Sunil Duggal : We have not really ramped up ad expense in the 9 months, it was 11.3% lastyear, 11.9% in the current year, so there has not been a huge change. Going forward I wouldnot expect this thing to grow very significantly neither would it reduce, so I think 12% +/- 1, or +1let us put at this way, is the safe ratio.Princy : All right. Thanks very much.Sunil Duggal : Thanks.Mr. Hemant B. Patel from Enam Securities : Hi Sunil congratulations to the team for a goodset of numbers.Page 7 of 27

Sunil Duggal : Hi Hemant, how are you?Hemant B. Patel : I am fine sir. Sunil, I just wanted to take up the question on this demandresurgence in rural market, you have been actually stating that the quarter 3 was actually largelyup due to revival from the rural market. Could you just give us a sense of what is the primereason for this current resurgence in the rural market?Sunil Duggal : I think it is growth in the rural incomes which shrank over the last couple ofyears. This year there has been a small growth. Also the shrinkage in the share of wallet whichwas driven significantly in rural areas has probably now come to an end, so we have reached asort of level where it would not shrink further. And now we mirror the growth at which we mightbe growing at, ahead of the urban growth rate. So I think it is not that there is a spectacularresurgence of demand from rural, but it certainly now ahead of the urban, which is veryheartening because we feel that this is sustainable.Hemant B. Patel : Are you seeing this actually coming through in terms of volume numbers onthe rural front, the growth which you had actually given a little while ago?Sunil Duggal : Yeah. No even though that was value growth, but it is significantly volumedriven. Like I said there is very little price increase which has happened here. There is verylittle change in mix, which has happened. So the value numbers are very reflective of thevolume growth.Hemant B. Patel : And any benefits in terms of distribution reach in the rural market.Sunil Duggal : Yeah, I think the distribution gains which we have made have been significantlytapped in the most remote rural areas. What we have to now look at is qualitativelyreengineering our whole distribution organization to cater to the demands of separate segmentsin terms of trade. So we are engaged them in a very massive reorganization of S&D. We willhave a separate channel for chemist, a separate one for modern trade, a separate one for thepan-beedi outlets, separate one for the higher end groceries, etc. So I think the task ahead is avery complex one in terms of designing the distribution structure geared to the requirements ofspecific channel.Hemant B. Patel : And just another thing about the organized trade, which you said that hasactually enabled you to scale up in home care segment. I just was wondering whether similarkind of effect would actually percolate down into your hair care or oral care, do you see anyprobabilities on that?Sunil Duggal : Definitely, for the business as a whole 6% of volumes come from modern trade.In home care it is as high as 20%. In food it is more like 25%, so overall the basic business interms of personal healthcare lags behind some of these newer categories. We can only see itincrease, whether it is FDI driven or not, I think the Indian chains are now going to scale upexponentially, going by what one sees in the market. We expect that in the next few years theshare of modern trade could be as high as 20% for the business as a whole and we will have toprepare for that.Page 8 of 27

Hemant B. Patel : Sure. And as far as your CCD growth is concerned, I mean, if you excludeBalsara growth for the 9 months you stated it is close to around 7%, right?Sunil Duggal : No, if you exclude Balsara growth, on a like-to-like for the quarter 3 it is 17% forthe consolidated business. If you just take out Balsara, the growth for quarter 3 is 17% and12.3% YTD. So again you see a resurgence in quarter 3 numbers, you know, they are muchhigher than the YTD numbers.Hemant B. Patel : And what is the growth in your hair care and oral care segments, oral careinclusive of Balsara?Sunil Duggal : I can give you specific growth in brands, let us take it this way, Red toothpaste7%, Babool 31%.Hemant B. Patel : Sunil, actually wanted the consolidated, that will do I think because thepresentation is quite exhaustive.Sunil Duggal : Yeah. I think I have mentioned some of those in the presentation. Overall oralcare growth in quarter 3 is 13% if you aggregate tooth powders and toothpaste.Hemant B. Patel : Great, that is inclusive of Balsara?Sunil Duggal : That is inclusive of Balsara, yes.Hemant B. Patel : And what about the hair care?Sunil Duggal : Hair care aggregate, YTD 5%.Hemant B. Patel : And these 2 are for 9 months.Sunil Duggal : These are 9 months, yes. The quarter 3 numbers look better than thesenumbers.Hemant B. Patel : And you have mentioned prior to this regarding your possible entry intoAyurvedic spas or any other new categories. You have already entered into soaps, so I wasjust wondering your headway into these segments?Sunil Duggal : To start with we have begun ayurvedic health clinics, and we have got 100 ofthem on the ground, which are basically a shop within a shop or establishment withinestablishment in the ayurvedic outlets, in the key ayurvedic outlets. We tend of scale this up to1000 over the next 12 to 18 months. So that will be a beginning in terms of, these would bemanned by ayurvedic practitioners. They would expense medicines, and there would be a coreayurvedic product type of activity. The larger activity in terms of spas etc. is something, which isbeing looked at. We are getting now into details as to how the business would pan out, but thatis still some months away.Hemant B. Patel : Okay.Page 9 of 27

Sunil Duggal : But the ayurvedic daycare centers are very much a reality and this is the activitywhich like I said we will scale up tremendously in the next year.Hemant B. Patel : And are you eyeing any other new categories at least down this financialyear?Sunil Duggal : I don’t think so. I think we need to strengthen presence in many of our existingcategories, skin, and home care particularly where we are comparatively small, and there are somany opportunities within the categories in which we operate, we don’t really have to look atany new category for the next couple of years at least.Hemant B. Patel : And one final question, how do you actually see the possible Niharacquisition by Marico, actually it is a reality I think?Sunil Duggal : I don’t think it will impact us because we weren’t operating in that space. Weare not big players in filtered coconut oil, and we don’t have a light hair oil product in that space.So I don’t think that acquisition would make any difference to us whatsoever.Hemant B. Patel : But does it actually play out on industry consolidation in terms of pricing ofyour brands?Sunil Duggal : It all depends how Marico plays that acquisition, but I don’t think…Hemant B. Patel : It does not make much of a material impact…Sunil Duggal : I think it is relatively fragmented industry, there are huge number of unorganizedplayers here. There are lot of regional brands, so it need not necessarily give anybody a lot ofleverage in regard to pricing.Hemant B. Patel : Okay, thanks a lot.Sunil Duggal : You are welcome.Mr. Harrish Zaveri from HSBC Securities : Sunil, just a follow up on the urban versus ruralgrowth rate that you were giving out, you mentioned toothpaste 2.7 and 3.8..Sunil Duggal : Let me just get back to those. This is value, April-December toothpaste? Yeah,urban 2.7 and rural 3.8.Harrish Zaveri : Okay, then the second I think was 10 and 14, I missed…Sunil Duggal : That is hair care, that is hair oils as a category.Harrish Zaveri : Okay, and Chyawanprash you said –2 and 8%.Sunil Duggal : Minus 2 and 8., yes.Harrish Zaveri : Any other figures you have for the other categories as well.Page 10 of 27

Sunil Duggal : Tooth powders-0.2 and +1.5.Harrish Zaveri : Okay.Sunil Duggal : And you have shampoos 11 and 30.8.Harrish Zaveri : 30.8 in rural, is it?Sunil Duggal : Yeah.Harrish Zaveri : Okay.Sunil Duggal : All shampoos.Harrish Zaveri : Okay. These are the categories that you operate in, any others?Sunil Duggal : Light hair oils 7 and 8.2. Okay, this is the category within hair oils. Glucose isactually -9.6 and -1.7, but again the rural growths are ahead. So in every category you see ruralgrowths are ahead of urban.Harrish Zaveri : Okay. You have traditionally been like 50-50 or a 55-45 in favor of rural.Sunil Duggal : That is right.Harrish Zaveri : And last 2 years you were actually changing track to be a more urbancompany particularly when Vatika clicked and Vatika face packs and all you know all were likemore lifestyle products than… Now is it like, how does your portfolio now look, is it...?Sunil Duggal : I think it is evenly balanced between urban and rural. I don’t see it changingvery dramatically. We had big holes as far as our urban presence was concerned say 10 yearsago. That is when we made a concerted effort to have a strong urban presence because I thinkleadership in the urban areas is important to drive rural growths long term. So that is when weentered into beverages, we got higher end brands like Vatika into the picture, now home care,but it is not that we intend to become a largely urban company or otherwise. We will play whereour brands take us, and the rural market is as attractive, perhaps more so in the long run thanthe urban market.Harrish Zaveri : Okay. When you look at your portfolio say 2-3 years down the line, do youenvisage any change in this rural/urban composition of yours?Sunil Duggal : I don’t think so because while we would be perhaps having lot more initiativesfor the urban area, we do expect the rural growths to be higher. So that will balance itself out.So I don’t think the split of business would change even though we would be having highergrowth coming from say home care than lets say hair care, but since rural growths are expectedto be faster, the size of the rural business would be.. ie the size of the pie would be around thesame. So again, next couple of years it should be half and half or rural might be little bit aheadof urban.Page 11 of 27

Harrish Zaveri : And does it happen that you have one bad monsoon and this whole ruralgrowth that you are seeing will go for a toss once again…Sunil Duggal : I think you got to have a succession of bad monsoons. One bad monsoon is notenough, and that is our experience. So if you have 2 or 3 bad monsoons, yes, then the ruralgrowth would be impacted.Harrish Zaveri : Okay. So effectively what you are saying is 2002, 2003 bare phase for ruralgrowth in FMCG is effectively behind us?Sunil Duggal : I think so, that is the indicator which we get so far, and we are seeing aresurgence of demand and I don’t think it is transitory as it has been on a couple of occasions inthe past. I think it is more enduring. I think it is related to overall economic growth, the overallavailability of finance, whole lot of structural changes, which have happened in the economy.Harrish Zaveri : What would be the most significant challenge that you as a company wouldface over the next 3 to 5 years, one significant challenge?Sunil Duggal : I think the most significant challenge which all companies face is the need toattract and maintain and retain high quality talent. So that is ultimately going to be the biggestchallenge of them all rather than any other competitive influences or any other macro economicchallenges. It is really going to be the talent war.Harrish Zaveri : You have been awarded the 10 thWork…best company among Great Places toSunil Duggal : Yeah, so we made a strong move in that direction to be employer of choice,offering people opportunities which many of our competitor companies may not be able to give.So leveraging on our strengths by getting into new categories, new geographies, empoweringpeople, and we have recognized this threat and we are taking the means to address it. It doesnot mean the threat has diminished, but we are taking steps to address it.Harrish Zaveri : Yeah Sunil, thank you very much and all the very best to you.Sunil Duggal : Thank you.Mr. Ankit from Mata Securities : Good afternoon sir, Ankit here.Sunil Duggal : Good afternoon Ankit.Ankit : Sir, like ITC has opened E-Chaupals and HLL operates through Shakti, so are you alsoplanning to open any distribution or retail centers especially in the rural areas in the near future,because you know ITC’s products are doing very well these days.Sunil Duggal : See those Chaupals are a 2-way traffic. They are a procurement herb as wellas the sales activity, so you know two things are done there. We are a pure one-wayorganization, we just sell. And I think Chaupal is a model which is applicable definitely, and isattractive model in many ways, but so are many others, and I think we prefer the moretraditional route of reaching out into the micro interiors going up to pop strata of 5000 levels withPage 12 of 27

the basket of products and with high quality distribution and service, which serves the purposeequally well. So I think, Chaupals are more in tune with a 2-way traffic of goods and services.Ankit : But it is a very good way to reach the very interior rural areas like..?Sunil Duggal : But don’t underestimate the efficiency of the wholesale channel to reach thesemicro interiors where no company can reach, and what we are doing is to have special channelto manage the wholesalers, we have been recognizing the wholesalers as being a very, verypivotal cog in the wheel in the whole channel structure, and if you are able to manage thewholesalers you get presence in the remotest of interiors in a way in which Chaupals cannot.Ankit : So it means you are satisfied with your distribution channels?Sunil Duggal : Yeah, I think we need to constantly upgrade it, but we are pretty confident thatthe channels which we operate are adequate, more than adequate for our business needs.Ankit : Thank you sir.Sunil Duggal : You are welcome.Mr. Hozefa Topiwala from J M Morgan Stanley :Sunil Duggal : Hi Hozefa.Hozefa : Hi Sunil, how are you?Sunil Duggal : I am fine, thank you.Hozefa : Congrats on a wonderful performance.Sunil Duggal : Thank you.Hozefa : Just 3 quick questions, first are the numbers for the industry that you mentioned - isthis data your own or is it AC Nielson data ?Sunil Duggal : No, no, we don’t have our own data. There is only one source and you have thesame numbers as we have.Hozefa : Okay. Just taking the A C Nielson data forward, I am sure you must have seen thenumbers closely and there has been lot of disconnect between AC Nielson growth and thecompany’s growth, not necessarily Dabur but across the board, so how should we read thatdata in your view, how do you all read the data?Sunil Duggal : There was a disconnect in the past. I am not too sure whether the disconnect isstill happening, but one thing you will find that in very rural categories the disconnect will bemore because the Nielson data while it is reasonably accurate for urban, has lot of holes in it asfar as rural data is concerned because their sample sizes are certainly not adequate. Thisworks particularly for smaller categories. For example we see great anomalies in let us say ourdata for Lal Tel, which is a rural category also not a very large one. So we have given up tryingPage 13 of 27

to even track that data because it did not make any kind of sense, but if you take largecategories even in rural you would find the data to reflect trends reasonably well say toothpastefor example.Hozefa : Just.., oral care and toothpaste for example, you all have shown a 13% growth.Sunil Duggal : That is right.Hozefa : At least in this quarter, Colgate has shown 23% growth.Sunil Duggal : 23% volume growth?Hozefa : 14% volume growth.Sunil Duggal : Okay.Hozefa : And overall value growth of 23%.Sunil Duggal : And Nielson says much less.Hozefa : 5 to 6%.Sunil Duggal : But Nielson data is around 3 months old you know…Hozefa : That is for the month of December as well. Anyway, so you are saying that you canlook at the data.Sunil Duggal : Yeah, yeah. You may be right that there will always be some disconnect, but Ithink if you trend it over 12 month or 18 month period you will find some convergence. But quitefrankly what else is there to go by. We don’t have, we can’t set up our own data trackingsystem because it is a huge excise. So we have to rely upon the only source of data. Andwhile we are, always we are, you know, very often not comfortable with this data, and Ipersonally have had innumerable meetings with Nielson to question them about some of thisdata, but that is the only source, which exists.Hozefa : Okay. The second question is on the overall market recovery. What do you thinkcould happen to the pricing environment considering the recent surge or buoyancy because last4 or 5 years, the whole sector was seeing pricing pressures, last year also, you know, peoplehave taken muted price increases…Sunil Duggal : I think the margins were cushioned by the excise benefits, so there was no hugedesire to increase prices. There was also a big VAT upside which many companies had, not us,but I am sure many companies you can track those companies down, enjoyed on VATimplementation. So I suspect going forward next year there should be significant price increasehappening in consumer side, because the crude prices continue to rise, the material costs aregoing to hit everybody now. We have been cushioned because we were I think a little lucky thatmany of our key raw materials got into a major deflationary spin, so we were able to managecost. But the crude prices will continue to impact on the margins. I think there will be significantprice increases next year.Page 14 of 27

Hozefa : Okay, when you said significant you mean 6-7% or….Sunil Duggal : I mean in the region of yeah 5-10%, in that range.Hozefa : Okay. Now just another question, the fear in the last 4-5 years has been that everytime branded FMCG company took price increases, you saw consumers down trade and moveto either cheaper products or off the branded products. Now what gives you the confidence thatthe consumers are ready to take a 5-10% price increase this year more than ever before?Sunil Duggal : I think this down trading is less likely to happen because the price-valueequation has shifted in favor of branded products. For example, toothpaste, the value whichpeople are getting today is much superior than what they were getting 5 years or 10 years ago.So the reason to down trade is much less, so even if there is a price increase of 5-10% intoothpaste, I don’t see people you know coming down to datuns for example, that is veryunlikely to. They happen in certain categories, but in many others where there has been acomplete reengineering of the price-value equation like say shampoos or the toothpaste, I don’tthink it is going to happen. Shampoos, you see the prices what they were 3 years ago and whatare they now.Hozefa : Correct. And the last question is on your input cost this year, the calendar 2005 or youknow first nine months this year, what has been the overall trend for you and how the inputcosts, key inputs have moved and what is the outlook there for next year?Sunil Duggal : We haven’t had witnessed any inflation in the first nine months of the year withregard to material costs. So that has been a big-big upside. Now going forward it is not likely tocontinue this way because we had some very soft prices in honey and coconut oil etc., whichmay continue, but I think the packaging material prices now would begin to hurt us becauseearlier on we had done some strategic buying and there was some lag between HTP and PPand the crude prices, but now the lag is gone. So I think there would be some inflation in thenext few months unless the oil prices soften, but it is not a huge amount so as to significantlyimpact margins. And the outlook for say edible oils and honey is still that the prices are going toremain soft. So overall I am not seeing inflation as a major threat to margins.Hozefa : On packaging cost per se can you give us a sense of, you know, how much, I mean,petroleum linked packaging material, what percentage of sales would that be and how does thatreally move when polyethylene/ HDPE because they have moved significantly over the last twoyears.Sunil Duggal : Yeah, HDPE and PET have moved up now, but if you take say PET granules,we have not felt any inflation so far. We will feel it going forward, but there have someinstances, say laminate for example which there has been no inflation, I think because of overcapacity so margins have shrunk, but overall packaging is going to be a issue at least in thenext three to six months.Hozefa : Okay. If I may just take the last one small question from my end, in modern trade, doyou approach modern trade as one company or is your negotiation for the foods part of thebusiness different from the other part of the business.Page 15 of 27

Sunil Duggal : We book them as two companies, foods and non-foods. I think the foods supplychain is completely separate because of obvious reason, six-month shelf life, etc. So theynegotiate separately because they have to manage the whole supply chain with modern tradevery differently. But all the other business, healthcare and the personal care even the consumerhealth division modern trade operates under single head. We would not probably in theforeseeable future integrate the foods modern trade supply chain into the main line.Hozefa : Okay, but do you offer much better trade terms to modern trade in food compared tothe other part of the business.Sunil Duggal : In foods, yes. In non-foods, no. Basically the margins, which we save by notpaying to the distributor we pass on to the modern trade. So our realization from modern tradeis exactly the same as that for traditional trade. Again going forward we may, you know, as andwhen the chains become larger and are able to negotiate better, that may not, we may have topass on some additional margins. As of now the profitability for modern trade is around thesame as the rest.Hozefa : Can you quantify what better terms you offer in foods compared to non-food?Sunil Duggal : Not immediately, but I can get back to you on this.Hozefa : Okay. Thank you very much and congratulations.Sunil Duggal :Thank you.Mr. Nikhi Vora from SSKI : Hello, this Nikhil here. Congrats again. Couple of things, one wason Dabur Foods, you know, we have historically known that there was obviously a separatestrategy for Dabur Foods growth and stuff, now given the fact that Dabur Foods is acquiringmeaningful scale, I guess it would top 200 crores plus in the current year itself, is there adifferent way of looking at Dabur Foods in terms of funding that part of the business.Sunil Duggal : No, I think the only difference is that instead of Dabur India funding DaburFoods, now it funds itself. So it is self generating in terms of its expansion, but otherwise for theforeseeable future we intend that it contribute part of the Dabur Group as a 100% subsidiary,but it would have its separate management in the sense that which is required to run thebusiness as a separate entity, so in terms of separate supply chain and separate sales anddistribution organization, but aside from that it would be totally a part of the current business.Nikhil Vora : Okay. So you think the incremental capex required for Dabur Foods’ growth in thenext couple of years or more than that will get funded by Dabur Foods itself, they don’t needexternal capital.Sunil Duggal : That is right. Even they have had significant capex outflows in the last couple ofyears, which have been all coming from their own resources.Nikhil Vora : Okay. Second, just to understand there has been, I don’t know whether it is arumor or its confirmed, but there has been some management level inductions in Dabur, couldyou throw some light on that?Page 16 of 27

Sunil Duggal : That is right. We are doing a major round of restructuring. One is that we havegot in a senior professional who will head consumer care division. So earlier two heads werereporting into me, head of sales and head of marketing, now they would report into a executivedirector sales and marketing for consumer care, which would free me for a more strategic role.So we are also now creating additional hub for the international business in Delhi and relocatingsome people from Dubai to Delhi. So we will have two global hubs, one is Dubai and one isDelhi. Dubai will look after the gulf and African businesses, Delhi would look after the SAARCcountries and the entire healthcare initiative, which has been little bit neglected for the overseasmarket over the last year or so. So we are resourcing international division significantly fromApril 1 st . So both, these two would report into me, the gulf head and the India head, and I thinkthis would give a big fillip to the overseas part. So this is the major restructuring. For that tohappen it was necessary for me to get freed of the more routine CCD activities and that is whythe induction of this senior professional from Unilever happened.Nikhil Vora : Sure. Mr. Sitaram would report to the Board?Sunil Duggal : He will report to me, so would the two global heads, one is Arvind Kumar whowould now be relocated at Delhi, and we will be relocating an India resource to Dubai, whowould also report into me. But my time would be little bit more freed for the longer-termactivities instead of you know getting into the brand plans and stuff like that, so it would be adifferent canvas now. So, this is inevitable with the growth of the company…Nikhil Vora : Okay. Just one more thing, I actually just joined in the conference now, but thisacquisition of Nihar by Marico, just on the side, does it mean that other guys are getting slightlymore aggressive than what we have been historically, I mean, we have obviously been veryaggressive earlier on acquisitions, Marico was not known to be very aggressive, they have donethat, they have out bid us I guess significantly. Any thoughts on that.Sunil Duggal : I think we are very aggressive on acquisitions and this is just because we didn’tbuy Nihar does not indicate any lack of aggression, but every deal has its price and I think thatis where things didn’t work out. But it should not be read as if our appetite for acquisition hasdiminished, it has not.Nikhil Vora : Okay, great. Thanks so much.Sunil Duggal : Thanks.Mr. Abhijeet Kundu from Prabhudas Lilladher Liladhar : Congrats sir for a good set ofnumbers. I just wanted to know what was your growth in oral care excluding Balsara.Sunil Duggal : Red toothpaste grew 7%, and Red toothpowder declined by….Abhijeet Kundu : Mainly I wanted to know the 9 month numbers like, I wanted to know whatwas the trend for the year?Sunil Duggal : Nine months traditional Dabur portfolio of oral care showed a small decline, itwas basically on the back of toothpowder, but if you see third quarter there has been asignificant increase. So we began the year badly with sharp decline in Red toothpowder. Weare now getting into positive territory in quarter three, 15% is the total Dabur oral care growthPage 17 of 27

driven by 14% in toothpowder and 32% in paste in quarter three. But the nine month numbersdon’t look so good due to a very bad start to the year.Abhijeet Kundu : Okay, and this has been driven by rural?Sunil Duggal : Once again, while the YTD numbers may show only a 7% increase, oursecondary sales numbers, which is actual off take from the distributor to the trade show agrowth of 31%. So this is a brand, which is really doing extremely well, so we are very gung-hoabout it. I think the challenge before us is how to revive Red toothpowder, or if we cannot reviveit how to manage its decline in a way which does not impact the rest of business. We are prettyconfident of at least the maintaining the brand where it is over the next couple of years.Abhijeet Kundu : Okay. So you said 15% was the third quarter growth in your Dabur portfolioof oral care right?Sunil Duggal : That is right. 14% Red toothpowder and 32% Red toothpaste.Abhijeet Kundu : Okay. And this was mainly driven by higher off take in rural market?Sunil Duggal : Yes, largely.Abhijeet Kundu : And going forward what would be your initiatives in skin care, because yousaid you would be focussing on skin care for growth?Sunil Duggal : See, skin care are, key initiative here is soaps, and we categorize it under skincare and not under body care etc. So we have launched a soap, we have just launched twoadditional sizes in soaps. We are looking at two variants to be launched by the closure of thecurrent year, current fiscal. And next year we are looking at a different type of soap also tocome into the market. So it would take, all the skin care initiatives at this point in time would befocussed on soaps and we probably will not do too much else.Abhijeet Kundu : Okay. In case of coverage, how has been the coverage of soaps, and whichregions have you mainly covered or has it been…Sunil Duggal : We are concentrating up on the North and East for sales, particularly the North.We have not addressed the south in a very concerted way because we don’t want to spreadourselves too thin. So North is the area of focus, that is also our area of strength, and Vatika’sequity is very high there.Abhijeet Kundu : Okay sir. Thank you.Mr. Meherwan Kotwal of B&K Securities : Yeah Mr. Duggal, I just wanted to check, you saidthat soaps have reported a sales of 13 crores, are they for the quarter or are they for theperiod….Sunil Duggal : Well, the soaps we have really launched in September nationally, so they areeffectively quarter sales.Page 18 of 27

Kotwal : Okay. And does this also include lot of sales promotion as well, I mean, a lot of soapsbeing given out as sales promotion because you have got some schemes…Mr. Sunil Duggal : The scheme has now started, you know, the one soap free with every three,but this 13 crores is value, so we have given some soaps free with shampoos but that is zerovalue, so that is not included. And the three plus one schemes, again it won’t impact the value .It will impact tonnage, but I am talking only value here.Kotwal : The other question, for Balsara’s products, have they been rolled across the entiredistribution network of Dabur or…?Sunil Duggal : Yes, they have been. Of course, home care does not carry, sorry the Daburnetwork does not carry the entire range of home care products, in the rural areas they don’thave too much of scope, you know, the air fresheners aren’t really the rural type of products.So we are little selective here, but the distribution channels have been fully integrated. Theywere done, in fact, couple of months after the acquisition. So the same channel machinerycarries both Dabur and Balsara products.Kotwal : And you said that you are taking a few initiatives to improve the company’sperformance in the south, have these initiatives being paying off?Sunil Duggal : Oh, yes. South growth was 18% as against 8% for the country as a whole, sosouth is growing at twice the rate of the rest of the country. The base is small, and we still havea long way to go before we reach that targeted 15% revenues coming from there. At themoment it is around 10%.Kotwal : Okay. Any particular product categories that are showing rapid growth in the south?Sunil Duggal : Surprisingly enough Red toothpaste is a star performer there, which was littleunexpected. Then we are getting good growth even from some of our healthcare initiatives,Chyawanprash etc.. And honey has been a traditionally a very strong brand in the south, butnow we are looking at south specific initiatives through the launch of two products in the nextfew months in the south, which will be only marketed in the south and not necessarily rolled outin the rest of the country.Kotwal : Okay sir. Sir you had also talked about scaling up your guar gum initiative, has anyprogress been made over there?Sunil Duggal : Yes, we have gone into the phase 1 of expansion which involved very littlecapex but effectively doubled our capacity, so that is in the final stages of completion. So thatwould be the first step in taking a decision whether to get into the phase II, phase II would meanconsiderable capex 15-20 crores and would effectively quadruple capacities, that would happennext year, but first, we are doing a calibrated approach here, first we see the results of phase 1and take a decision in the first quarter of next year whether we want to get into phase II. So,yes, guar gum is now an area, which we never paid too much attention but it is something whichwe are looking at as being a major player here.Kotwal : Sir, and the demand for these products would be more domestic or would it beinternational?Page 19 of 27

Sunil Duggal : Guar is almost entirely exported.Kotwal : Right sir. Thanks a lot.Ms. Yasmin from Anand Rathi Securities : Hi sir, this is Yasmin here. I had a questionpertaining to the reclassification of your raw material cost, can you just take us through that?Sunil Duggal : Can you be a little bit more specific, reclassification of raw material cost..Yasmin : Yeah, I mean, one of your press releases state that you have reclassified your rawmaterial cost, that is the reason why you have seen…Sunil Duggal : Okay, yeah. Since we have moved from a significantly outsourcing model intoin-sourcing our raw and packaging material costs are showing as higher. The reason for it isnow we are buying our own raw and packaging material for our own units, and year or two agowe were buying the finished product from the ancillary units and that was not being shown asraw material cost and packaging material. It was being shown as cost of goods. So it is just areclassification, I won’t take that very seriously. So some of the impact, so there is a higheramount of raw and packaging material cost consequent to this change in methodology ofsourcing.Yasmin : Right sir. Sir on your hair care can you give us the nine-month growth numbers forthe entire portfolio of hair care?Gagan Ahluwalia : Hair care inclusive of shampoos is 4.6%.Yasmin : And can you give us separately for oil and shampoos?Gagan Ahluwalia : Oils have growth at around 5%.Yasmin : And shampoo?Gagan Ahluwalia : Shampoo category’s growth is 2%.Yasmin : Why is it that the growth has not really picked up in shampoos…Sunil Duggal : Well, it has picked up now. Again, if you see third quarter numbers, you knowthere is a reason, the first quarter are in terms of revenues, we were much higher priced in thefirst quarter of last year as compared to first quarter of this year, because around September-October last year we took a sharp price decrease. So obviously the growth numbers wereimpacted. If you see third quarter numbers, they look little different.Yasmin : Can you share with us the third quarter numbers please?Sunil Duggal : Just a minute, we will have to dig it out. Can we get back to you on this? I don’thave it immediately in front of me.Page 20 of 27

Yasmin : Yeah sure. So, are you saying overall if you see Dabur India’s portfolio, the growthrate has been in the region of 7-8% in the last three to four quarters, do you see the growthrates sustaining?Sunil Duggal : I will just go back to your shampoo thing, quarter three is 18% for shampoos asa whole in terms of value. Have I answered your shampoo question, I have just got the numbernow.Yasmin : Yeah.Sunil Duggal : 18% for quarter three. Sorry, can you repeat your other question?Yasmin : Yeah, sir if you see your growth numbers in the last three quarters, Dabur Indiaportfolio has grown in the region of 7-8%, like some categories pick up and some categoriesdrop back, that has been the phenomenon since the last three to four quarters, how do you seeit panning out in the next year?Sunil Duggal : Well, the third quarter has been 10% and we think the third quarter is little bitmore reflective of the road ahead than the first two quarters. First two quarter it was around 6%,or 6 to 6.5%. Then quarter three we did 10, which propped up the whole growth to around 7.5.There have been a couple of things, which have depressed growth, and the most significant hasbeen supplies to the army. Now the army has been, it is our largest customer and sales aredown there by 20%. The reason for that is that army was sales tax exempt, it has not been VATexempted. So their off take for all companies, and since our exposure to army is very high wehave been impacted quite badly there. That has caused some erosion, which has happened inthe current year. Now again, the state will correct itself. But otherwise if you just take brandsales excluding the army, the growth is significant in the 3 rd quarter. So once again, we see this10% growth happening in the next few quarters and hopefully next year should be even betterthan that. If you exclude the army part, we are at 10% growth for the nine months period andnot 7.5. That one customer has depressed our revenues in the consumer care division that iswhat supplies to the army.Yasmin : Now, as a part of your policy, are you supplying less or what is it going to be goingahead for the army portfolio?Sunil Duggal : Well, we supply whatever they ask us. In a sense, there is no canvassing forbusiness because they buy whatever they want. But since prices have increased in armysignificantly and now they more or less match the civilian prices, the customers prefer to buyoutside and not buy from the canteens. So, you know, the army inventories have depleted, andthat’s I think is a one-time loss. Ultimately it does not really matter whether army buys or notbecause the people will buy it from outside, but for a few months you suffer the pain.Yasmin : Okay. Right sir. Thank you so much sir.Sunil Duggal : Thanks.Mr. Janesh from Networth : Hello good evening sir. I have just one question. One is, youhave just recently just mentioned that the discounts what you are offering in the food business ispretty high because of the different set of supply chain what you are catering to, I would like toPage 21 of 27

know that what kind of impact or what kind of development do you see for the non-food categoryin the modern trade, especially when we look at the different brands, I mean, we can say thestore brands, are they taking a share in the overall market in that, and do you foresee any kindof threat from these kind of products?Sunil Duggal : I think in-store brands like we see in the developed markets, we first concentrateupon the food category and more in terms of food staple, so you will have in-store brands ofatta, rice, etc, etc., and they would gradually grow the value chain into the more value-addedproducts, but I don’t see for example, store brands in juices happening in a hurry because itrequires a very large capex, and there are not too many of those suppliers around, it is a verycomplex form of manufacturing. So it would begin to impact in the staples very quickly andslowly perhaps get into the other branded items, but unless you have large chains, and I don’tsee those emerging over the next two or three years, that private label will not be an issue as faras we are concerned. We see modern trade in the next few years as being a significant driverof growth in terms of the way the consumers behave in a modern trade environment is verydifferent and the propensity to purchase is much higher in a modern trade environment. We seethis as a huge opportunity.Janesh : Even for the personal care products you see…?Sunil Duggal : Even for personal care products, there is a lot of impulse buying. In a traditionaltrade format, there is only planned buying, you go with a list of items, you buy exactly that. In amodern trade environment, you buy things, which catch your fancy. It permits easier placementof products, it permits better merchandising. If you manage modern trade well, it can be a hugeimpetus to business.Janesh : Okay, thank you sir.Sunil Duggal : Thank you.Mr. Abhijeet Kundu of Prabhudas Lilladher : Which segment has been an area of concern foryou during this quarter or during the year, like which segment has not actually performedaccording to your expectations?Sunil Duggal : I think the only brand which has caused us some concern is Vatika Hair Oil.Now the reason for that is that the coconut oil table of raw oil has been at a all-time low; last fiveyears we haven’t seen this kind of coconut oil prices, which has meant that the pure coconut oilpeople have reduced their rates considerably, either directly in the form of MRP changes or inthe form of higher trade loads, etc. Now Vatika operates outside this coconut oil table, itoperates on a different pricing platform. So the growth in Vatika has been flat, and so that’sbeen a bit of an area of concern for us, which means that we may like to address the problem ofpricing of Vatika because it perhaps is overpriced in the current scenario. So Vatika growth isonly 2% and this has been a very fast growing brand. The other one is Red toothpowder forwhich there is a life cycle issue which we have recognized many years in the past and launcheda toothpaste. Overall, I am not very worried about Red toothpowder. So Vatika is somethingwhich we will have to now perhaps look at the price-value equation and change things a bit. Wehave been discussing that over the last few days and may get very aggressive in Vatika in termsof pricing.Page 22 of 27

Abhijeet Kundu :Okay, and sir you said in your hair care segment overall in the nine months,you have grown by about 5% ?Sunil Duggal : 5% or so, yes. We have been dragged down by Vatika.Abhijeet Kundu : Right, that’s what I wanted to know.Sunil Duggal : So if it wasn’t for Vatika then we would have had a much higher growth. Ourperfumed hair oils have grown very well.Abhijeet Kundu : Okay, and in your international business division, it has grown by about20.8% for the nine months?Sunil Duggal : That’s right.Abhijeet Kundu : So this quarter, even after getting sales from Pakistan, and Pakistan was oneof the contributor as a laggard, a very small component…Sunil Duggal : We are a little bit behind schedule in Pakistan. We should have got the team inplace by September, it has come into place only by February, so some lag there, but Pakistandespite that has worked well. It is not met our actual standard but still generated a 25% oddgrowth. We are looking at much higher volumes from Pakistan now that the team is in place,we have a country head in place, and with the new reorganized structure, with the person inIndia looking after the neighboring markets, Pakistan will get a much higher share of attentionthan it ever did. So the whole reorganization of the international should drive growths wellbeyond 20-21%, which is actually below our actual standards.Abhijeet Kundu : That’s what I actually was looking at…Sunil Duggal : So we recognize the fact that the organization is a bit under-resourced to meetthe needs of such a diverse set of geographies, so that’s why we have done this majorreorganization. Next year would be I think substantially better for overseas than the currentyear has been.Abhijeet Kundu : Okay, which countries would be the main growth drivers apart from Pakistan?Sunil Duggal : I think in the immediate future we would see good growth coming fromBangladesh, Pakistan, and Nigeria, and Gulf would continue its steady growth. We would seevery good growth coming from Russia because again we have got things into place. Thedeveloped markets I would not put in aggressive numbers next year, US and UK, I think that willcome the year after next.Abhijeet Kundu : Okay. ThanksSunil Duggal : You are welcome.Ms. Sunita Sachdev from UBS Securities : Hello sir, congratulations on your results, verynice numbers.Page 23 of 27

Sunil Duggal : Thank you.Sunita Sachdev : Just two questions sir. Since this quarter was the winter quarter andChyawanprash is basically a winter product, in your presentation you said that it has reachedthe highest market share and achieved a growth of 8%, what I wanted to know is how has beenthe year to date performance of your health supplements?Sunil Duggal : Chyawanprash 8% for the year, 14% for Q3; glucose 51% for the year, 94% forQ3, this has been a star actually. Honey 6% for the year, 5% for Q3, this has been a bit oflaggard, again similar to Vatika, the raw honey prices have been low so our honey which isslightly high priced.…Sunita Sachdev : This is also because of the competition that has come in the honey segment?Sunil Duggal : See what happens in honey for example is that when the honey prices are low,our honey is very high priced and we don’t move our prices up and down in tandem with the rawhoney prices because we don’t see our brand as a commodity, but there is some erosion whichhappens as I mentioned in my address in a low-priced environment where people will moveaway from Dabur Honey which is the most expensive honey into the cheaper semi-brandedproducts. It is something, which we have recognized, and the only way to arrest is to lower theprices of honey which we tend not to do unless erosion becomes very significant.Sunita Sachdev : Also it doesn’t help the situation when you have competition at slightly lowerprice?Sunil Duggal : In honey?Sunita Sachdev : Yes.Sunil Duggal : In honey we have competition at considerably lower price, but it is unorganizedcompetition. There is no major national player, we are the only national players here. Sopeople at the fringe would migrate from Dabur Honey into these smaller branded offerings, andthey will come back to us when the prices table becomes higher. So this is similar to the Vatikastory that there is a migration from Vatika to pure coconut oils when the coconut oil table is lowand the prices of pure coconut oil brands are low, and vice versa when it is high, but our marginprofile in both Vatika and honey is at an all-time high. We are getting good profits from herebecause of the very low prices of raw honey and raw coconut oil, so this cycle is what we haveseen many times in the past. In the case of Vatika, we might like to change the paradigm bylowering prices. In the case of honey, we are pretty much insulated from competition.Sunita Sachdev : Including Wipro Sanjeevini?Sunil Duggal : That’s a very small brand.Sunita Sachdev : Very small as yet.Sunil Duggal : ….nonexistent, we don’t see that being a threat. Honey, we have a hugeadvantage over everybody else in terms of our supply chain.Page 24 of 27

Sunita Sachdev : Procurement from Nepal.Sunil Duggal : Not so much from Nepal, but honey is a very disaggregated, it is not anorganized category, so we have to build bulk from thousands and thousands of small producersof honey, so we buy as low as 100 kilos and 200 kilos and aggregate it to our annualrequirement of 3000 tonnes. So it is a very elaborate supply chain, which provides a hugebarrier to any organized player.Sunita Sachdev : My second question was regarding the consumer health division. Honitushas done well, what are the other things that we could expect in this division?Sunil Duggal : This division would now concentrate on two areas. One is the prescription endof Ayurvedic medicine, the detailing part. So far we were not concentrating so much on actualdetailing, but we are building up our detailing machinery to upwards of 500 people, so the fourAyurvedic medicines would receive a lot of attention and would grow very fast, and the secondwould be the OTC business, products like Honitus, and we have a few of those in the pipeline.So these would be the two engines of growth.Sunita Sachdev : Right, and sir Gulf would be now what proportion of international division?Sunil Duggal : GCC would be around 40%.Sunita Sachdev : 40% of the total international division?Sunil Duggal : But 70% of the profits, so it is still the profit engine of international, and thewhole business model of international is to deploy the profits made from the Gulf markets intothe emerging markets.Sunita Sachdev : All right, thank your sir.Sunil Duggal : Thank you.Mr. Kiran from Arisaig Partners : This is Kiran from Arisaig Partners. What I wanted to knowis would you have a breakup of revenue in terms of different divisions, consumer care,healthcare, international business?Sunil Duggal : Yes, we will just give it to you. The breakup of revenue from various SBUs, doyou have that…, you want for the YTD?Kiran : Yes, nine months.Sunil Duggal : CCD 883, consumer health 109, international 122, foods 140, Balsara includingthe oral care, I don’t have the two numbers separately as of now, Balsara as a company 138,and miscellaneous which is largely guar 27, aggregating to 1420.Kiran : Right, and another thing, the way you have reported your revenue figures this time, it isFMCG, food, and others, others have shown a significant decline of growth rate by 32%, sowhat are other businesses that you club here?Page 25 of 27

Sunil Duggal : Essentially two to three things, one is we used to have a small business fordealing with the ayurvedic veterinary business, this is the animal feed business, which we weremanufacturing. This has actually gone out to the people whom we were supplying, so they aremanufacturing themselves. That is a single largest area where the impact has come from andthat was very insignificant amount, not a very large amount.Kiran : Now you are not into that business anymore…?Rajan Varma : We are no longer manufacturing for them.Sunil Duggal : So we are losing some revenues on account of that. Earlier on it was beingmanufactured at one of our plants and they decided to move to excise-free location and so westopped manufacturing for them, which caused some revenue loss.Rajan Varma : It is a very small amount.Sunil Duggal : We weren’t making any money from that in any case.Kiran : Right, okay thank you.Mr. Sameer from Capital Markets : Good afternoon sir.Sunil Duggal : Good afternoon.Sameer : I saw in your presentation that Dabur Amla Hair Oil has grown by around 5.2%, is itthe quarterly growth or the YTD growth?Sunil Duggal : This is YTD.Sameer : And in the previous quarter’s presentation, I have noticed that the same Dabur AmlaHair Oil had grown by around 12% in first half.Sunil Duggal : I think it is not very significant because there were some promotional activity,last year third quarter and this year. Overall for the year, we should grow at around 5-7%. Sothe third quarter slow down is more a base effect, I would not take in absolute terms of threemonthnumbers very seriously. The brand is on a very good wicket. It has grown market share.There are no problems here, but it is not a fast growing brand. It is such a large one and it willgrow at around category level, 5-7% is considered to be a very good growth for this brand.Sameer : Right and the company has also test launched Anmol Jasmine coconut hair oil, howhas the response been?Sunil Duggal : Its just been launched, so I won’t be able to give you a feedback, but this will bean area of focus, especially consequent to the acquisition of Nihar, we will be deploying someresources here.Sameer : Okay, and what has been the overall growth in the toothpaste category, Dabur hasgrown by 13% but what is the overall toothpaste category growth?Page 26 of 27

Sunil Duggal : Toothpaste category growth is 3% April-December, that’s Nielson data in termsof value.Sameer : Right, and sir one last question, foods division the revenue growth has been reallysolid, but in terms of margins, they are just around 3-4%?Sunil Duggal : The margins, we are not expanding margins because we are not taking upprices, so in the sense the gross margins are fairly static at what they were last year.Sameer : So the margins will remain constant going forward also?Sunil Duggal : Yes, so that’s the intent. We intend to grow the market and increasepenetration and not get into pricing game here. In fact, we are even looking at lower marginofferings in beverages and low-juice content areas, fruit drinks etc.Sameer : Okay, going forward, that means that the profitability will come more from the revenuegrowth?Sunil Duggal : Profitability will largely come from revenue growth. I don’t expect great deal ofmargin expansion. There could be some expansion happening because of the downstreamsubsidiary, which is into concentrate manufacture, so there would be some better managementof the value chain, but most of the profit growth would come from revenues.Sameer : Okay. Thanks a lot.Sunil Duggal : Thanks.Abhijeet Kundu of Prabhudas Lilladher : What has been the reason for your higher otherincome during the quarter, can you explain? Other income has been around Rs. 5.6 crores asagainst Rs. 2.1 crores.Sunil Duggal : Essentially this is where we credit our income from our investments and theincrease is purely on account of the higher income that we have got during this quarter.Abhijeet Kundu : Okay, thanks.Thank you very much sir. Participants who wish to ask questions may please press *1. At thismoment, there are no further questions from participants. I would like to hand over the floorback to Ms. Gagan Ahluwalia for final remarks.Gagan Ahluwalia : Thanks everybody for participating in this call.Page 27 of 27