TCS Second Quarter Earnings Conference Call Dabur India Limited

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					               “Dabur India Ltd. 4th Quarter Earnings Conference Call”

                                    May 4, 2009

Dabur India Ltd.’s Participants


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                                               Dabur India Ltd. Earnings Conference Call
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Gagan Ahluwalia:   Thank you Rochelle. Ladies and gentlemen good afternoon, on behalf of
                   management of Dabur India Ltd. I welcome you to the conference call
                   pertaining to annual results for fiscal 2008/2009. Present here with me
                   are Mr. Sunil Duggal, Chief Executive Officer, Mr. Rajan Verma, Chief
                   Financial Officer, Mr. Ashok Jain, General Manager Finance and
                   Company Secretary. At the outset we will have a brief overview by Mr.
                   Duggal after which we will have a Q&A session. I handover to Mr.
                   Duggal for the overview.

Sunil Duggal:      Thank you Gagan. Good afternoon ladies and gentlemen I welcome
                   you to our conference call regarding the results for the 4th Quarter
                   and financial year ended March 31st 2009. The year 2008/2009 was
                   the year of major economic crisis which shook the foundations of
                   the world economy. The Indian economy was also impacted and
                   growth declined, credit slowed and GDP growth came down from
                   9% to about 6% levels. In addition inputs costs spiraled and hit a
                   peak in September 2008 with inflation touching 12.8%. In this
                   scenario there was a major apprehension of consumer demand
                   slowing down and impacting the growth of FMCG companies.
                   While faced with these challenges we kept our focus on investing
                   aggressively behind our brands, processes and organization. The
                   company managed to tackle the challenges competently and in fact
                   has delivered one of it’s best ever performances.

                   Dabur achieved a growth of 18.3% on consolidated sales in the 12
                   months period and a strong 20% growth during the 4th Quarter. It
                   also makes the growth in 2008/2009 the highest in organic terms
                   witnessed by the company in a decade. The company witnessed
                   strong volume growth of 13% for the year with price increased
                   contributing the balance 5.3%. Net profit on consolidated basis
                   including retail registered a growth of 17.5% for the 12 months

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period and 31% for the quarter. Net profit excluding retail registered
a growth of 20.1% for the 12 months period and 27.7% for the 4th
Quarter. The losses on account of retail venture went down to
Rs.2.5 Crores in Quarter 4 as compared to Rs.4 Crores in the
corresponding quarter last year.

The overseas business housed under the International Business
Division delivered strong growth of 40% for the 12 months and
31% for the quarter. IBD now contributes 18.5% of the consolidated
sales as compared to 15.7% in the previous year. Consumer Health
Division CHD registered a growth of 19% for the 12 months period
and 15.9% for the quarter. The Consumer Care Division, CCD
which houses our domestic FMCG business grew by 13.8% for the
12 months period and a robust 18.1% for the quarter. Amongst the
various categories Hair Oil, Shampoos, OTC and Skin Care
witnessed good momentum delivering double digit volume

Hair Oil had a strong performance during the year with growth of
20.6% for the year and 23% for the 4th Quarter. This performance is
led by one of the strongest growth of 20.4% in our largest Dabur
Amla Hair Oil in the last 5 years. Vatika Hair Oil had a turn around
year and delivered a full year growth of 12.2% backed by a relaunch
and new marketing initiatives.

Shampoo category grew by a strong 31.5% for the year and 30.8%
for the quarter. All the variants have performed well while the
newly launched Vatika Black Shine Shampoo has done exceedingly
well becoming a 13 Crore brand in the first year of its launch. The
Vatika brand out performed the category as the fastest growing
shampoo brand for the 3rd year in a row. Dabur now has close to 7%
share of the shampoo category with a gain of around 1%.

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Health Supplement recorded a growth of 11.3% for the year and
11.9% for the quarter. Dabur Chyawanprash registered a growth of
7.4% for the year and gained market share growing up from 62.3%
to 64.1% for fiscal 2008/2009 as per AC Nielsen update. The Indian
Cricket Team Captain MS Dhoni was signed up as a brand
ambassador to better connect with the younger consumer. A malted
food drink Chyawan Junior was launched in North, East and West
Indian markets and has met with encouraging response gaining 1%
share in the MFD category. Dabur Honey posted a growth of 12.6%
for the year. Dabur Glucose registered a growth of 21.6% for the
year and a strong 31.1% for the quarter and has geared itself well
for the coming summer season. The brand has signed Indian Cricket
Team’s Zaheer Khan which should give it further momentum.

Skin Care category performed with a growth of 23.5% for the year
and 27.6% for the quarter excluding the discontinued soap business.
This was driven by strong growth momentum in the Gulabari brand
backed by aggressive activation programs which have given a good
boost to the brand. The new variants that is Gulabari Hydrating
Rose Crème & Lotion have been launched nationally and have
added to the brand’s franchise. With the acquisition of Fem and the
proposed launch of a new Ayurvedic Skin Care range Dabur’s Skin
Care strategy will gain further traction in the coming years.

Oral Care category reported a moderate growth of 4.8% mainly due
to decline in Lal Dant Manjan and lower growth of Babool during
the year. The toothpaste category grew by 11.3% during the year.
The growth has however revived strongly with 19.2% increase in
the 4th Quarter. A new variant Babool Neem was successfully
launched during the year. Red Toothpaste reported good growth of
21% during the year and touched the Rs.100 Crores turnover mark
with over 3% share in the category.

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The Digestive category grew by 12% for the year and an excellent
31% during the 4th Quarter. Hajmola brand performed well led by
Hajmola Candy with 18% growth for the year and 37.7% for the
quarter. However Pudin Hara declined by 8.7% for the first 9
months. Pudin Hara brand has been shifted to CHD for increased
focus and is doing well since then posting 20% growth. This is part
of a strategy to house OTC brands in CHD.

Home Care reported a growth of 9.7% for the year and 6.4% for the
quarter. This was after accounting for the discontinued business of
Mosquito Coils. During the year Sanifresh reported a good sales of
32.1% led by launch of new variants. Odomos brand has been
showing good pickup in sales during the second half of the year and
ended with overall growth of 5%. A number of initiatives such as
launch of 2 new variants Odomos Gel and Odomos Naturals are
driving the brand’s growth. The newly introduced brand Dazzle has
been launched in all key markets and has added to its product range.
The brand has garnered 5% share of the floor cleaner market.

The Food Business registered a growth in sales of 14.4% for the
year and 23.1% during the quarter. This category which witnessed a
slowdown in the first half of the year has picked up momentum
backed by aggressive marketing initiatives and distribution
realignment. We continue to maintain our market leadership in
Juice segment and also launched a new fruit drinks brand by the
first week of May in the fast growing drink segment.

The International Business witnessed strong momentum on the back
of new product initiatives, strong investment in marketing and
distribution and entering new geographies. While all markets with
the exception of Pakistan performed well exceptional growth was
witnessed in Egypt, GCC, Nigeria, North Africa and Bangladesh.

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The international business now contributes to almost 20% of total
sales a milestone which has been achieved much earlier then
expected due to consistently high growth witnessed in the last 3
years. Dabur’s international strategy of focusing on select
geographies and investing aggressively in these have paid for this
superior growth.

Consumer Health Division performed well posting 19% growth
during the year. The division continued to launch new OTC
products and support these with above the lines spends in order to
increase awareness and penetration. The ethical portfolio also
performed well with the launch of media initiatives to extend the
Ayurveda franchise. We will continue to invest heavily in the OTC
category in the coming years which will provide the impetus for
growth of this business.

On the operating profit front, the EBITDA margins including the
retail impact contracted by a mere 25 basis points to 18.25% despite
high inflation which existed through the year. Excluding the retail
loss the EBITDA margins were stable at around 18.9%.
Consequently the company has posted a growth of 17.5% in net
profit after retail and 20% before retail. This is a commendable
achievement given the volatility in the commodity prices and sharp
currency depreciation seen throughout the year.

During the company announced the acquisition of Fem Care
Pharma Ltd signing the agreement for takeover of 72.15% of the
company’s equity from the promoters followed by an open offer for
additional 20%. The public offer is currently in process and has
opened on the 7th of May. We expect to complete the takeover
process by middle of June 2009 after which the integration plans
will come into play.

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                    Overall I am delighted to share the company’s performance with the
                    investor community. The standard features of this year’s results are
                    that these growths have been driven by volume rather than price and
                    at the same time we have managed our cost judiciously despite the
                    highly inflationary environment. Simultaneously we have continued
                    to invest aggressively in brand building and have initiated several
                    strategy initiatives during the year which are expected to gain
                    further   momentum     going   forward    and   become     important
                    contributors to the company’s growth and evolution. We remain
                    committed to build further on the strengths and initiatives and
                    leverage the opportunities that exists both in domestic and
                    international markets. With this I would now open the house for the
                    Q&A session, thank you.

Jaibir Sethi of Noble Group

Jaibir Sethi:       Sir just a couple of questions on your international business, first
                    what was the growth on a constant currency basis? And second did
                    any of the markets in particular suffer from the high levels of
                    inflation which we saw in the middle of the year?

Sunil Duggal:       Yes in terms of constant currency, the growth was 41%...

Gagan Ahluwalia:    The overall growth for the year is 39% including, capturing the
                    currency translation gain. And if we exclude translation gain it will
                    be around 34% to 35%.

Sunil Duggal:       Around 60% of the sale is in Dollar denominated currency such as
                    Dirham and we did have a translation gain there. The residual part is
                    the South Asia, Nepal etc. where there was no gain or loss either
                    way. So there has been some translation gain from basically the
                    Dirham denominated areas. And to answer Part B of your question,
                    inflationary impact was pretty similar in terms of the price

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                   increases, something like 7% price increase took place in the
                   overseas markets and the balance part was volume.

Jaibir Sethi:      Okay that is all from my side, sir thank you.

Percy Panthaki of HSBC Securities.

Percy Panthaki:    My question is on the reorganization of the sales force that you are
                    undertaking especially in Tier I towns. Can you give some more
                    flavor on exactly what is happening on the ground and how what is
                    happening is different from how things used to be?

Sunil Duggal:      I think consequent to the integration of the food business into CCD,
                    while there were considerable benefits in terms of scale and
                    economy and savings in cost, there was also perhaps a little bit lack
                    of focus on some of the smaller brands consequent to this very
                    complex architecture which CCD has. Which led to the tail
                    becoming less visible as far as the sales people were concerned and
                    you know suffering as a consequence. So what we have done is that
                    we have split the CCD business in the key markets down the middle
                    into two segments 1) One is basically Personal Care & Home Care
                    and the 2) is Food & Health Care. We have two sales organizations
                    with the same stockiest of course but two separate sales
                    organizations which merge at the level of the Regional Managers
                    but below that they are kept separate. And this is basically to
                    provide extra focus and attention to the entire portfolio. We believe
                    this is a very good move and will certainly help regaining focus in
                    some of the smaller brands and categories.

Percy Panthaki:    And at the areas sales managers are there two different ASMs?

Sunil Duggal:      In some cases, the sales forces are entirely separated in some cases,
                   in the high density markets the Area Sales Managers are separated.

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                  The separation ends at the next level of Regional Heads where there
                  is commonality in terms of the two organizations.

Percy Panthaki:   Okay so at the stockist level you would have the same stockist but
                  the actual salesman that would be doing the beat would be different
                  for these…?

Sunil Duggal:     That is right, it will be almost like two companies as far as the
                  stockist is concerned that he will be raising two sets of orders and
                  there will be two sets of invoices and two sets of people visiting
                  him. So we will be compartmentalizing it, but by and large and
                  there are a few exceptions here. By and large the stockists have
                  been kept the same, because we do not think it is necessary to
                  separate out the stockist. The stockists in any case handle a
                  multitude of companies so instead of handling one Dabur company
                  he is handling two Dabur companies.

Percy Panthaki:   Do you think there will be any increase in the overheads because of

Sunil Duggal:     Some increases will be there definitely we are budgeting in the
                  region of 7 to 10 Crores extra overheads consequent to this, which
                  we believe is a fair expenditure given the benefits which will accrue
                  from this move.

Percy Panthaki:   And how do you quantify or how do you target the benefits from
                  this move?

Sunil Duggal:     See we are looking at a volume growth this year I would not
                  mention exact numbers but just to give you a flavor which is in
                  excess of what we saw last year. And I think that is a division of
                  portfolio is a very important step to realize that objective, because
                  we are looking at some pretty aggressive numbers this year and this

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                  would be only possible if there is complete focus on every
                  component of our portfolio.

Percy Panthaki:   Okay. Sir my second question is on the new products and variants
                  that are being planned to launch in FY2010, if I understand
                  correctly you have a lot of launches and variants planned for
                  FY2010 and the activity on this account would probably be higher
                  then what we have seen in FY2008 or FY2009. So would you be
                  able to give some kind of flavor like if let us say every year your
                  new variants and products give about 4% to 5% of sales how much
                  more could it be this year on account of these new launches?

Sunil Duggal:     It could be higher this year, because we are now looking at a much
                  more aggressive new product introduction calendar. So while not
                  wanting to give specific numbers we would see the new product
                  contribution to total sales to be much ahead of what we saw last
                  year. See we have a great opportunity to invest larger amounts
                  behind our brands because we do see margin expansion on the basis
                  of softer material prices. And while letting some of it slow down we
                  would certainly like to step-up our investments. We are at the same
                  time, in a favorable position comparatively speaking of not being a
                  need, unduly pressured to reduce prices so that the raw material
                  impact would definitely be captured by us. Some of it being plough
                  back into higher A&P and some of it will slow down. So I think this
                  opportunity is something which does not come every year that you
                  have a robust demand scenario as well as a very friendly pricing
                  scenario as far as costs are concerned. And this is a time really to
                  become aggressive in terms of enhancing your portfolio and getting
                  into new domains.

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Percy Panthaki:   Lastly sir, my last question is on the cost inflation or deflation as we
                  might call it, would you be able to give any kind of guidance as to
                  what kind of cost index you are looking at on a YOY basis?

Sunil Duggal:     See I think the kind of ratio we saw in the 4th Quarter would be
                  representative of what you would see for the full year that is a fairly
                  conservative estimate, if you are aggressive you can look at even
                  the exit numbers of current year to be representative of the scenario
                  next year. I think what we see is a fairly high visibility in terms of
                  margins for the first two quarters after that it becomes a little bit
                  more uncertain. So I would hazard a guess and say that the margins
                  in the first two quarters would be a little bit better than what we saw
                  in the 4th Quarter and after that it could run either way, because the
                  inflation issues which could come up around October are something
                  which are very hard to map out.

Percy Panthaki:   Okay because in Q4 still I mean although the situation was better, it
                  still had a YOY gross margin contraction of about 65 basis points…

Sunil Duggal:     Over the previous quarter, but if you see sequentially we have had a
                  huge expansion.

Percy Panthaki:   Yes sequentially it was a huge expansion, so would it be fair to
                  assume that from Q1 onwards you would see a gross margin
                  expansion on a YOY basis?

Sunil Duggal:     Yes we would at least in the first two quarters, in the 2nd Quarter we
                  would see a margin expansion and little bit perhaps in this 1st
                  Quarter too.

Percy Panthaki:   And in keeping in mind this kind of cost scenario how do you think
                  you will play out your pricing strategy, will you keep prices flat or

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                    do you see opportunities to in fact increase prices in some case?
                    And what will be the weighted average …?

Sunil Duggal:       Let me put it this way, in line with our outlook in terms of inflation
                    we have budgeted no price increase up to October. After that we
                    would see how the inflationary pressures map out and we would if
                    necessary take price increases to neutralize inflation, but as far as
                    the budgeting process is concerned we have really taken no price
                    increases because for the first two quarters we do not see them
                    being required or necessary.

Percy Panthaki:     Okay. I will just take two minutes more sir and ask you what has
                    happened in the foods, how is it that suddenly in this quarter you
                    have a quantum jump in the juices sales which we did not see in the
                    last 2 to 3 quarters?

Sunil Duggal:       I think this quarter has been the first quarter where we have seen
                    complete normalcy return to the business. The first three quarters
                    were disturbed in one form or the other either due to supply
                    disruptions or other issues which impacted revenues significantly.
                    Also I think the learning curve in terms of the CCD team’s ability to
                    understand and assimilate the food business has been fully
                    achieved. And I the growth which you see in the 4th Quarter are
                    more reflective of the state of the business as it exists and we hope
                    we will be able to maintain them.

Percy Panthaki:     Okay. Thanks very much sir.

Akhil Kejriwal of Enam Securities

Akhil Kejriwal:     Hi Mr. Duggal, good sets of numbers again. Just one question on
                    Oral Care what is the outlook on Oral Care as in you know it has
                    been pretty lagging all the four quarters. Of course I mean this 4th

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                  Quarter it did inch up to be the highest single digit but it has been
                  lagging in all the four quarters previously. When can we expect
                  these segmental grow in double digit?

Sunil Duggal:     If you take toothpaste you know just to give one category here,
                  which is actually the one which matters in the long term. We saw
                  19.2% growth in the 4th Quarter I think that is a very encouraging
                  sign in terms of the turnaround. But even if you see the toothpaste
                  category as a whole we did grow at 11.3% which is not very much
                  off the category growth. Now the drag is really Red Toothpowder
                  and as we all know it is a category which is not going to grow at a
                  rapid clip, no matter how much we invest behind it. But I think the
                  road ahead is to invest significantly in our toothpaste category
                  reduce the dependence upon toothpowder which is now only around
                  1/3rd of the total revenues. And as and when the toothpowder
                  contribution in the whole mix comes down you will see better and
                  better growth emerging, but I think the toothpaste portfolio is in
                  good nick and we should see good growth certainly of the low base
                  for the first two or three quarters.

Akhil Kejriwal:   Okay. No but the thing is see even for the toothpowder category
                  actually it is pretty volatile in some quarters it jumps up and in some
                  quarters it jumps down. So are we focusing on toothpowder or are
                  we shifting focus from toothpowder and that is why not really
                  aggressively pushing it on the ground …?

Sunil Duggal:     No, see we are not aggressively doing any brand building activity
                  on toothpowders so there is very little spend above the line. There is
                  lot of activation work which happens on the ground to keep the
                  category at least salient and going in some form or the other, but we
                  do not believe that by just throwing advertisement money behind
                  this category people are going to start converting back from

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                  toothpaste or are not going to exit this category, because toothpaste
                  today offer as good value as toothpowder and in a format which is
                  modern and more contemporary, price points which are very
                  friendly. So toothpaste have everything going for them. I would be
                  happy with having a low single digit growth for LDM for the next
                  few years. And having you know stronger, mid-teens growth,
                  upper-teens growth in toothpaste that would be a good way to run
                  the Oral Care category.

Akhil Kejriwal:   Alright and one question on retail, I know you have slowed down
                  on the retail front and the losses also have declined this quarter, but
                  where do you see this going probably in the next two years, the
                  rentals also have fallen. And plus what about the investments that
                  have gone into the retail business or do you expect to increase
                  investments in this business in the next couple of years?

Sunil Duggal:     See the additional investments in the current year will be very
                  marginal, because we are not going to get into any big store
                  expansion A). B) We are going to get increasingly into a revenue
                  sharing model and we have done some good deals in the last couple
                  of months in terms of revenue sharing with quality developers. I
                  think this is how the way forward is really at least in a very
                  uncertain realty environment which shows actually no signs of
                  improving on the ground. The revenue sharing is the safest way to

Akhil Kejriwal:   And that of course but how many do you expect to open in this
                  financial year?

Sunil Duggal:     We do not have any specific targets because we do not want to get
                  railroaded into getting into a number which will erode the bottom-
                  line. So we are looking at opening something like 15 to 20 stores
                  only this year.

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Akhil Kejriwal:    Alright. And what losses do you then expect? I mean because you
                   have rentals and revenue sharing the losses should come down, but
                   again it is too early to expect because initially when you spoke of
                   course it was early, you had guided for about a 15 Crores loss in
                   FY2010 and breakeven in FY2011.

Sunil Duggal:      I think our expectation would be in the region of 10 to 12 Crores in
                   the current year.

Akhil Kejriwal:    Alright. And you still expect to breakeven next year? …

Sunil Duggal:      Given all of that yes, we expect to come very close to breakeven
                   next year.

Akhil Kejriwal:    Okay, alright thanks so much.

Aniruddha Joshi of Anand Rathi

Aniruddha Joshi:   Just wanted to know, what is the profit or loss Fem has reported in
                   the quarter?

Gagan Ahluwalia:   Fem has not yet come out with their 4th Quarter annual results, I
                   think their audit is still going on.

Aniruddha Joshi:   Yeah but roughly indication, because it is almost part of Dabur now.

Sunil Duggal:      You know as a company I think it would be not correct on our part
                   to even guess at those numbers, but sometimes in the next 15 days
                   or so the numbers would be out, but the business is on track, I mean
                   there is nothing too get concerned about in Fem one way or the
                   other as its still pretty much the same as when we saw it.

Aniruddha Joshi:   Okay. And regarding this launch of a new fruit juice, almost the
                   major part of summer is also over, so …?

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Sunil Duggal:      This is not a national launch we are doing a small regional launch,
                   and if we are happy with the results which we believe we would be,
                   then we would be doing a much larger launch in the month of
                   September-October. So we are just taking a few markets in North
                   India where the season is now in full swing and testing out the water
                   and we just have to make sure about the whole production issues,
                   the supply chain issues so this is just a test, but a precursor to our
                   full scale entry into the fruit drink segment.

Aniruddha Joshi:   Okay, thank you.

Pritesh Cheda of Emkay Global Financial Services

Pritesh Cheda:     Yeah this is Pritesh from Emkay, what is the blended volume and
                   price growth in Quarter 4 in FY2009 for Dabur?

Sunil Duggal:      It is pretty similar to what you saw for the full year but to give you
                   some more precise numbers, it is 6.25 price and 13.65 volume.

Pritesh Cheda:     This is for the full year?

Sunil Duggal:      No this is for the 4th Quarter. For the full year the numbers are 5.3
                   and 13 respectively price and volume.

Pritesh Cheda:     Okay. This is obviously at the consolidated level?

Sunil Duggal:      This is all consolidated level, it is not very much different at the
                   individual business level.

Pritesh Cheda:     Okay it is not at the individual level, thank you.

Abneesh Roy of Edelweiss

Abneesh Roy:       Sir I have a follow up question on your Food and Beverages Real
                   Burrst, you are planning only North India launch, wanted to

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                understand in terms of pricing how do you compare with Mazza and
                Frooti? Second is in terms of distribution obviously there will be
                some change from the current distribution mechanism, so if you
                could give some color on the sales team and the distribution
                channels that would be targeted for Real Burrst?

Sunil Duggal:   See as I said it is at a premium to Frooti and Mazza, it is at the price
                point of Minute Maid and Twister so at around Rs.60 to Rs.65 a
                liter A). B) At this point in time we are distributing only in modern
                retail because we do not have the intent to really do extensive
                traditional trade distribution. Modern trade will anyway give us you
                know the feedback which we seek from this launch. So then we will
                roll it out in traditional trade either in October or if we believe that
                we are not satisfied with the results then definitely by February
                March next year, that will definitely be a full scale launch, but we
                will like to accelerate it to do as much as we can in October itself.

Abneesh Roy:    And what are the metrics of your success ….?

Sunil Duggal:   There are many parameters of measurements in terms of consumer
                offtake, in terms of the taste feedback, in terms of our own ability to
                manage the supply chain. So this is something which you know can
                happen only at a considerable risk. We prefer to go a little bit slow
                and make sure that all elements of the marketing mix are firing
                before we go into a extended launch which will be taking traditional
                trade into account, because that would be supported by extensive
                amount of above the lines spends etc. At the moment we are just
                going to modern trade doing significant activation work but no mass

Abneesh Roy:    In most segments your growth has been very good except in Home
                Care wherein from a 10% overall full year growth the Q4 has seen
                only 6% growth so could you give us how do we plan to recoup this

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                apart from the fact that coils has been discontinued? Any plans to
                relaunch that or what are your …?

Sunil Duggal:   No coils is not a very attractive category to enter, but I think the
                new air freshener launches in terms of both the car air fresheners,
                new home fresheners etc. will definitely provide a lot of momentum
                here. And then the Odomos variants you know particularly the
                Odomos Naturals should inject a lot of life into the Odomos brand.
                Sanifresh and Odopic are doing well, so there is no lack of
                momentum here, but the two big brands will be really I think
                accelerating growth on the back of new initiatives which we
                activated only in the last few months.

Abneesh Roy:    And sir my last question is on your international foray, you have
                forayed into China now that is a very big market but most Indian
                FMCG companies are not …?

Sunil Duggal:   Now let me correct. China - everyone thinks about Southern China,
                actually we are at the other end of China. We are in the part of
                China which borders Asia and which has the consuming habits
                which are very different from the mainstream Chinese. So we are in
                that area which borders the Central Asian Republic and we have
                made some good initiatives there. So we are not looking at the
                mainstream Chinese market the way people understand it, I think
                that is too big a hill to climb quite frankly and many of our products
                may not really have enough consumer franchise there.

Abneesh Roy:    So would we be one of the first FMCG company from India to enter

Sunil Duggal:   I think so I mean I am not too sure but I have not heard of any other
                company entering China, but like I said we are entering only into a
                small slice of China which is not really mainstream China.

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Abneesh Roy:        Okay thanks a lot sir.

Amnish Aggarwal of Motilal Oswal

Amnish Aggarwal: Sir I have a few questions, first question is regarding the retail
                    business, you have said that you will be setting up 15 to 20 stores in
                    the coming year so what is our overall goal and philosophy with
                    which we are developing this business now given the current
                    economic scenario and the way the entire sector currently in
                    shambles in India?

Sunil Duggal:       So therefore I think the answer is to ride the storm, get into a
                    business model which has the maximum impact at least cost wise.
                    And that is what we are really doing, I think we never even thought
                    about the revenue sharing model when we started off this venture
                    and now that it appears to be the more attractive way to go. There
                    are learnings here at every step of the road specially in this very
                    uncertain environment, but we believe that the business has long
                    term prospects and if you can sustain it and build some scale into it
                    at a very little burn it will be a very great asset for us when the
                    economy revives and the whole retail and realty environment perks

Amnish Aggarwal: Sir has there been any improvement in the footfalls and the
                    conversion ratio in the past quarter or so?

Sunil Duggal:       No it has been pretty static and there has been no visible
                    improvement or on the other hand any deterioration in the footfalls,
                    conversion and bill size and any other matrix which we see.

Amnish Aggarwal: Okay sir have you done any study that any improvement you need
                    to make in the model or let’s say, whatever incremental is required
                    to actually make the model more robust?

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Sunil Duggal:      What we have done while overall, like I mentioned, we have not
                   seen any improvement in footfalls I was talking at the aggregate
                   level. What we have done in our stores is A) We have scaled down
                   the store size in many areas. B) We have shutdown a couple of
                   stores which were not performing. And C) We have significantly
                   improved our gross margins to now which are running are close to
                   30%. So a combination of these activities has lead to this sharp
                   reduction in the losses. So we have been able to I think manage the
                   environment by taking some steps to mitigate the issues which flip
                   the retail sector.

Amnish Aggarwal: Okay. And sir my next question is regarding the international
                   business, where we have seen a sharp increase in growth rate. What
                   have been the key drivers of this growth? And how would be the
                   profitability of international business vis-à-vis our FMCG business
                   in India?

Sunil Duggal:      The key driver of growth in international business last year really
                   was a fairly big boom in particularly the oil rich countries which
                   happened in the first two quarters and then you know the
                   momentum of that continued. Now going forward, the momentum
                   we believe is sustainable and I am very confident that we will be
                   able to generate another very good set of numbers from
                   international business because of the opening of entirely new set of
                   geographies which we never focused on earlier. You know markets
                   in North Africa in the Levant region and other parts of East Asia
                   and Central Asia - a lot of markets are opening up particularly in the
                   Arabic world which offer us great opportunities, because this
                   markets are very under-penetrated they are not on the map of many
                   MNCs. We advertise a lot in pan Arabic channels which generates a
                   lot of demand. We are seeing these markets certainly become very
                   attractive and now we are setting up distribution, we are putting up

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                     infrastructure in these markets to cater to the demand. So at least for
                     this year, even from my existing set of geographies I see a lot of
                     demand coming up. Then there are new areas like East Africa etc.
                     which again offer lot of opportunities. It’s a little bit unsettled in
                     terms of you know socio-political environment, but once they settle
                     down they offer again good opportunities. So the momentum is very
                     high in the business and we expect it to continue for this year
                     despite the fact that the economies there are no longer as robust as
                     they were a year ago.

Amnish Aggarwal: So how is the profitability of this business …?

Sunil Duggal:        Yes the profitability is now pretty similar to let us say the EBITDAs
                     there are in the region of 16%. So that is converging on domestic, it
                     is still little bit behind the domestic margins, because of higher
                     A&P, A&P spends there are close to 20%. That is a bit higher
                     investment but now the business size is large so the overheads are
                     being spread over a larger base and therefore the margins are
                     improving every quarter.

Amnish Aggarwal: Sir what sorts of investments you are planning in terms of your
                     CAPEX and other investments because you are ramping your
                     distribution over there?

Sunil Duggal:        Around 200 Crores of CAPEX is what we expect to spend next year
                     in the total business out of which around 30% to 40% would be
                     international balance would be domestic. The two large plants, one
                     plant expansion and one Greenfield plant which is being setup in
                     India to capture all the taxation benefits and I think that would take
                     up a lot of investment. So around 200 to 225 Crores CAPEX is what
                     we are looking at in the current fiscal.

Amnish Aggarwal: Okay sir what is your guidance for tax rates for the coming year?

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Sunil Duggal:        We still would be under MAT, but Rajan would you like to answer
                     a little bit more on the…

Rajan Varma:         Yes barring any changes in the law we will continue to be in MAT
                     during the next foreseeable future.

Sunil Duggal:        Would there be any deferred tax credits etc.?

Rajan Varma:         Deferred tax has seen a reversal in the current financial year when
                     we go back to the positive charge next year but that is as you know
                     deferred tax keeps on changing depending on the investments we
                     make. But the current tax will remain at MAT levels in the
                     foreseeable future.

Amnish Aggarwal: Okay sir. Sir my final question is that if we look at the performance
                     in the current year some of the categories like Hair Oil, Shampoos,
                     international business have been the key growth drivers, can you
                     give some flavor of the categories which you think will be the key
                     drivers in the coming year, or the current year rather?

Sunil Duggal:        Well I think you know every year we see ebbs and flows - we see
                     some categories performing well, other ones not but, on an
                     aggregate level I think international business while the growth
                     maybe a little bit lower than what we saw in the current year, will
                     be definitely ahead of domestic business. Within domestic business
                     you would see improvements in Home Care and Oral Care, you
                     may not see the same level of growth in Hair Care because that was
                     extraordinarily high, but our OTC, CHD business should continue
                     to grow at a good clip. So there would be some changes here and
                     there but I think some of the laggards of last year Home and Oral
                     Care particularly showed perk up. Foods should do better this year.
                     Whereas some of the very high performance areas like international
                     and Hair Care maybe a little bit lower.

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Amnish Aggarwal: Okay thanks a lot sir.

Ashit Desai of B&K Securities

Ashit Desai: My questions have been answered sir.

Richard Liu of JM Financials

Richard Liu:         Sir just a couple of things, little more on the foods end, you know
                     taking a slice out of our conversation in the 3rd Quarter concall, I
                     remember you mentioning that some part of the foods slow growth
                     was because of the problem with modern trade and also the
                     hospitality sector.

Sunil Duggal:        Yes.

Richard Liu:         You have spoken something about distribution etc. which lead to
                     the higher foods growth, but considering the fact that modern trade
                     and hospitality has not really turned around this quarter compared to
                     last one, how exactly did this kind of a growth come about in foods?

Sunil Duggal:        I think it was mostly better supply, I think for the first time this year
                     we were able to match the demand precisely as far as the supply
                     side is concerned. And that I think was the major contributor more
                     than anything else. Now going forward there will be a significant
                     improvement in the hospitality sector or there may not be, but
                     certainly it would not be as bad as it was consequent to you know
                     26/11 etc. so there should be some improvement there, how much is
                     anybody’s guess. And so overall especially with the new product
                     launches, last year we did not have any new product launch but this
                     year with Burrst etc. coming in I am pretty hopeful of sustaining the
                     4th Quarter momentum going into all of the next year.

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Richard Liu:    Okay, assuming you know modern trade or modern retail remaining
                the way it is, is this kind of growth rate sustainable?

Sunil Duggal:   Yeah I mean at the end of the day we are you know perhaps a little
                bit stronger in traditional trade than we are in modern trade vis-à-vis
                several of our smaller competitors who focus entirely on modern
                trade. So if modern trade does not take up it does not really hurt us
                in the context of you know the competitive environment, because
                nobody can match our strengths in traditional trade. So while it does
                take away a little bit of the momentum it does provide us
                competitively speaking with some advantage. So it is something
                which we do not lose a lot of sleep over, but certainly the hospitality
                sector and you know the whole price point gains are something
                which have to map out very carefully.

Richard Liu:    Sure. What about those threat that were there from the guys who
                were offering a 1:1 free etc. which led to I guess some kind of a
                problem in 3rd Quarter?

Sunil Duggal:   Yeah that remains but it is confined to modern trade. You see you
                are these price warriors ? Who do not have the wherewithal to
                distribute in traditional trade. So their focus is entirely on a few key
                accounts in modern trade which they are able to get because of the
                access. The supply chain is very simple as far as those accounts are
                concerned. So that is where their attack is and since they keep their
                costs low they are able to have these you know very attractive deals.
                It is very hard for us to match those deals, because for us 70% of the
                business is actually traditional trade, but as and when traditional
                trade continues to be on a growth path as it has been, nobody like I
                said can match our strengths there.

Richard Liu:    Sure. Second question is really on margin on a sequential basis for
                the food business, I mean we saw that huge margin last quarter, I

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                guess you mentioned that some part of it was because of integration
                benefit from foods into CCD network etc.

Sunil Duggal:   Yes.

Richard Liu:    So what is the reason for a sequential decline quarter-on-quarter?

Sunil Duggal:   Largely A&P. A&P accounts for major part of that decline. See the
                4th Quarter of last year if I remember we spent almost nothing on
                advertising and promotion because we were busy in the process of
                integrating and you know reinventing the portfolio. This quarter we
                did spend 400% on A&P and a little bit impact is on account of
                FOREX. The FOREX environment in the 4th Quarter this year was
                much worse than what it was one year ago. And since this is a very
                import dependent portfolio, in fact FOREX did give us quite a bit
                beating in foods this year, we lost almost 17 Crores over our
                budgeted profitability, just on FOREX losses, because you know we
                were budgeting 42 and we ended up at 46 to 47. Since our import
                content is very high that was, so the fact that we were able to
                manage margin despite this huge FOREX adverse impact, I think
                augers well for the future of the foods business, because certainly
                the FOREX impact is not going to be as bad as it was last year and
                the years to come.

Richard Liu:    And what about this Ayurvedic Skin Care that we have been talking
                about for quite sometime?

Sunil Duggal:   Well I think it is a very interesting initiative, we soft peddled it a
                little bit, because I think the environment last year was not
                conducive to you know very heavy duty launches and we wanted
                just to conserve our resources in a uncertain environment, but I
                think this year we do have the resources and as I mentioned in one
                of the earlier questions the margins which will expand consequent

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                   to lower cost, will enable us to invest in these high investment areas
                   because we are looking at substantially upping our A&P spends in
                   the current year. And a lot of that will be for new initiatives like
                   Ayurvedic Skin Care range.

Richard Liu:       Okay. And last one what is the reason for the delay in Fem

Sunil Duggal:      Basically the open offer delay happened for I think, it was just
                   around the month, regulatory issues essentially. You know SEBI is
                   obviously very careful these days in making sure that everything is
                   above board and so that it took around a month, maybe even a
                   month and a half longer than what we expected. So we would have
                   normally expected consolidation to happen from 1st April it will be
                   more like middle of June but there is nothing much we could do
                   about it.

Richard Liu:       Okay. So and the money that is there the 200 odd Crores that, is it
                   earning any kind of an interest or it is lying in a …?

Sunil Duggal:      Not for us yes.

Richard Liu:       Okay definitely. Okay Mr. Duggal thanks and all the very best.

Hozefa Topiwala of Morgan Stanley

Hozefa Topiwala:   Firstly on the broad market, FMCG, we have forgotten that we are
                   still part of a slowdown, why do you think FMCG has not been
                   impacted this time around in the cycle as it was in the earlier down
                   cycle. What is different this time in your view?

Sunil Duggal:      I think FMGC sometimes is pretty contrary and that in the up cycles
                   we actually did not perform too well and vice versa. So I think its
                   part of that same pattern that discretionary spending on low value

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                   items such as we make is not so much impacted by the slowdown
                   and in fact it is not impacted at all by any slowdown. And then of
                   course the rural story which you know is often repeated is very
                   much part of the whole answer that the rural incomes are genuinely
                   high the slowdown has not impacted that part of the economy at all.
                   And then I think the sustainability and durability of the demand is
                   very high. In fact I was just wondering if there is a sharp economic
                   up cycle would discretionary spends move away from FMCG as
                   they have done in the past towards more durable items and that is
                   anybody’s guess. But as we speak, we are seeing a continuation of
                   demand happening, we are seeing no slowdown whatsoever. The
                   next big trigger which works either in our favor or against would be
                   the monsoons and if that works well I do not see any problems in
                   the current year.

Hozefa Topiwala:   And you mentioned urban-rural growth, is there any big difference
                   in urban-rural growth for your…?

Sunil Duggal:      The rural growth now is convergent with urban growth which was
                   never the case, rural growth was typically half that of urban growth.
                   The fact the rural growth despite of share of the pie in terms of rural
                   population which is shrinking is the same as urban shows that the
                   per capita growth there is actually much higher. And our portfolio is
                   you know half and half rural/urban so we are able to take advantage
                   of that. In fact this year we put our focus a little more towards the
                   rural end of our portfolio and not so much by doing anything else
                   except by reducing the number of initiatives which for urban centric
                   products like that, Ayurvedic Skin Care range which we decided to
                   postponed by our couple of quarters. And then invest significantly
                   behind you know the Personal Care and Health Care part which
                   goes to the rural areas.

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Hozefa Topiwala:   My other question is on the Hair Oil segment, you know in the Hair
                   Oil industry particularly in volume terms, it seems to be doing
                   pretty well in the last couple of years?

Sunil Duggal:      That is right.

Hozefa Topiwala:   And counter intuitive we would have argued four years ago that this
                   is probably the dead category, cash cow, but it seems to be the
                   fastest growing categories.

Sunil Duggal:      That is right, it is not dead at all, it is actually, it has got legs to
                   carry on for the next you know 20 years. I mean that is the belief
                   which is commonplace that it is a sunset category, actually it is a
                   very-very robust category. And not just in the rural areas, even
                   though lot of the demand comes from rural but even the urban
                   sectors, there is no slowdown in terms of demand. In fact we are
                   aggressively introducing new products, we have introduced Almond
                   Hair Oil another Hair Oil under the Dabur brand. And then we
                   believe that this category will continue, but having said that, will it
                   do at 20%, probably not because that was on the back of (A) price
                   increases of you know up to 7% to 8% and (B) Volume piece of
                   around 12. Now the price increases would not happened, so even if
                   the volume remains at 12 you will see growth coming down this
                   year, but it is still ahead of the curve.

Hozefa Topiwala:   Any consumer study that you have done on what is been the shifting
                   consumer behavior toward this category? And what is driving this
                   growth that you can share with us?

Sunil Duggal:      I do not think anybody has really exited this category, you know
                   people once they start using hair oils, they stick to it. And I think
                   the belief that hair oil is good for nourishment is very entrenched.
                   Now the way people use hair oil they use it as a pre-bath, you know

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                   as a conditioner, that has undergone a change over the years from
                   post-bath to pre-bath use and that is pretty well documented, but the
                   relevance of hair oil to a hair care regime has been as strong as it
                   has ever been.

Hozefa Topiwala:   And other questions on Fem Care, do you have anything to share to
                   the group at the moment on what your plan for Fem is for fiscal
                   2010 or it is too early?

Sunil Duggal:      We are pretty excited about Fem, we believe that once you know we
                   are in control of the company, we will be able to push that agenda
                   forward very quickly. They are very strong brands I think they
                   suffer from perhaps lack of adequate investment and adequate
                   amount of distribution. There is a lot we can bring on to the table,
                   and while we are waiting for the open offer to finish before we step
                   in into the management of the company, but we have observed the
                   business very carefully and mapped out our strategies to grow the
                   business for the future.

Hozefa Topiwala:   Okay. And the point that you alluded in the earlier part of the
                   conversation on margins, I am a bit confused, you mentioned that
                   gross profit margins will remain at the exit levels of Q4?

Sunil Duggal:      Talking basically about material cost to sales ratios.

Hozefa Topiwala:   Because if I look at the 4th Quarter’s consolidated numbers, that has
                   a mix of retail as well as food, the gross margin actually declined in
                   the 4th Quarter compared to 4th Quarter last year?

Sunil Duggal:      Last year yes, but if you take sequentially or you blend it over the
                   year, then you find the 4th Quarter to be the best in the whole year.

Hozefa Topiwala:   Okay, so by that logic you know the average gross profit margin for
                   the first nine months were 50.5 and the 4th Quarter gross margin

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                   was 53.5.Which means what you are saying is that you expect at
                   least in the first half not in the second half, about 300 basis points
                   savings in input cost ….?

Sunil Duggal:      I would not hazard a guess that this would be for the full year but
                   like I said the first two quarter visibility seems to be in that region.
                   Now come October you know the picture becomes a little blurred,
                   because it is very hard to say what the inflation for the year would
                   be. Also we have done our hedges so we have good visibility about
                   the material cost for the first six months, but beyond that it is
                   impossible, but just to, yeah you are right that the material cost to
                   sales ratio for the year was 48.6 and for the 4th Quarter was 45.5. So
                   there is a 300 bps improvement in terms of the exit vis-à-vis
                   average. And that is what we will seek to maintain for the first two
                   quarters for the year.

Hozefa Topiwala:   Okay, one just, one last question about Vatika brand, particularly in
                   shampoos, we have between 2004 and 2006 the brand was
                   struggling and then for the last 3 years of course we have done
                   exceptionally well in the brand. So is it possible for you to just take
                   us through a journey of Vatika brand in terms of pricing,
                   distribution, positioning and how you are able to really revive the
                   brand in terms of gain market share over the last 3 years.

Sunil Duggal:      I think the franchise of Vatika which was you know a premium
                   herbal shampoo at a affordable price, is something which had
                   inherently huge appeal. It required a significant amount of
                   distribution push to you know enable people to reach out to it. So
                   while we had good strength in the North, it was lagging behind in
                   the West, East and South and lot of growth has actually come from
                   there. So we also decided to go very heavily into the rural markets,
                   with this product, because you know we were offering actually a

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                   great value proposition at the Re.1 price point. A lot of growth of
                   shampoo, sachets of course has come from the rural areas, but it
                   also involved you know about 20% of A&P spends so we invested
                   very heavily behind this category. And I think the next step would
                   be to get much bigger slice of the pie as far as the dandruff control
                   shampoos are concerned. We have just launched a very interesting
                   set of products in Antidandruff category which should keep the
                   growth going, but these category is where we have occupied a space
                   which is pretty unique i.e. of herbal shampoos and that is something
                   which we can definitely grow.

Hozefa Topiwala:   And how is the pricing of the Antidandruff segment vis-à-vis the
                   Vatika Black Shine and vis-à-vis the …?

Sunil Duggal:      So the sachet which is the main SKU is Rs.1.50 vis-à-vis the Rs.1
                   for the non-dandruff shampoos. Which is again the category price,
                   you know if you take the competition Clinic All Clear etc, they are
                   all at Rs.1.50 so that is a category price is Rs.1.50. We were earlier
                   Re.1 but we have decided to improve the product offering and the
                   price at parity with you know the other competitors. And we would
                   be able to obviously generate much money in terms of the support
                   we give the brand.

Hozefa Topiwala:   Thank you very much, that is all from my side.

Shishir Manuj of Mangal Keshav Securities

Shishir Manuj:     Hi, congrats setting on excellent set of numbers, very quickly if you
                   could give me, stripping out the international business volume
                   growth, if you could give as a sense of what is being the domestic
                   volume and you know price hike that you have taken for the entire

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Sunil Duggal:    Let us put it this way, the domestic growth has been around 5.5
                 price and around 9 volume, 9 to 10 volumes.

Shishir Manuj:   You are talking about FY…?

Sunil Duggal:    I am talking about FY2009.

Shishir Manuj:   Yeah okay and how had that trended through the year, I am just
                 looking at the trend lines, not looking for all the numbers but how is
                 that being trending for the year?

Sunil Duggal:    This is perhaps the highest volume growth we have seen for a long
                 time and also in terms of price typically last couple of years the
                 price increases were more in the region of 3 odd percent. Even the
                 price increases have been a little bit higher, so both if it is a 18%
                 that is actually pretty aggressive top-line for us at least for the last 2
                 or 3 years are concerned. So both volume and price have

Shishir Manuj:   I mean the volume growth all through the year has remained pretty
                 strong … across the FMCG firms. Would that be a problem for

Sunil Duggal:    No, I think if you take, if you map out other companies we have
                 showed perhaps the strongest volume growth. Any other companies
                 have a much higher component of price increase.

Shishir Manuj:   Absolutely.

Sunil Duggal:    So I think that, augers very well for the future because the volume
                 growth is the more enduring of the two, whereas the price increase
                 you take if you certainly are forced to pass on some of the price
                 increases to the consumer. So that I think, like I said the business is

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                 on a good momentum fueled by high volume growth, which would
                 carry us, stand us well in the next in the current financial year.

Shishir Manuj:   Sir just trying to play a little devil’s advocate, here you know your
                 biggest categories or segments wherever you would call that Hair
                 Care and International Business have reported one of the strongest
                 growth of all categories and products and that was been led by
                 volume growth. So FY2009 has been pretty strong and good set of
                 numbers all I was wondering was that you know if you have the
                 underlying understanding of you know how this volume has come
                 through and it could be distribution, it could be new product, it
                 could be you know a mix of product or other things, how much of
                 that is sustainable if you were to strip down all these factors and
                 look into FY2010/FY2011 how much of that would be really

Sunil Duggal:    I believe in the volume growth which you have seen last year is
                 imminently sustainable. Now the million dollar question is, can we
                 do actually better than this, because a price increase of 5% to 6%
                 may not be sustainable. So if you are looking at a price increase
                 which is typically half of what we saw last year then we are looking
                 at a top-line which actually would be a little bit lower than what we
                 saw this year unless we not do something else, if you take the same
                 business composition. So I think the endeavor on our part would be
                 not just to maintain the current volume growth but to actually go
                 and do a little bit better and particularly from the categories which
                 have lagged behind so to get better growth from them. And the high
                 performance category continue that growth path. And overall we
                 have a better volume component next year than what we have in the
                 current year. And that is strategy in front of us, but I think the
                 picture on the margin front looks far better because of the material

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Shishir Manuj:      And finally if this kind of volume growth would mean anything on
                    the marketing spend?

Sunil Duggal:       Yes like I said we would be investing more, so you would probably
                    see a higher add to sales ratio in the current fiscal than you saw in
                    the previous one which was around little over 12%. So while again
                    not wanting to get into specifics, we would certainly seek to raise
                    the ratio and to have a top-line which would then commensurate
                    with that. So definitely higher investments in our brands because we
                    have the opportunity on the back of lower material costs.

Shishir Manuj:      Great thanks, all the best for the future.

Abneesh Roy of Edelweiss Securities

Abneesh Roy:        Sir if I see the Dazzle market share in Q3 it was 6.1% currently it is
                    5%, so has it declined sir, actually?

Sunil Duggal:       Well it is you know 1% here and there is basically rounding of
                    error, so I would not say, I think it is been maintaining itself at that
                    5% to 6% levels. Now how it is going to trend out we will know in
                    the next few quarters, we do think it will definitely register a
                    upward trend, but like is said numbers will do the talking.

Abneesh Roy:        Sir, second is whenever raw material prices have softened, we have
                    seen regional players getting very active, but till now have you seen
                    any signs, in two segments you know I would like to be careful
                    especially in shampoos and maybe in surface cleaners, have you
                    seen any signs of the regional players getting very active?

Sunil Duggal:       See surface cleaner is a very small category for us, you know even
                    if the regional players become active, I do not think it would have
                    impact us, our surface cleaners would operate into the top-end of
                    the market. And this probably will not be too many significant

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                down trading because they are looking at comparatively small share
                of the market. In terms of shampoos, you know I do not think
                anybody can price shampoos at 50 paisa which is the next price
                point. So you know it is Re.1 game and the big players are all
                entrenched at Re.1 so I do not think there would be any down
                trading here either. And so overall I think the business would not
                witness any such down trading in these two categories at all, which
                we have mentioned, only category where we could see some down
                trading is categories which have taken up prices considerably. So is
                there a possibility of down trading in hair oil, yeah perhaps there is,
                you know from expensive pure coconut oil people could migrate
                from cheaper coconut oils or expensive Dabur Amla Hair Oil to a
                cheaper Amla Hair Oil. We will have to guard against that and we
                will have to make sure that that has not happened, but this is the
                only category, where we took up price increase you know by a
                fairly substantial amount, where that maybe a window opportunity
                for price warriors.

Abneesh Roy:    Sir in retail, I had a follow-up question, you said FY2010, we can
                expect it around 10 to 12 Crores loss, which is run rate based on
                even the Q4 numbers. So will curtailing losses be the main
                objective in FY2010 because …?

Sunil Duggal:   The objective is a blend of curtailing losses and maximizing
                revenues and maximizing store openings. So we will have to walk
                the tight rope very carefully, that we do as much number of new
                stores, but capping the losses that is 10 to 12.

Abnish Roy:     And so, where do we stand on the, attracting investment in that
                venture because there were news flow on that?

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Sunil Duggal:      You know I think it is premature at the moment, the regulations
                   would not permit that, but as and when they do, we will look at that

Abneesh Roy:       Okay sir, thanks.

Kavita Rawat of Systematix Shares

Kavita Rawat:      One is a follow-up question regarding the top-line growth that we
                   can see for FY2010 and FY2011. What we were just discussing
                   right now and sometime back, about the volume and the pricing
                   growth. You had mentioned that obviously we are not expecting any
                   price growth in the coming year. Now coming to the volume
                   growth, there are lot of new launches that you are looking at this
                   year and new products as well as new variants. So you know
                   keeping that in consideration and with the other additional adpro
                   and being a little more aggressive, what kind of growth can we see,
                   can we see better growth for FY2010/FY2011?

Sunil Duggal:      See last year we had targeted growth in the band of 15% to 20%.
                   And we ended up doing 18. I think if I were to again be forced to
                   give an outlook, I would put into the same band of 15% to 20% and
                   can we hit you know the top of the band or it will be a challenge in
                   front of us. So I do see a growth in the similar range as in the
                   current year not accounting for Fem, Fem would obviously give us
                   an extra 3 odd percent growth, but organic growth would be in the
                   region of 15% to 20%.

Kavita Rawat:      Okay. And sir coming to Chyawan Junior, you know could you just
                   throw some light on this what is the size of the markets and what
                   kind of market share are we targeting in the next say 1 or 2 years?

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Sunil Duggal:   See the market size is around if you take brown beverages around
                600 odd Crores. And while I would not like to disclose market share
                objectives but we would certainly seek to have a strong position in
                this market. And I would be happy if we are able to maintain that
                strong position and then growth share in a calibrated way rather
                than do anything in big bang. So we would, we are looking at this
                product for the long haul, it is a very interesting product, we do
                believe that it offers to the consumer much more than what our
                current competitors do. We are willing to you know invest behind
                this product and make sure that it grows.

Kavita Rawat:   Okay. And sir with the Lite Hair Oil category, wherein we have
                recently launched the Vatika Enriched Almond Oil as well as the
                Dabur Amla Flower Magic Hair Oil, we already had two hair oils in
                this category, if I am not wrong, that is Dabur Special Enriched and
                the Dabur Amla Lite…?

Sunil Duggal:   Dabur Amla Lite we discontinued many years ago and that we have
                a brand called Special which is the regional brand itself in the
                northeast and parts of Bengal and we really have not extended into
                the rest of country for various reasons. We believe that Lite Hair Oil
                is a very interesting category we need to established presence there,
                we need to have a strong product offering and both these products
                have the advantages, we should be able to make a good impact in
                the Lite Hair Oil markets with these two, but it is important for us
                because we had almost no presence in this Lite Hair Oil segment.
                And being the leader in hair oil there was a fairly big gap in our

Kavita Rawat:   Okay. And sir coming to the Ayurvedic Skin Care, again what kind
                of you know, you said you were looking at the launch around
                October, November not long.

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Sunil Duggal:   That is right.

Kavita Rawat:   So again what kind of revenue contribution are you expecting from
                this …?

Sunil Duggal:   I am not going to look at revenue too much in the current year, the
                current year is going to be really mapping out the marketing mix,
                making sure that everything goes right, testing consumer reaction
                and just making the marketing mix perfect in-tune for a full scale
                rollout which would happen perhaps early next year or in the 4th
                Quarter of the current year. So we do not, and you know in any
                product in the first year of it’s launch, one should not budget much
                in terms of revenues it is not going to contribute too much just get 4
                or 5 or 6 month of launch. And that also in a restricted geography
                but it is important to get the mix right, because once you do that,
                then you can you know go into the next level much more

Kavita Rawat:   Yes absolutely. So that is cycle I was talking about not currently but
                once you go out for a national rollout you would have some picture,
                some vague pictures something or some benchmark you would have
                kept for yourself.

Sunil Duggal:   Yes I mean we prefer not to disclose specific brand numbers of new
                brands, you know we do get a fair amount of visibility about our
                existing portfolio, but we are hesitant to talk about the new

Kavita Rawat:   Alright sir. And sir in terms of gross margins how would, I mean
                currently how are they adding in foods business as compared to the
                other FMCG portfolio?

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Gagan Ahluwalia:   The gross margin for last year is in the mid 30’s and that is after the
                   FOREX impact for foods business.

Kavita Rawat:      Okay and excluding the food business, the FMCG portfolio?

Gagan Ahluwalia:   Mid 40s.

Kavita Rawat:      Okay. And also if you could tell me what kind of I mean what kind
                   of revenue top-line contribution we are having from the Southern

Gagan Ahluwalia:   South region contribution in CCD it is around 9% to 10% .

Kavita Rawat:      And so are we looking at you know are we taking initiative?

Sunil Duggal:      Yes South is growing ahead of the rest of the country. We need to
                   further invest into the South and that is something which we are
                   doing. We would certainly look at something like 12% in the next
                   two or three years.

Kavita Rawat:      Okay sir. And sir lastly, then new unit you spoke about, one is in
                   Greenfield unit at Baddi and the other expansion I believe at
                   Uttaranchal …?

Sunil Duggal:      That is right.

Kavita Rawat:      So Uttaranchal what kind of expansion are we looking at, I mean is
                   that like full-fledged and basically what I want to understand is that
                   is this basically to take advantage of the benefits for which the
                   window is going to close by 31st March FY2010 …?

Sunil Duggal:      We need capacity to take care of the additional demand so it has
                   significantly do with capacity enhancement and obviously the
                   excise benefits would be there till March 31st, but even if the excise
                   benefits weren’t there we would have had to enhanced capacities

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                    because we are running out of you know capacity in any case given
                    the sharp rate of growth particularly in the Personal Care domain.

Kavita Rawat:       Okay sir. And sir one last thing, what kind of guidance would you
                    give about working capital?

Sunil Duggal:       See we have around 5 days working capital as we speak. And I do
                    not see the change -- one way or the other…

Bhushan Gajaria of IDFC SSKI

Bhushan Gajaria:    Hi sir, my question has been answer, thanks a lot.

Shirish Pardeshi of Anand Rathi

Shirish Pardeshi:   Just couple of question, sir I wanted to understand what is our urban
                    and rural contribution?

Sunil Duggal:       Well it is half and half to be more precise it is 48 rural and 52 urban,
                    but these numbers are little soft in terms of you know everybody’s
                    perception of rural is little bit different.

Shirish Pardeshi:   How would this close for us in over one year window?

Sunil Duggal:       One year I do not know, I would not be able to give any answer, I
                    do not think the changes are very significant in one year, but
                    certainly the rural share has crept up over the last two or three years,
                    I do not think there has been anything very dramatic but the whole
                    portfolio which was shifting from rural to urban has now reversed a
                    little bit and is moving little bit more towards rural. I do not think
                    this is a permanent shift, I think this is something which will happen
                    perhaps in the current year and maybe the next then the rural
                    growths will ultimately be higher than urban.

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Shirish Pardeshi:   Just wanted to check with you, UP and Bihar are the main states for
                    us, largely in terms of the product profile what we have. Could you
                    just share what kind of contribution we get, sales, from these two

Sunil Duggal:       UP is a bigger state, we get perhaps around maybe around 15% odd
                    contribution from UP, North is around 35% so UP would be around
                    15% to 17%. The second bigger state is actually Maharashtra and it
                    is not Bihar as what this commonly understood. And then you have
                    a cluster of MP, Bihar and Bengal being you know second, third
                    and fourth I mean third, fourth and fifth. But Maharashtra, Andhra
                    are actually pretty big states for us now…

Shirish Pardeshi:   Just wanted to check with this three focus states, UP, Maharashtra
                    and AP, what kind of growth we have seen as if you see the national
                    average of what you have just mentioned 17% to 18%, is the growth
                    higher or is it per capita income is really changing significantly in
                    UP to drive the volume off take for our products?

Sunil Duggal:       You know I think this year if I remember the Maharashtra was a
                    comparative under performer, for a variety of reasons, but UP did
                    well, but that is you know again the trend where Maharashtra
                    actually have been right at the top, so I would not read too much
                    into this. I think perhaps the food did not grow as well as it did last
                    year in Maharashtra so that took down the sales there, but it is
                    something which there is nothing inherently you know wrong with
                    our whole marketing model in Maharashtra. I think Maharashtra
                    should be perhaps the largest, the fastest growing large state as it
                    has been for the last 3 to 4 years.

Shirish Pardeshi:   The reason I am asking this question is specifically in reference to
                    the LDM. We have been seeing that UP, Bihar and especially North
                    and Maharashtra were the strong states for the toothpowder markets

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                    and you have just mentioned in earlier part that there is shift which
                    is happening from toothpowder to toothpaste. Is that phenomena
                    that after few years, probably this category would be zero or there
                    will be some replacement which will be taken care by Babool

Sunil Duggal:       LDM is 5% of CCD volumes so it not that huge, so as to change the
                    basic dynamics of CCD. So while definitely let us say the
                    contribution of MP to the total kitty which was very high 5 years or
                    7 years ago has come down because that is a big LDM state. And in
                    UP and all has made actually very little difference, so while UP is a
                    big state for LDM many other products would come and taken up
                    the slake, but where in MP for example LDM was maybe you know
                    25% of the total business and there the drop in LDM has reduced
                    the states saliency to the total mix. But once again LDM is 5% of
                    CCD and maybe 3% - 3.5% or so of the total company.

Shirish Pardeshi:   My next question is that, I was completely amazed seeing the
                    shampoo category growth, year on year we have seen a significant
                    good growth and obviously when we are gaining the market share
                    whereas somebody who is leaving in the category. So what is the
                    success formula? Is it the price point or it is the distribution or if
                    somebody is losing because of brand value or what….?

Sunil Duggal:       Proposition, it is the value proposition in terms of what we are
                    offering the consumer at the price which we are offering and that is
                    really the discriminator which we have, you know in India basically
                    there is a lot of belief that shampoos damage your hair but you
                    know still you need a shampoo to clean your hair but it is a mixed
                    type of feeling which many people will have when they use
                    shampoos. So I think the fact that our shampoo is herbal does seem
                    to reassure a consumer that at least the damage either is not there or

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                    it is much less compared to other brands. And that part I think
                    works for the brand very well and that is the platform on which we
                    launched the brand, it has worked very well for us over the years.

Shirish Pardeshi:   You just mentioned Re.1 price point is significantly important, what
                    kind of contribution we get from sachet in our shampoo portfolio?

Sunil Duggal:       At least 75% to 78%, close to 80%, but that is typical for the
                    category. It is not that only we are getting this, I mean other than
                    players like maybe Loreal etc. which are largely driven by bottle
                    sales, all the key players Uni Lever, us etc. have a similar sachet

Shirish Pardeshi:   Just one more question on shampoo, who would be the loser when
                    we have gained in Antidandruff category, who would be the loser?

Sunil Duggal:       The others which are basically two other players here, and I think if
                    we have to gain any share any significant share gains in dandruff
                    control, they would have to come from the two major players who
                    dominate this category.

Shirish Pardeshi:   Okay. My last question on Real Burrst, where are we sourcing Real
                    Burrst, I mean I am just more interested in checking is there any
                    supply issue which we are going to get?

Sunil Duggal:       No, we got access to a 3rd party which is manufacturing for us
                    which has got absolutely state of art facility in Bahadurgarh near
                    Delhi. Now we would like to test the water and make sure that there
                    is adequate amount of market for this brand before we put up
                    significant CAPEX for it. So the outsourcing will continue for the
                    next for the at least period of time till the viability of the brand is
                    fully established, after that we will review our investment decisions.

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Shirish Pardeshi:   I am sure we would have done a excellent homework on this food
                    drink and we have been talking almost 2 to 3 quarters, now here we
                    have the product in our hand, what is the confidence because now in
                    this season even the Big Daddies Coke and Pepsi are gearing up for
                    A&P-spends. And you have just mentioned that you have based the
                    test market in North, does that mean that North is the largest market
                    for food drink?

Sunil Duggal:       North is I think it is closest home, so we are able to map out the
                    performance of this brand in the North much better than if we do it
                    in the South (A). (B) Since we were little late in launching the
                    product you know the summer season in the North is a little bit later
                    than that is in the West or the South, so we are right in the bang in
                    the middle of the season while we have launched the product here.
                    If we had launched it in the South for example we would have been
                    you know halfway through the season. So there are logistical
                    reasons to launch it in the north. Now since it is comparatively a
                    small launch, it is better to do it closer home so where you can map
                    our performance of the brand much more carefully.

Shirish Pardeshi:   I am sure, you just mentioned earlier part of the call that you are
                    going to test this in the modern trade, what confidence will you get
                    in that modern trade would that this product will be successful?

Sunil Duggal:       It is very high, otherwise you would not have launched it. You
                    know there is a lot of work which has been, there is two years of
                    work which has gone, one and half year work which has gone
                    behind this product. It has been through extensive area of consumer
                    tests, the confidence levels are very high, but since you know these
                    are all perishable products you have to be extra cautious in fine
                    tuning the marketing mix otherwise there would be lot of mess on
                    the ground. So anything to do with food, particularly beverages

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                     which have six months shelf life, it is better to be prudent while
                     planning the launch and not just doing the pre-launch work in terms
                     of research etc, but also doing a test launch.

Shirish Pardeshi:    Okay lastly you have positively surprised on the tax-rate and even
                     COGS, is there any room left further that you would surprise us,
                     positively from the next 2 to 3 Quarters also?

Sunil Duggal:        You know I think we should be able to deliver consistency in terms
                     of growth and that is what we seek, little bit of material cost ratios,
                     up and down it is not something which should alter the basic
                     mechanics of the business. So while like I said the outlook for the
                     next two quarters is pretty healthy in terms of material cost, it could
                     turn the other way post October, but if the business is basically on
                     strong footing in terms of consumer demand, in terms of market
                     share, in terms of your product propositions, you know
                     sustainability is very high the consistency of performance and
                     delivery is very high. So I think that is what people look at in a
                     business like ours and that is what if we have been able to deliver

Shirish Pardeshi:    Okay well, thank you I am done and best of luck.

Vivek Maheshwari of CLSA

Vivek Maheshwari: Most of the questions have been answered just a small clarification,
                     in your gross margin as I see the purchase of finished goods is a
                     negative number which has actually made this delta in the overall
                     gross margin, is there any adjustment for the previous three quarter?

Rajan Varma:         Yes it is just an adjustment because our auditors wanted, the
                     treatment of the goods to be done in a certain way so that is only an

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                    adjustment. So far to correct the previous 9 months it would be a
                    sustainable … there is no any financial impact in that transaction.

Vivek Maheshwari: So basically this does not have any, so whatever gross margin that
                    we are looking at, of around 53% that is the way it is, nothing
                    pertains to previous 3 Quarters basically?

Sunil Duggal:       No, overall it is not have any difference.

Vivek Maheshwari: Perfect sir. Thank you so much.

Vijay Chugh of Ambit Capital

Vijay Chugh:        Yeah good evening everybody, expansion to the Southern market
                    has been key initiative for the company over the last 2 or 3 years, I
                    just wanted to know as to you know what sort of medium terms
                    goals that the company has from this market actually?

Sunil Duggal:       We have a goal of reaching 12% revenue in the next 2 or 3 years.
                    We believe we are on the right track, it is the high investment area
                    because of the media fragmentation, also comparatively higher
                    media cost. There is very little media deflation in the South, so we
                    are not you know upping our investments there too much at this
                    point in time, because we are finding media deflation or media
                    inflation in the south to be a little bit of a deterrent at this point.
                    Going forward I do not see that continuing for long ultimately it is
                    deflation in other part of the country, there would be similar
                    deflation in the South too. That will be able to up our investments
                    there much higher than what we have been doing in the last one
                    year or so.

Vijay Chugh:        Also just to, Sunil do you notice any changes in terms of because
                    there is softness in raw material prices but in terms of trade and

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                   things like that have changed or you know offers to consumers and
                   all that has changed in the market?

Sunil Duggal:      Not at this point in time, I think there have been categories where
                   the price increases have been sharp and there is some reversal of
                   that happening in one form or the other, but otherwise in terms of
                   trade the modern trade is quite frankly is no longer in the position to
                   demand excessive terms. So our Terms of Trade as for as modern
                   trade is concerned it is pretty much what it was one year ago,
                   because the expansion has not happened so that off-take has not
                   improved, so there is no reason to renegotiate in terms of trade. And
                   what happened is that we are getting a little bit of extra credit to the
                   trade because that is consequent to much fast collection of cash
                   happening from trade. So in terms of working capital, it made no
                   difference, but you know the cheque clearing time etc has
                   accelerated sharply. So very little in terms of all these parameters,
                   our margin profile has remained pretty similar in terms of both
                   stockiest margins as well as dealer margins.

Vijay Chugh:       Okay that is it, sir thank you.

Kunal Bhatia of Dalal & Broacha

Kunal Bhatia:      Yeah thank you for this opportunity. Sir most of my questions have
                   been answered just one clarification in regards to, sir you have
                   mentioned that going forward you would be having tax benefit and
                   benefits in regarding to the raw materials. So just wanted to know as
                   in what kind of improvement should we expect in bottom-line as
                   compared to top-line?

Sunil Duggal:      See I think all of us like to hazard a guess here is that our bottom-
                   line growth would be ahead of top-line. Now it is a moot point as
                   will it be considerably ahead or just marginally - a lot depends upon

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                   how much we invest behind our brand. Certainly if we let the whole
                   gross margin improvement flow down and that means we cap our
                   A&P at the current levels, there would be a substantial amount of
                   expansion but I think this is not the time to seek margin expansion
                   at the cost of investment of our brand. So we would be diverting
                   some of the margin expansion at the gross level to advertising and
                   promotions. How much we will, we will obviously put our budgets
                   in play but how much will actually deploy would depend upon the
                   success of our many initiatives, but this is the time to invest, I think
                   we are in a very fortunate situation that we have strong demand and
                   soft material cost, this kind of opportunity does not present itself
                   every year so when it does take advantage of it.

Kunal Bhatia:      Okay and sir in regards to your raw materials do you feel like you
                   have bottomed out or is there any further…?

Sunil Duggal:      I think we have bottomed out and the bottomed out process is still
                   visible like I said for the fist two quarters, I think there would be
                   some reversal and some inflationary pressures kicking back you
                   know around October or thereabouts, but I could be wrong there,
                   but in terms of our entire contractual framework, the hedging which
                   we have done, we are pretty much insulated from raw materials
                   impact for most of raw materials for the first two quarters of the

Kunal Bhatia:      Okay, yeah thank you so much sir, thank you.

Aniruddha Joshi of Anand Rathi

Aniruddha Joshi:   Sir just two housekeeping questions, what is the total CAPEX you
                   said for FY2010?

Sunil Duggal:      200 to 225 Crores in FY2010.

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Aniruddha Joshi:   And FY2011?

Sunil Duggal:      Harder to say but it will be considerably lower.

Aniruddha Joshi:   So somewhere around 150 Crores?

Sunil Duggal:      Somewhere around that, there I think it would be fair guess, maybe
                   even lower, because two of the big plants would be commissioned,
                   there is another property which is housing R&D establishment are
                   fairly high cost CAPEX sir which would be fully capitalized in
                   FY2010, I do not see too much happening in 2011 in terms of
                   CAPEX, so maybe even you know in the region of 100 to 150
                   Crores is what is visible at this point in time.

Aniruddha Joshi:   Okay fine. On Fem Care, when the integration process results for
                   the consolidated numbers, so if you see in June Quarter or in
                   September Quarter?

Sunil Duggal:      You would see a little bit of it in the June Quarter, but only a few
                   days hence as we speak, now even that of course is a subject to a lot
                   of uncertainties, but we are looking at tentatively, correct me if I am
                   wrong 15th of June as being a likely date for consolidation of the

Aniruddha Joshi:   Okay. And sir very lastly question, from the other con-call you see
                   that from the October onward are we seeing inflation is spiking
                   again, or the inflation may go up again?

Sunil Duggal:      Our internal estimates are looking at a distinct possibility of
                   inflation happening much ahead of current levels which is
                   practically zero, but certainly happening in the 5% to 7% band by
                   end by October. Now like I said this is just an internal estimate, it
                   could be completely off the mark, but we do not see the current zero
                   inflations environment continuing for beyond the first two quarters.

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Aniruddha Joshi:   Okay so from October to March we are expecting inflation to be in
                   the range of 5% to 7%?

Sunil Duggal:      That is what our internal estimates indicate.

Aniruddha Joshi:   Okay sir, that was my questions, thank you.

Anand Mour of Reliance Equities

Anand Mour:        How are you sir, my question is regarding the other overheads in
                   which you have seen low growth in this quarter and if I look at
                   standalone numbers it is pretty just about 7% growth for the full
                   year, so any particular cost cutting exercise or saving on any
                   particular cost hikes?

Rajan Varma:       No, the reductions are all over the place…lot of fixed cost that is
                   being rationalized, lot of variable costs were rationalized even the
                   sales and marketing expenses so it has been an overall play all over
                   the place it is not in any one place…

Anand Mour:        Okay.

Sunil Duggal:      Just to be a little bit more specific other expenditure and SGA has
                   come down from 16.4 to 14.2, right that is really what I think what
                   you want to answer. So as Rajan said there are three basic points :
                   one is operating leverage, second is lower distribution costs and
                   third is lower fuel and power. So the combination of these three has
                   led to other expenditure coming down by around 200 basis points.

Anand Mour:        And do we think it is sustainable?

Sunil Duggal:      We should be able to maintain, you know I would maintain the
                   same answer that for the first two quarters we do see this kind of
                   visibility. After that you know fuel and power is anybody’s guess

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                   because what will hydrocarbon prices be in October is very hard to
                   guess, but for the first two quarters we would look at this kind of

Gagan Ahluwalia:   That is only for the quarter, I think if you look at the full year
                   numbers, there is a saving of about 80 basis points quarter-on-
                   quarter you should look at that kind of saving…

Anand Mour:        You know I was looking at standalone numbers which has grown
                   just by about 6.5%.

Sunil Duggal:      Yes.

Anand Mour:        Fine I think that answers my question….

Sunil Duggal:      You know our other expenditure has come down actually very
                   sharply in the 4th Quarter on the back of basically lower fuel and
                   power and also on account of all of the three which I mentioned
                   earlier, but for the full year it has not been so much but you know if
                   you look at exit of 14.2% which is probably indicative over the next
                   couple of quarters.

Anand Mour:        Okay, thanks sir. All the best for future.

Gagan Ahluwalia:   Thanks everybody for joining us for this conference, for your
                   facilitation, we will have the transcript and the archive of the
                   WebCast on our website shortly. If you have any further questions,
                   kindly let us know. Thank you and have a great evening.

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