Dabur India Limited

Investors / Analysts Conference Call

July 24, 2007

Conference Call on the Unaudited Financial Results for the Quarter Ended on 30th
June, 2007

Dabur India Ltd.’s Participants

Mr. Sunil Duggal, CEO (Chairperson)

Mr. Rajan Varma, CFO
Mr. Ashok Kumar Jain, GM-Finance & Company Secretary
Mrs. Gagan Ahluwalia, DGM-Corporate Affairs
Mr. Byas Anand, Manager-Corporate Communications
Mr. Raman Preet Sohi, Senior Executive

Gagan Ahluwalia : I welcome you all to this investors’ conference call regarding the results
for the first quarter of financial year 2008. At the outset, Mr. Sunil Duggal will give an
overview of the company’s performance during the quarter, post which we will have a
question and answer session. I hand over now to Mr. Duggal.

Sunil Duggal : Ladies and gentlemen, good afternoon. Welcome to our conference call
pertaining to the results for the quarter ended 30th June 2007. Dabur India Limited has
witnessed another strong quarter recording a growth of 20.1% in consolidated sales and
31% in net profit.

During the quarter, the Consumer Care business grew by 15%, Foods reported a strong
growth of 35%, and International business grew by 54%.

Within Consumer Care business the performance of almost all categories was good.

Oral care recorded a growth of 15.4%, with the toothpaste portfolio growing at an impressive
27%. Dabur toothpaste continued to outperform the category by a wide margin, reporting a
growth of 30% as compared to category growth of 8% as per AC Nielsen data.
Consequently, our market shares witnessed sharp gains. Key drivers of growth in this
category were Babool toothpaste which grew by 38%, and Dabur Red toothpaste which
grew by 15%. Meswak has also performed well with a growth of 31% during the quarter.

Vatika range of shampoos recorded a strong growth of 24% during the quarter. This is as
against category growth of 15%. The third shampoo variant, Vatika Root Strengthening
Shampoo has received an encouraging response. Some more variants of shampoos are in
the pipeline along with complete new packaging for existing variants.

Hair care category grew by 6% with Amla Hair Oil performing well and growing by 9.4%.
Anmol brand showed strong growth with Anmol Coconut growing by 19% and Anmol
Mustard Oil by 32%. However, Vatika Hair Oil declined during the quarter as price
differential to plain coconut oil remained high and also because of planned reduction in
inventories. The brand will be restaged during the year with new packaging, positioning and
product inputs.

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The hair supplements category continued its robust performance with a growth of 30%. All
the major brands in this category performed well. Chyawanprash registered 16% growth,
Glucose-D 50%, and Honey 26%. As part of our plans to introduce variants of
Chyawanprash, we had launched ChyawanShakti targeted at young adults to provide relief
from stress. The second addition to this portfolio is Chyawan Prakash, which is a sugar free
variant and is meant for diabetics and the health conscious. This variant has received
positive response during test marketing and will be launched nationally soon. Additional
variants of Chyawanprash are also in the pipeline

Sales in digestive category picked up with an overall growth of 13.7%. Pudin Hara made a
smart comeback recording growth of 22% backed by fresh marketing initiatives. Hajmola
brand grew by 10%. A new variant was launched under Hajmola Candy.

Baby and Skin care category recorded a strong growth of 26% during the quarter against the
flat growth witnessed in the previous year. Gulabari registered good performance growing
by 23% and Dabur Taill recorded growth of 9.4%. Vatika soaps touched sales of Rs. 6
crores during the quarter with a growth of 93%. The third soap variant, Vatika Orange Peel
Soap has been rolled out during the quarter.

Home care category recorded a growth of 24% during the quarter with Odomos brand
growing by 19%. Odomos cream and lotions performed well. Odonil brand which operates
in the air freshener category recorded a growth of 48%. Both the brands, Odomos and
Odonil, will get another boost this year with a complete new packaging and presentation,
which will be rolled out in the coming quarter.

The Foods business posted a robust growth in sales of 37.5% reaching a revenue base of
Rs. 69 crores. Real fruit juices recorded growth of 44% led by good growth in all the
variants. Real Twist was launched during the fourth quarter of financial year ’07 and it has
received good response registering sales of Rs. 4 crores during the current quarter.

Consumer Health Division grew by 5.2%, Asavs grew by 12.6 while Honitus cough drops,
Shanka Pushpi and Nature Care all grew in excess of 25%, although the overall growth was
muted because of decline in some products like Super Thanda Tail. The division is planning
to introduce a number of new products, new campaigns and new packaging during the
quarter, which will increase the growth rates during the rest of the year.

International business recorded a strong growth of 54% with impressive performance across
all focus and potential markets. The drivers of growth were GCC, Egypt and Pakistan. GCC
recorded a growth of 60%, Egypt 51%, and Pakistan 130%. The new manufacturing unit at
Ras Al Khaimah in UAE for manufacturing Dabur products for the Middle East and African
markets is underway with finalization of layout and equipment. This would involve the
investment of around 20-25 crores during the fiscal. Additionally, the manufacturing unit in
Cairo, Egypt, is being substantially expanded to meet demand.

On the operating front, EBITDA margins have improved by 60 basis points to 15.2% for the
consolidated business. There have been some inflationary pressures but the company has
been able to manage the same by taking moderate price increases in the range of 2.5 to
4%, which would have put into affect during the financial year ‘07. In addition the leverage
due to lower growth in fixed cost has helped maintain the margins.

It has been decided to merge Dabur Foods Limited, which has been a 100% subsidiary with
the parent company Dabur India. With this the Foods portfolio will be integrated completely
with the core FMCG business and this is expected to yield significant benefits in terms of

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cost and revenue synergies. With this merger Mr. Amit Burman, who has been managing
Dabur Foods, will move out of day-to-day operations and the management team integrated
completely with Dabur India Limited. The company is working out a plan to capture the huge
potential of its business and the benefits of integration on both back as well as front end.
The merger is waiting statuary approvals but will be effective from 1st April 2007.

The company’s retail venture is underway with the CEO, Mr. Peter Baker, coming on Board
during May 2007. The wholly owned subsidiary, named H&B Stores Limited has been
incorporated to take this venture forward. The management is currently working on building
the organization, systems and processes to launch this chain of health and beauty stores by
the end of financial year 2008.

In the Board meeting held yesterday, Dabur India announced some changes in the
constitution of the Board of Directors. I will briefly take you through the changes. Mr. V. C.
Burman stepped down as Director and Chairman of the Company, and Dr. Anand Burman
was appointed the Chairman in his place. Dr. Anand Burman was earlier holding the Vice
Chairman’s office in the company. Mr. Amit Burman, who was earlier the director on the
board has been appointed as the new Vice Chairman of Dabur India Limited. Both the
positions are non-executive. Mr. Mohit Burman, son of Mr. V. C. Burman has joined the
Board as a Director.

With this the overall constitution of the board remains unchanged with four representatives
from the promoter family, four independent directors, and two company executives.
Basically, the change signifies induction and representation of younger members on the
Board. Other than this there is no change in the day-to-day operations, management, and
the direction of the company.

As economic indicators remains positive, the year 2007-2008 appears to be a promising

one. Data for the first quarter indicates that category growths remain robust. The key
challenge for us would be to outperform category growths while continuing to expand
margins. With inflationary pressures easing we believe this is very possible. We will
continue to build the growth drivers aggressively and capture the opportunities as the market
evolves and changes. With this, I would now open the house for the Q&A session. Thank
you.

Hemant B. Patel from Enam Securities : Yeah, Sunil, this is Hemant here.

Sunil Duggal : Hi, how are you?

Hemant B. Patel : I am fine. Just a couple of questions, first on your gross margins.

Sunil Duggal : Sure.

Hemant B. Patel : You mentioned that you have effected a price increase and if I gather it
should be close to the end of the fourth quarter of last year.

Sunil Duggal : That’s right, all along the fourth quarter there were some price increases

Hemant B. Patel : And you mentioned that is around 2 to 4%. Is that right?

Sunil Duggal : That’s right.

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Hemant B. Patel : Okay, despite that I think the gross margins for the quarter were lower on
year-on-year basis, while there has been an increase on a sequential basis. I just wanted to
check with you whether are we required to do a further price increase so that gross margins
comes close to the level at where it was in ’07?

Sunil Duggal : Even I think Quarter on Quarter the gross margins are pretty much intact at
around 40.7%. So there has been no erosion despite the fact that the material costs to
sales have gone up on a year-on-year basis. The price increase has effectively neutralized
the impact of material cost. Gross margins are pretty much intact.

Hemant B. Patel : Okay, another thing on the packaging cost, I was just wondering you
mentioned that a lot of packing renovations have been done as regards to the last year.

Sunil Duggal : That’s right.

Hemant B. Patel : So if you could split up the raw materials for us and tell us how much of
the packing costs in this quarter was attributable to packaging renovation and how much of it
was towards the price increase?

Sunil Duggal : Nothing too much in terms of the renovation. The renovations have not
really cost us additional money. It has been more in terms of design, layouts, graphics, etc.
So, there has been no significant cost impact on account of the renovation piece. It has
been a mixed bag as far as raw materials are concerned. There has been inflationary
pressure in some and there deflationary in others, but overall there has been inflationary
pressure on packaging material which are largely plastics and glass.

Hemant B. Patel : What would be the proportion of packing materials in this quarter, could
we have the number?

Sunil Duggal : Yeah, 75 odd percent will be raw material and 25 packing, and I don’t think
this ratio has changed very substantially, I mean, if its pretty constant.

Hemant B. Patel : Okay. And would it be possible to give us an idea as to the margin
outlook on foods because last year we had lot of issues regarding raw material supplies in
the like, are we likely to see margin expansion in food division per say.

Sunil Duggal : At the gross level, maybe not but certainly expansion at the PAT and
EBITDA level. But at the gross level, we probably would be at the same margins over the
current portfolio.

Hemant B. Patel : It was the earnings before interests and tax level?

Sunil Duggal : Yeah, that of course is undergoing a substantial expansion. The gross
margins are at around 32 odd percent, but if you see EBITDA it has gone up from 2.9 last
previous quarter, to 6.8 in the current quarter. It has been a substantial increase in the
profitability of business as a whole.

Hemant Patel : And increasing margins for international business division as a whole in
terms of earnings before interest and tax?

Sunil Duggal : The EBITDA of our international business is today at 14% and for the
domestic business it would be close to 17%. So, it still lacks behind the domestic business
but it is converging pretty quickly. Last year for example it was 11.4 in the same quarter, this

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quarter its 13.9 so there is a 2.5% increase in EBITDA there. So, the margin outlook at on
international is very strong and in foods we are seeing a substantial turn around in terms of
profitability even though there still remain issues on the gross margin.

Hemant B. Patel : Thank you.

Sunil Duggal : My pleasure.

Aniruddha Joshi from Anand Rathi Securities : Hello.

Sunil Duggal : Hello, yes.

Aniruddha Joshi : Yeah, I am Anirudh Ghosh here. When we had met last year there was
news that you are going to launch something like Horlicks, Chyawanprash probably in the
form something like Horlicks, as Chyawanprash is not liked due to its form, so we were
thinking about something on that, so can you just update us about that?

Sunil Duggal : We are planning to introduce and I would not like to talk too much about it for
obvious reasons, but we are planning to introduce a Chyawanprash variant which will be a
milk additive. A Chyawanprash variant under the Chyawanprash family which will be milk
additive, targeted at kids, and which will offer all the benefits of the current set of brown
beverages with the additional value of herbs. So, this product is slated for a test launch in
the next couple of months and depending upon the outcome of the test launch we will give it
a national roll out. It is a very interesting new product, which we perfected over the last one
year and we are now ready for this launch.

Aniruddha Joshi : But probably considering Horlicks is a leader we will be launching it in let
us say only brown variant or probably white.

Sunil Duggal : We will start with the brown and then we look at introducing a white variant
also.

Aniruddha Joshi : Okay, that was my question actually. Thank you.

Vandana Luthra from DSP Merrill Lynch : Hi Sunil, it was a good quarter.

Sunil : Hi Vandana, thanks a lot.

Vandana Luthra : The only segment which seemed a little bit underperforming is your
consumer healthcare division, which given the fact that it had very a bad first quarter last
year because you had ERP issues, so you had a very very low base to deal with and yet you
had a very poor top line growth there, so if you could throw some light on what happened
over there and what could change, that is my first question. My second question is on
international, over the next two to three years time or more like two years time what do you
think international will account for as a proportion of your total sales. My third question is
regarding capex, if you could give us guidance for the next two years and break that up
between outlay needed for your retail buildup and your normal business. And the last
question would be on the advertising cost, you have mentioned that many new variants and
new packaging in Vatika are planned and you talked about the new product launches
including this Chyawanprash milk additive, so if you could give us some sense on what do
you think would be happening to advertising cost over the next few quarters. So that is all
from me.

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Sunil Duggal : Okay, that is quite a bit, but we will start with the first question on the
consumer health division. Basically, CHD was sluggish in the first quarter, we don’t expect
this to continue, we expect the year to end in the region of around 15% growth, which for a
fairly mature business like consumer health is possible. There are several seasonal reasons
why growth in the current quarter didn’t happen, a. we launched cooling hair oil last year,
which we decided to withdraw because of margin issues, so that it enhanced the base last
year and obviously impacted the growth in the current quarter. Then there is a whole slew of
new products, which are awaiting introduction in the second and third quarters, which we
expect would uplift growth, and third was from pipe line corrections which we did in the first
quarter consequent to cooling hair oil. So I think the outlook for consumer health is good.
The challenge before us is to introduce new products in the OTC space, particularly in the
everyday remedies area, which would work and which will propel growth forward, but the
core classical portfolio is growing at a fairly steady clip if you measure secondary growth of
around 10 to 12%. We are pretty optimistic about the growth prospects of CHD. We are
looking at also structural realignment of consumer health division with the mainstream
consumer care division, which would probably happen sometimes early next year, which
would release enormous amount of cost and generate whole lot of synergies in terms of
revenues, so there is a lot of thinking going on with regard to how do we move this business
forward and we are pretty hopeful of getting a good outcome.

I will jump to your third question on capex, we expect around Rs. 450 to 500 million capex in
the current year. We do not expect this number to alter significantly in the next two years as
we see today because the main investment of this capex would be around Rs. 250 million on
account of Ras Al Khaimah plant, which would be hopefully commissioned by the end of
March, so we would capitalize it in the current year, there may be some spillage into the
next, but effectively we are targeting in the current year. Next year, we will be spending
similar amounts on Food capex, so that would be really the largest single item in the next
fiscal. So we are looking at capex which are pretty steady in the region of around Rs. 500
million, half of which is new capex on account of plant, machinery etc., and half of which is in
a sense replacement capex for IT and other such services.

On the retail, we are infusing 140 crores in the form of equity over a period of three years
and that is part of the business plan which we have showcased a couple of months ago, and
there would not be direct capex employed under Dabur India in to the retail venture.

Vandana Luthra : International?

Sunil Duggal : International today is around 13% of group revenues. We expect this to
creep up to around 17% by the end of the current strategic horizon, which ends fiscal 2010.
It is growing at around 2-3 times the pace of the domestic business. We expect this growth
to continue, there are enormous opportunities in the international business which we see
would continue to propel growth. So around 17% I think is a fair estimate in terms of slice of
the pie purely in organic growth terms by the end of fiscal 2010. Is there anything else?

Vandana Luthra : Yes, advertising expenditure?

Sunil Duggal : Ad pro, yes, on the ad pro front we are currently at around 11%. We do not
expect packaging renovation to impact adpros, there could be some impact on material cost
on account of the renovation particularly in products like Vatika and perhaps going forward
Amla. We expect this to be fully recovered by way of price increases because it would mean
radically improved packing formats which will enhance the value proposition and enable us
to recover the money from the consumer. So, adpros are at the moment in the band of 10.5
to 12%. I do not see this changing radically over the next two to three years. Because, this

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is on the back of new product introduction charter which we have maintained over the last
two to three years, so there is nothing which is going to radically alter this ratio.

Vandana Luthra : In Vatika are you looking sort of to move towards higher price platform
and give it a more premium positioning ?

Sunil Duggal : Yes, I think we need to do a packaging revamp, the current packaging is a
few years old, needs to be upgraded, and we are in the final stages of doing that. You
should see the newer packaging out by the first quarter of this year, which would mean
higher cost, but we believe that marginally extra cost which will be incurred on packaging
would be borne by the consumer quite comfortably.

Vandana Luthra : Also, lastly if any outlook you could gave in terms of your store rollouts
under the retail?

Sunil Duggal : Let us say by middle of next year we should be having around 30 stores, let
us say by around August of next year, that is the plan. We were reviewing the retail
business now. We have decided to accelerate the pace of introduction of the stores. So, in
the current year we would just have a few stores, may be eight or ten in the current fiscal,
which would be more in terms of fine tuning the product offering, but once we have got that
done we intend to have a very rapid scale up to build scale into the business. So let say 30
stores by the same period next year or let us say early August next year.

Vandana Luthra : Okay, that is it from me. Thanks a lot Sunil.

Sunil Duggal : My pleasure.

Nikhil Vora from SSKI Securities : Hi Sunil.

Sunil Duggal : Hi Nikhil

Nikhil Vora : Sunil, just one issue rather one question on Dabur Foods, its merger into
Dabur India, what is really the logic behind it, you have said it but like what is the economic
benefit of doing this merger into Dabur India rather than keeping it as a standalone entity
and letting the growth being driven at a separate SBU itself?

Sunil Duggal : I think keeping that a separate venture would limit the growth of Foods
simply because of the size of its balance sheet, the amount that we can invest in terms of
growth. So there were a certain logic in keeping it outside Dabur India if you were wanting to
get into a strategic alliance or some kind of a joint venture, which was a thought some years
ago. We believe now that Food is very intrinsic to our whole story, it is really the category of
the further, the growths here are going to be quite explosive. Merger would entail a free
movement of investments between the single entity, which now is Dabur India, can enable
far higher level of management depth which would come consequent to its integration, would
enable revenue synergies if you do selectively integration at the front end which we are
contemplating, and certainly a whole lot of cost synergies consequent to that. Then a
seamless purchase organization, HR organization across the whole two entities obviously
bring into play substantial efficiencies. So we believe this is a right move now that we are
really serious about growing the Foods category beyond beverages, and we believe this will
pay very rich dividends.

Nikhil Vora : But you would not presume that financing options would have been more as a
standalone entity more than getting it consolidated within Dabur India?

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Sunil Duggal : We believe that financing options would be much easier within the integrated
entity; otherwise, it would have been more expensive financing or there would be other
limitations on financing especially in a era of high interest rates. We have a lot of cash here
which we can use either to fund expansion or M&A or for a combination of both. So that
give us more flexibility, quite frankly the rationale for keeping it outside has now disappeared
once we have decided not to kind of spin it off or have any strategic alliance but to do it our
own way as a Food business.

Nikhil Vora : Second is what new product launch can one expect in the Foods part of the
business as you move forward?

Sunil Duggal : I think to begin with in the current fiscal and early part of next you would see
a substantial amount of innovations happening in the health space, and we are looking at a
number of options here. We will begin exploring culinary and other value added foods, I do
not expect to see any products emerging in the current year, but next year we would
certainly be more than just a beverage player in Foods. Current year you would see
definitely a lot of activity on the health beverages.

Nikhil Vora : Okay, and what is in the retail business…why would we then need a holding
company structure for H&B Store?

Sunil Duggal : Let us put it this way, the synergies between the retail and main Dabur India
are much lesser than what we have in Foods and Dabur India, so there the distribution
synergies, the procurement synergies are so compelling that the rationale for a merger is
very clear. H&B requires a very different skill set that is why the management of H&B is
completely different, there is a new CEO of H&B, which is a basic requirement. They will
have their own sourcing team which would be not be same as the Dabur team, so therefore
parking H&B in a sub makes a good amount of sense, because it is going to be
independently managed.

Nikhil Vora : Okay, thanks for this and all the best.

Sunil Duggal : My pleasure, thank your.

Vivek Maheshwari from CLSA : Hi sir, this is Vivek Maheshwari.

Sunil Duggal : HI Vivek.

Vivek Maheshwari : Continuing with the last question about this H&B stores, could you tell
us something about the formats of the store, is it going to be something like you know what
Kaya is to Marico or is it going to be a pure retailing chain?

Sunil Duggal : This would be pure retailing, there would be no service element in this like
Kaya etc. It is going to be modeled on you know Boots or Watsons or stores of that type
which would offer health and beauty solutions of a fairly up market nature. It would also
offer general merchandise and strong private label play, so that is really going to be the
format, it is going to be around 1500 to 6000 square feet store sizes with a median being
around 2500 or so. We expect this to be largely in a mall environment even though we are
looking at high street, but the format would be modeled on Watsons, Boots, and many such
health and beauty enterprises which you see in other countries.

Vivek Maheshwari : Okay, another one is on merger of Dabur Foods, what I want to
understand is that is it just a financial kind of a merger or there are going to be operational

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synergies like the distribution channel for the two business are different as of now or are they
integrated to this extent?

Sunil Duggal : See there was not much point in just doing a financial integration, that would
be pretty limited, even though it would reduce the tax burden and give us some efficiencies
and of course increase the size of the balance sheet for Foods. But the more important
reason is to have operational synergies which would impact both the costs of Foods, that is
very critical to the future of the Foods business, and more importantly give rise to revenue
synergies that will mean we use the large Dabur India platform to introduce array of food
products. So the reasons just to conclude are both financial and operation and both are very
compelling reasons.

Vivek Maheshwari : So that mean the Dabur Foods has a separate distribution network as
of now ?

Sunil Duggal : It has a distribution network, which is separate, I do not expect this
distribution network to unravel, it would continue to be separate, but there would be points of
convergences, you know warehouses for e.g. May be in the category C terms we would
have a common distribution where the cost to carry the Foods portfolio would be too high,
may be we would have a single entity to present to modern trade where we could use the
combined leverage of the integrated Dabur business to highten up the bargaining power, so
we would actively look at points of synergy while maintaining the integrity of the Foods
distribution wherever it is necessary.

Vivek Maheshwar : Okay, another thing from your investor communication, you have
mentioned that increase in working capital had been on account of dividend payment that is
understandable, but another reason is strategic stocking, could you throw some light on this
aspect?

Sunil Duggal : If you take inventories they have really grown in line with business, so there
is nothing much to talk about from the point of view of inventories, but we do strategic
stocking every year. We build up stocks of critical raw materials to be in line with
Chyawanprash season, prices are softening, any other such strategic stocking happens.
But the working capital impact is largely on account of this provision for dividend, which we
made last year but not in the current year, we preponed the dividend pay out. That is 90
crores out of 90 crores in fact from working capital, so you should net off that 90 crores to
get a true picture, which means basically the working capital is growing at around the pace
of business, nothing much to speak about that.

Vivek Maheshwari : Okay, one last question on your distribution network, how many
stockists do you have?

Sunil Duggal : Well, we have three distribution networks running in parallel. The consumer
care is obviously the biggest of them all, which is around 2200 to 2300 stockists, but each of
them are very large sized. Then we have consumer health which has 1500 stockists, and
Foods which has around 800. So we have three networks, and we are now looking at
synergies between these three networks, and that is you know something which will engage
us very actively in the next six to twelve months.

Vivek Maheshwari : Okay, and what are your plans like all the FMCG companies are
currently talking about you know expanding in the rural India, so what are your plans in
respect of rural ?.

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Sunil Duggal : Already done, that is a pretty old story now, CCD has expanded very deep
into the rural areas, and the expansion now is incremental, basically when the cost of
delivery is below a certain threshold we find direct distribution is not optimal, but I think CCD
is optimal and we will keep like I said expanding distribution in an incremental fashion. We
have to see how to leverage the very deep reach of CCD to help the CHD and Foods
business, that is like something we are looking at very closely.

Vivek Maheshwari : Alright, thank you.

Sunil Duggal : That is in the distribution synergies, I think would be very important.

Vivek Maheshwari : Okay, thanks a lot sir.

Sunil Duggal : Thanks.

Roopa Shah : Hello, yes sir I just want to know that at present you have Dabur ayurvedic
centers, so once your retail foray starts I mean will this be a different unit or it would be
merged with the retail stores?

Sunil Duggal : No, that was the independent. See the rationale for the Dabur Ayurvedic
centers is to propagate the science of ayurveda and to popularize Dabur ayurvedic products
to both users and non-users. So that format is a service format, they exist in ayurvedic
outlets in dispensaries etc. Whereas the H&B store initiative is completely product centric,
and would be more urban, more up scale, so they are two really different initiatives. Like
both will be co-existing without having any connect with each other.

Roopa Shah : So at present sir how many branches do you have for Dabur ayurvedic
centers.

Sunil Duggal : 550 odd centers we have.

Roopa Shah : Okay, and what is the plans for these units.

Sunil Duggal : We would now like to not expand them further but do substantially upgrade
them, have better quality in terms of delivery, have more qualified representatives setting
there, so I think 550 is the pretty decent number, we need to now just make sure that they
meet the quality standards of a very high order.

Roopa Shah : Okay sir, thanks a lot.

Mohanish from Wealth Manager : Hello, this is Mohanish actually calling from Wealth
Manger. My question is regarding your Ras Al Khaimah plant, we are investing 25 crores in
the plant, so could you please just give us what kind of products will be produced and
manufactured there?

Sunil Duggal : Basically we have two plants in UAE, one in Sharjah and one in Jebel Ali,
both these are running out of space and we need now to have a integrated plant which will
offer much better manufacturing efficiencies, and also we need substantial expansion of
capacities. We are running out of space, so it will produce the complete array of Dabur
products with exception of item like Chyawanprash etc., which will continue to be exported
out of India. So all hair care, oral care, going forward skin care products would be made
there, even some ayurvedic products like the Hajmola which are comparatively easy to make
will be produced there. With the exception of very complex products likes Chyawanprash

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and/or beverage portfolio practically everything else will be made there, and this will service
GCC, large parts of Africa, Russia, and CIS, Central Asia. So it will service a very large
geography, it is a very large plant which incorporates many categories.

Mohanish : Okay sir, and what kind of sales revenue we are expecting from this plant?

Sunil Duggal : I think the sum total of GCC revenues as well as around 50% of Africa
revenues, so there should be in the region of around 200 crores or 170 odd crores.

Mohanish : So that is at a full capacity.

Sunil Duggal : At current levels, and this is like I said earlier this is growing around 30, 40,
and 50% per annum, so there has to be a lot of flex in this plant to accommodate future
growth.

Mohanish : Okay thank you, you can accommodate future growth also?

Sunil Duggal : It should be able to accommodate our growth for the next 5 years at the
current pace of growth.

Mohanish : Okay, and sir if one has to understand if there is any tax benefit we are getting
out of location or from the government out there?

Sunil Duggal : Not really, I mean Ras Al Khaimah compared to the Dubai is much lower
cost environment, cost of land is fraction of what we would pay for a plant in Dubai, cost of
labor is cheaper, so overall it will be a much lower cost and a fraction environment that the
one we currently have in Dubai, both in terms of labor cost as well as in terms of capex.
Particularly the cost of land etc. That is one of the reasons why we chose Ras Al Khaimah
instead of the option of moving to our location in Dubai itself.

Mohanish : Okay, sir another question is regarding our talk about launching new products,
launching new variants of the product that is required to maintain the growth momentum, so
could you please give us some idea what kind of revenue percentage may be coming from
the new product launch or the variants going forward?

Sunil Duggal : See presently on 6-7% of our revenues come from products launch in the
current and previous fiscal, we intend to scale this up to around 9-10% from next year
onwards. Because we do have a very aggressive new product introduction agenda on our
hands, so this would only grow.

Mohanish : So we are expecting 9-10% coming from….

Sunil Duggal : 9-10% is our internal benchmark, we hope to get there next year, currently
around 6-7% comes from what we call new products.

Mohanish : Okay, just what we talked on Dabur ayurvedic center, you have 550 centers
across the country. What level of revenue right now we are getting from these centers?

Sunil Duggal : See the whole rationale for the centers is not to build revenues, but is to
popularize ayurveda and propagate our products, so we do not look at revenue generation
here and frankly there is not too much capital which we deploy here. Because the premises
are not ours, they belong to the shopkeeper whose premises we utilized for this Dabur
ayurvedic centers. All we do is we put some money on signage and we pay for the Vaidya

Page 11 of 26
who will be advising the patients, but we expect revenues in the region of something like 10
lakhs a year once they are fully operational. So the rationale here is not to drive revenues, it
is really to build equity amongst consumers for our products, otherwise these are all
remember generic products, the differentiation is low, and need to build equity through these
routes.

Mohanish : Okay, thanks. I am coming back to again to the Ras Al Khaimah plant, this Rs.
25 crores investment of what we just talked of what will be the cost of land if we have to
buy?

Sunil Duggal : The land cost if I remember was in the region of Rs. 3 to 4 crores.

Mohanish : Rs. 3 to 4 crores.

Gagan Ahluwalia : But there is an additional Rs. 11 crores which will be spent in next year,
so the total cost of the plant is around 36 crores.

Sunil Duggal : Yeah 25 will be capitalized in the current year, and 10 next year.

Mohanish : So out of that Rs. 3 to 4 crores would be….

Sunil Duggal : Yeah, the land cost is very low; we got the land at very low price that was
one of the attractions. So we were able to get in and get the land at a good price.

Mohanish : Okay, and what will be the tax benefit from the plant, I mean would it be same
as what we are getting as a tax rate?

Sunil Duggal : It would be a little bit better than what we are getting from current units,
because since it is located in the GCC we get the GCC duty benefit, which is around 5%,
since this plant will making quite a array of products than our current two plants, there would
be overall duty benefits coming which means that this plant will pay us and pack very
quickly.

Mohanish : Okay, and just last question, at the end of quarter what would be the cash and
cash equivalent standing?

Gagan Ahluwalia : Cash and cash equivalents amounted to around Rs. 150 crores at the
end of quarter, that is on 30th June 2007.

Mohanish : Okay, thank you sir, that is all. Thank you very much.

Sunil Duggal : Thank you.

Hozefa from Morgan Stanley : Sunil hi, Huzaifa here.

Sunil Duggal : Hi Huzaifa.

Hozefa : Just a few questions one is on receivable days for last year in the balance sheet
have jumped quite dramatically, is there any particular reason or is it one off or how should
we read it?

Gagan Ahluwalia : As compared to last year in consolidated terms was I think lower than
last year.

Page 12 of 26
Hozefa : If you just look at consolidated numbers last year.

Sunil Duggal : If you compare June on June, that is how we compare most metrics, is there
still an increase?

Gagan Ahluwalia : June on June I think they have come down.

Sunil Duggal : From 89 to 79 days. So I don’t think we should be concerned about that, we
do tend to bring down the debtors by the year end, and they do tend to swell up a little
during the year, that is a fairly routine practice.

Hozefa : On the international business, of course we know that there was an exceptionally
good growth - GCC and Egypt both have grown over 60%, but can you just take us through
what drove that growth of 60% GCC and Egypt, which have been in around for a while in
those countries?

Sunil Duggal : It is built on a base of strong growth in the mature brands like Amla hair oil
and Vatika hair oil which have been around for a while. But the true driver of growth has
been a very successful skin products. For example, we launched Vatika hair cream in the
gulf just a few months ago, this year we are expecting revenues of around 30 crores from
that one offering. Egypt we launched new hair oil that is under Vatika brand again, Vatika
olive hair oil, again a huge success. We also launched premium variant of Amla called Amla
Gold, then another Vatika variant the Vatika Olive hair oil. In Nigeria we launched one new
toothpaste that is called Dabur Herbal toothpaste, so the delta really has come from these
new products, otherwise on the back of existing products we would have probably shown a
growth of around 20% odd, but these have really lifted performance and we have a
fortunately a very high success rate in international in the last few quarters.

Hozefa : Okay, and what is the outlook for international going for the one year itself, I mean
you know you think 3 year to that 17%, but if you go at the pace you grew this year, you will
reach 17% very soon I guess.

Sunil Duggal : But I think it is not easy to replicate 54% growth quarter-on-quarter, our
internal metrics for international growth are in the region of 30-35. So don’t extrapolate 54%
number for the next 3 quarters. It’s still been growing at well ahead of twice of domestic and
we continue to witness margin expansion. So the good thing about this business is that not
only they are growing at that rate, it is expanding margins at a very equally rapid pace.

Hozefa : What is the EBITDA margin for the international business can you share.

Sunil Duggal : Around 14% in the first quarter EBITDA.

Hozefa : What would be last year?

Gagan Ahluwalia : 11.4% QonQ.

Hozefa : For whole of last year?

Gagan Ahluwalia : Margin was around 12.5%.

Sunil Duggal : So again very rapid growth, but again the same measure of margins always
is quarter-on-quarter and not sequential because of mix issues. So we are seeing a 250

Page 13 of 26
points increase here. So that’s the good thing about international that both revenues and
profits are growing.

Hozefa : Will we see the EBIT margins in the domestic business at same 20-22%?

Sunil Duggal : EBITDA is what we measure and we are seeing that around 16% in the first
quarter, we hope to see some expansion of this. A lot will depend upon inflation, but even
though EBITDA growth has been non existent in the first quarter compared to the same
quarter last year, both have been at around 16%. We do expect based upon current
outlooks on material cost that we would be able to expand margins.

Hozefa : For the entire company as a whole?

Sunil Duggal : I am talking about the domestic business. For the entire company as a
whole, it will increase irrespective because of Foods and the International margins would
have come up. On the domestic business the challenge in front of us is to improve margins
from the current 16 levels to anything decently above that, but if you take the consolidated
business then certainly going to be a margin expansion on the back of…., sorry, 16% is for
the consolidated business, and 17 is expected for the consolidated business, even for the
domestic business.

Hozefa : And what kind of price increases have you taken in the first quarter, have you taken
any price increase?

Sunil Duggal : Very little in the first quarter, some fine tuning of prices basically. Now we
want to see the inflation outlook and with the costs don’t seem to be rising, in fact we did a
general analysis a few days which showed inflationary impact of 0.5% over March ‘07 prices.
So inflation seems to be pretty much under control, may be we are a little bit luckier than the
others because of our peculiar mix of products sugar and oils etc. But the inflation does not
seem to be a monster like it was last year. On the back of a low inflationary environment we
will have to see, but I think as we have always done we would not like to sacrifice revenues
on the back of margin expansion on account of price increases.

Hozefa : And my last question is on Vatika hair oil. Vatika hair oil has been one category
which has been doing bad enough for the last 3 years now, and of course the logic was that
there was a huge price gap between pure coconut oil and Vatika, and the expectation was
that you would bring it down but that has not happened. Are you repackaging even hair oil or
only shampoos.

Sunil Duggal : Shampoo would be a comparatively less intense renovation, it involves

basically a label change, so there is no cost impact there, and that has already been done.
You see it on the shelves.

Hozefa : So big renovation is happening in Vatika.

Sunil Duggal : The big renovation is going to happen in Vatika hair oil where we are going
to completely reinvent the packaging and whole, not just the packaging but the entire
proposition including formulation etc. That renovation is going to be very very you know 360
degree and we will take place over the next 3 months or so. In a sense one of the reasons
was first quarter performance that we are drawing up inventories, we don’t want to a whole
lot of old packs in the market when we launch the new pack, that is what we are going to do.
In Vatika you will see immense activity on the marketing front.

Page 14 of 26
Hozefa : But that will again increase the price difference pure coconut and Vatika.

Sunil Duggal : No we will maintain margins here. We are pretty happy with the margins of
Vatika, we are northwards of 50%, so we can invest heavily behind this brand if we are
assured of revenue growth. With the current mix, we were not that sure that major
investment on that would yield results on the ground. With the renovation we believe that
this may be possible. That is the plan and if it works I think Vatika would be on the right track
once again.

Hozefa : Thanks.

Rajan Varma : Just to answer you question on the debtors, you see actually the increase is
merely a function of increased growth that we have had, and there has been no major
increase in either proportion or amount of receivables from March to June.

Hozefa : Okay. I was actually comparing this March to March, and the numbers here was
basically going from Rs. 74 crores to Rs. 142 crores, so it basically doubled.

Rajan Varma : Last year March ‘07 the figure was Rs. 141 crores. So at this point of time,
what we see in June ‘07 is much lower than that. It is lower than March figure.

Hozefa : Okay, perfect, thanks.

Male speaker : Sir can you throw some light on the opportunities available in our potential
markets and the opportunities markets that we classify.

Sunil Duggal : Yeah obviously yes, and finally is that we are getting strong growth from so
called tier II markets, these are markets like Morocco, Algeria, Yemen, Kenya, Ghana, and
these were markets which were classified either as potential or in most cases opportunistic.
So we are moving them up the ladder, for example, Morocco next year would be perhaps a
focus market and markets like Iran and Yemen would be definitely potential markets. In fact
Iran is already a potential market but we can add many such markets to the category. In this
tier II markets we are finding opportunities emerging and we are moving them up the ladder
from opportunistic to potential and from potential to focus much more rapidly than what we
had envisaged lets say a year ago. The reason for that and this is very interesting point is
that many of these fall under the Arab Television footprint, the primary channel of
communication in that part of the world is a channel called NBC, which is a Lebanese
channel which has a robust viewership. So we use that as a platform to promote our brands
in core GCC markets, but we find that there is huge spillover which basically creates a lot of
demand for our products in areas specifically in not on our radar, like let us say Yemen and
North Africa etc. and all the arabic speaking world. So we are getting the benefits of that
and we are further reinforcing our commitments in these markets by increasing spending on
these channels.

Male speaker : Okay sir on the Pakistan market, last year your sales grew by more than
100%, again this quarter it has grown by about 130%, what is mainly driving the growth in
Pakistan market?

Sunil Duggal : I think we have just focused a lot more in the market, we have got a team in
place, we have got some very high powered managers who are of course Pakistani
nationals, who are driving our business there, and earlier on we were running the business
literally out of Dubai with just a distributor in place. So we have got feet on the ground, we
are building a large sales organization, we are deepening distribution and that’s the reason.

Page 15 of 26
Male speaker : Okay, and sir last year your growth drivers were mainly Hajmola and Amla
hair oil as mentioned, are you seeing some new categories which you can….

Sunil Duggal : Pakistan, A, we have introduced toothpaste, B, we are introducing coconut

oil, and then whole of ayurvedic products because we feel those have a lot of potential.
Pudin Hara will be launched there, then we will be launching Glucose. So basically we are
widening the portfolio, now that we have got a good distribution network, we believe that can
carry a array of products which we never wanted to launch in the past. So it is both
deepening of the distribution network as well as widening of the portfolio which is to drive
growth, and now we are seriously looking at the possibility of setting up local manufacturing
there because the duty regime is pretty erratic, so we want to get over that uncertainty, but
then there is a country risk there, so we have to factor that out. So we will be sending a
team to examine the possibility of setting up manufacturing there and see the risks, the
opportunities out weighs the risk and we will set up plant there next year.

Male speaker : Okay. Sir Meswak grew by 31% in this quarter, and last year that grew far
slower than oral toothpaste portfolio. So what has changed in terms of strategy that is
driving the growth in Meswak?

Sunil Duggal : We focused little bit more on Meswak, last year it was not a focus brand.
We kept it on float. This year we are going to revamp packaging, we have created new
advertising, and we are giving it more focus on the ground. So it is registering growth. I
think we have barely scratched the potential of this brand. We still haven’t really invested
big time here. The next lever of growth as far as our oral care portfolio is concerned will
actually be Meswak and we hope to do that in the later part of this year.

Male speaker : Okay, thank you very much sir.

Sunil Duggal : You are welcome.

Agarwal from Motilal Oswal : Hi sir. I have couple of questions. The first question is
regarding home care business, we have grown by 24% here. First, what is the outlook on
the home care business and how is the performance of our brand Sanifresh over here? My
second question is regarding your outlook on the raw material prices and how far have we
been benefited from decline in the prices of molasses as also has our diet juice business
benefited from stronger rupee because I understand that we import a lot of food pulp and
concentrate etc.?

Sunil Duggal : We hardly use any molasses, I don’t think it is a key raw material for us, but
we use a lot of sugar and gur, and obviously the prices of those have been very soft, so that
has been one of the big factors in our margin expansion. We have benefited somewhat by
the rupee appreciation, because we import concentrate in to Nepal and also some
packaging material to Nepal, and the Nepalese rupee has also appreciated vis-à-vis the
dollar with respect to India rupee. So there has been benefit, even though it has not been
enormous amount, it has not had any very significant impact on our margins. Sanifresh was
a little bit below actions standards, it grew 11% by volume, in should actually be growing
much more. What we need to do and what we are not doing is to variant Sanifresh. We are
spinning off 2 or 3 variants in the next quarter. Aggregate growth would then be brought up
to in the 20% plus levels, which this brand should do. In terms of home care there is a huge
amount of activity which is going on. What we are doing is we are getting out of the
commodity space, we are perhaps going to exit coils category or at least not exit but not
really invest behind the coils category, we don’t believe that’s a good margin business to be

Page 16 of 26
in. We are very aggressively moving into hard surface cleaners and we have got some very
exciting plans to launch a array for hard surface cleaners, we have finalized the brand name,
it will be a new brand under Balsara portfolio. We will be launching at least 3 variants in the
6 months. We believe the scope for hard surface cleaners in this country is absolutely
phenomenal, and that also happens to be a very high margin business. So I think the whole
portfolio shift in home care is going to now evolve to emerging high margin categories and
we are getting out of low margin businesses like mosquito repellants, basically coils, even
though our creams would remain very, very critical to the Odomos brand.

Agarwal : Okay just a couple of more things, what is our market share in oral care business
now particularly toothpaste.

Gagan Ahluwalia : In fact our market share in April and May has gone up to around 11.9%
in volume terms.

Agarwal : Okay, can you share with us what was the sales value we achieved in Pakistan
during the quarter?

Sunil Duggal : In excess of Rs. 3 crores, but we are looking at around Rs. 35 to 40 crores
revenue in the current year. Our secondary sales has been in the region of around Rs. 8
crores. So in primary terms we have been reducing some pipelines. So we are looking at
between Rs. 35-40 crores for the year.

Agarwal : Thanks a lot.

Preeti from KR Choksi : Hello sir, can you give us the category wise revenue break up of
consumer care division?

Gagan Ahluwalia : Consumer care business has revenues in the range of Rs. 390 crores or
so in first quarter.

Preeti : I wanted how much was the contribution of hair care, oral care, and other
categories?

Gagan Ahluwalia : As percentage I will give you, hare care as percentage is 37% of total
CCD, then oral care is 23%, health supplements is 15%, digestives and candies is around
10%, skin care is around 7.5%, and home care is around 7%.

Sunil Duggal : You should keep in mind that these need not reflect the full year picture
because the supplements really peeks in the third quarter. Health supplements are more
like 20-22% of total mix, so you know you should factor it out.

Preeti : Okay, thank you very much sir.

Sunil Duggal : Welcome.

Biani from Capital Matrix : I am sorry if this question is being repeated. What is the activity
expected in CHD, which has been our low growth division, I just want to know outlook about
that?

Sunil Duggal : Two things are going to happen in the next 2 quarters, one which is going to
happen very soon is a complete packaging renovation, I think our classical portfolio has
been packaged in a very generic form, like all the other competitors, we need to radically

Page 17 of 26
upgrade packaging and make it more contemporary and connect better with the modern
consumer. The three major categories are Churans and Asavas and the classical
medicines, all three over a period of time, this year the Churans and Asavas next the
classical products will undergo a substantial amount of packaging renovation. The more
important initiative would be to introduce a slew of OTC health care products which are
ayurvedic in nature and we are looking at the branding issues and all are being fine tuned.
We expect to launch them towards the later part of the current year, and the success of
those initiatives would be critical to driving growth in consumer health, because once the
classical portfolio is renovated we expect steady growth of around 10% odd, it is hard to
drive growth beyond that, it is a fairly mature business. Growth really has to come from the
OTC products, which are patented, and we have a lot of plans for that.

Biani : Okay and my other question is about Vatika Soap, I have been actually hearing from
you that you are going to focus on this particular brand and I want to know what was the
performance during the quarter and what is expected there?

Sunil Duggal : See we expect sales of around Rs. 30 crores from our soaps portfolio in the
current year. First quarter we did in the region of Rs. 6 crores, so Rs. 30 crores is a pretty
realistic estimate. The soaps portfolio is an interesting outcome of the Vatika brand, I think it
is very important to built the overall Vatika franchise as complete beauty care solution.
Soaps is not central to Vatika. Vatika is always going to be more in the hair care domain
than in the body wash domain. It is an interesting initiative which has a fair amount of
promise in terms of scalability.

Biani : Okay, so is it going to be peripheral in near term?

Sunil Duggal : Well we don’t intent to become a mainstream soap player. This is at the
periphery of our Vatika initiative, which like I said the central part of Vatika, the core of Vatika
equity lies in herbal hair care.

Biani : Okay, thanks very much.

Sunil Duggal : You are welcome.

Shirish Pardeshi from Anand Rathi Securities : Hi! Sunil good evening.

Sunil Duggal : Hi! Shirish.

Shirish Pardeshi : Congratulations on good set of numbers.

Sunil Duggal : Thank you very much.

Shirish Pardeshi : I just wanted to understand you mentioned that in toothpaste, in case of
oral care you have grown by 15.4%, and the category has grown at 8%.

Sunil Duggal : Oh! Sorry, in oral care if you take tooth powders out, we have grown by 27%.
Tooth powders is a low growth category. The growth in tooth powders would be hardly 4-5%
and we have grown ahead of that, but the driver in oral care is toothpaste, not tooth
powders. Now if you just take toothpaste as a category, we have grown at 27 and category
has grown at 8%, so we have grown at thrice category.

Shrish Pardeshi : Yeah, that is right, my question is that which segment in the toothpaste,
the LPT is growing faster than the economies?

Page 18 of 26
Sunil Duggal : This quarter the economy offering Babool grew ahead of rest, whereas last
year they both grew at around the same pace. But this year Babool grew at around 30%,
Red grew by around 15%. Meswak which is our super premium offering grew actually 31%.
So there was a mixed bag. The economy and the premium grew at very fast pace. Mid
priced grew at a comparatively modest pace, but all of them grew well ahead of category.
So again we are the fastest growing toothpaste company in country by a wide margin.

Shirish Pardeshi : Do you have encountered that there is a shift from premium to economy
- coming down to downtrading happening at the lower LPT as a toothpaste?

Sunil Duggal : Yes there is, and the reason for that is that the economy toothpaste whether
it is Babool or even Cibaca are now offering very good value proposition. So they are
attracting people from the mid price toothpaste, so you can see that in the Pepsodent and
Colgate shares etc., there is a downward trading happening, which is acting to our benefit
because we have a very strong economy offering in form of Babool.

Shirish Pardeshi : So, who are the losers in the category?

Sunil Duggal : Sorry?

Shirish Pardeshi : Who has lost the share?

Sunil Duggal : I think Pepsodent, if am not mistaken has lost share. Gels would have lost
some share, Anchor would have lost some share. I am not too sure about CDC, CDC has
probably maintained its share, but I think that data you can pickup from Nielsen. We focus
upon our own growth, they are well ahead of category.

Shirish Pardeshi : Okay. My next question is that other than the shampoo categories and
soaps, which are the new categories you would intend to get in to CCD division?

Sunil Duggal : Very clearly skin care, and we are fine-tuning now the options in terms of
product offering. As a first step and that is a comparatively easy part which we are activating
right away is to expand the Gulabari brand into various basic skin care offerings which offer
great value and we are looking at moisturizers, we are looking at talcum powders, we are
looking at 3-4 type of products all under the Gulabari umbrella, all offering the same benefit
of you know the benefit of roses. So this is the first initiative and comparatively like I said
easier one. Then we are progressing on two different routes in terms of the main skin care
offering which we will be launching perhaps in the fag end of the current year and another
one sometime earlier next year. So skin care is perhaps a single most important initiative at
this point in time which we are progressing.

Shirish Pardeshi : Okay my last question on the retail venture, what kind of capex would
you have per store coming up in the end of this year. You mentioned 8-10 stores coming
up.

Sunil Duggal : Yeah in the current fiscal we plan to have around 8 stores, like I said those
would be to fine tune the mix not really as sort of revenue generation exercise, but basically
it will be more of a testing the waters. From there over the next 6 months after the end of the
current fiscal, we will be quickly into around 30 stores, and then we will propel it further into
around 100 stores by the end of the 6 month or so, and the format would be like I have said
earlier largely mall based, around 2000 square foot in term of size, and entirely in the health
and beauty domain.

Page 19 of 26
Shirish Pardeshi : Right, it is interesting to know that what kind of capex still I would be
interested in knowing that you would incur?

Gagan Ahluwalia : Currently, our estimates are around Rs. 1700 per sq. ft.

Shirish Pardeshi : Okay, and what kind of revenues in the full scale of operations you
would expect down the line two to three years?

Gagan Ahluwalia : Two to three years down the line our estimates are that we should be
doing something in between Rs. 20,000 to 24,000 per sq. ft. per year.

Shirish Pardeshi : Okay, thank you.

Sunil Duggal : Welcome.

Abhijit Kundu from Prabhudas Lilladher : Hello sir. Congratulations on good set of
numbers. Just had a few questions. One was on your sales tax paid during the quarter. It
has been flat in absolute terms, why is that?

Rajan Varma : It has actually gone down in percentage terms.

Sunil Duggal : In percentage terms, it has gone down. It is actually on account of lowering
of sales tax on the beverage portfolio, and we expect a further reduction when VAT is
integrated we would see there could be some more reduction in terms of the percentage
sales tax. It is a matter of time. So, overall the tax regime at least on the sales tax front has
been to our advantage.

Abhijit Kundu : Okay, and in case of other expenditure as percentage of net sales, it has
gone down, so what had been the main key things that have really brought down this
expenditure?

Rajan Varma : There has been a combination of expenditures basically with all the factories
now becoming under single head or three or four major heads, the overheads in general
have begun to shrink and as a result of that the overhead expenditures are coming down
whether it is in terms of trades, whether it is in terms of commission and things like that. So
it is a combination of general overheads that have come down.

Sunil Duggal : Its the operating leverage.

Rajan Varma : Operating leverage is happening and bringing those costs down.

Abhijit : Okay. If we take the volume growth during the quarter, the total volume growth I
am saying, it should be in the region of 16 to 17%?

Sunil Duggal : Our total revenue growth in the domestic business is 15, of which 3 would be
price.

Abhijit Kundu : I am talking about consolidated.

Sunil Duggal : You can say around 20% would be price and balance would be volume i.e.
20-25% is because of price change. It is not probably very different from the international
business vis-à-vis the domestic.

Page 20 of 26
Abhijit Kundu : I was actually speaking for the consolidated entity, that is the reason why I
am….

Sunil Duggal : It is hard to segregate, now the international business is so far spread that it
will have a continuing change which will then change the whole equation. I would see from
the point of view of the domestic business, 15% revenue growth driven by 12% increase of
the volume and 3% on the part of price increases. If you want me to do the analysis for the
consolidated business, I will have to look very deep into the country mix, the product mix, the
price increases, volume increases, quite frankly I have not done that analysis yet, but we can
do it.

Abhijit Kundu : Sir in case of the cost inflation in input, you said that 75% is raw material
and 25% is packaging, that is the break up of your total raw material cost. Of this, what has
been the increase in the 75% raw material cost and what has been the increase in your
packaging cost?

Sunil Duggal : See the increase in raw material cost is comparatively low because a lot of
these items have netted themselves off, whereas the packaging materials have shown a
fairly steady increase in terms of pricing, largely on account of that they are all hydrocarbon
derivatives, all parts and all of them have been impacted because of oil prices. Raw
materials tend to cancel themselves out. We have huge upsides for sugar, etc. We have
downsides for groundnut oil and dextrose, honey, for example, esapgol, so it is a mix bag.

Abhijit Kundu : Okay, and going forward, what is your call on the trend in raw material
prices?

Sunil Duggal : I think it is very favourable. I am talking about raw and packing aggregate,
as I was mentioning a little bit earlier, we did an internal analysis of raw material costs over
March ’07 prices for the current fiscal. In other words, we are hoping that there would be
practically no inflation as far as mix of raw and packing material is concerned in the current
year.

Abhijit Kundu : Okay. Sir in case of the hair care category, what is your call for the year,
because there has been a slight slow down in the growth during the quarter?

Sunil Duggal : Shampoos has been growing quite strongly at 25% odd. I think we can
actually increase this growth because we are launching a new variant of the shampoo, we
are doing a major packaging renovation. We are going to invest substantially behind A&P.
Shampoos, I will be disappointed if we don’t close the year at around more like 30% growth.
The key challenge would be to resurrect growth in terms of Vatika Hair oil, which like I said
declined in the first quarter, and as I mentioned earlier, the packaging renovation and
product changes should make that happen and we should see some growth coming from
Vatika. As far as Amla is concerned, 8-10% growth is what we can expect from this brand,
and what this brand has been consistently generating.

Abhijit Kundu : So from hair oils, if you want to break it up the hare care category into hair
oil and shampoos, from hair oils what is the kind of growth you would be expecting from, and
another question I had was how much would be Vatika as percentage of your hair oils?

Sunil Duggal : Vatika would be around 20-25% of hair oils. It is important but not dominant.
Amla is the big one there. And then we have Anmol Mustard, and Anmol coconut. Amla is
around 250, so it is out of the 350 crore hair oils, let’s say; 15-17%. To answer your earlier

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part question is that like I said a 30% growth in shampoos and a 10% growth in hair oils is
something which we would aspire to in the current fiscal.

Abhijit Kundu : Okay, and in case of your baby and skin care, how has been the quarter,
because I have seen Rs. 5.7 crores has been the sales in soaps, but are things really
changing from now on?

Sunil Duggal : Yes, soaps, I think we are turning it around. We had some problems in the
beginning, the variant did not do well. The second variant did better, the third has done
even better, so we are on a learning curve and we are improving with every launch. We
should be at around Rs. 30 crores in the current year, if the current momentum continues.
Baby and skin aggregate grew 26% and soaps have actually comparatively small part of
baby and skin, but the critical brands here were Lal Tail which grew by around 10%, also
other products in baby care like Janam Ghuti, etc., which grew at a very smart pace so
overall this category is doing well after comparative stagnation last year.

Abhijit Kundu : Right, and what about the plans to launch soaps under Dabur brand?

Sunil Duggal : Yes, we have plans for that. In fact, that may prove to be the stronger of the
two initiatives in soaps. We will be progressing soaps in two trajectories, one is the Vatika
soap, which is the herbal beauty soap, and one would be a strong, clean, medicated
ayurvedic offering under the Dabur Red brand, and we would see which ones we might
progress.

Abhijit Kundu : Okay, when would be the launch. When is the launch happening?

Sunil Duggal : In the third quarter.

Abhijit Kundu : Okay sir. Thank you.

Thodi from Irvina Research : Hello, my questions have mostly been answered, but if you
can just tell me that the capex that you said expected in the retail segment, is it include in
the 450-500 million for the final capex that you mentioned?

Sunil Duggal : Direct capex infusion into Retail will be by way of equity in future. Rs. 140
crores equity will be specifically put into that venture over the next few financial years, and
they would use that as well as debt to fund their capex requirements.

Thodi : Right, and your advertising, what is the presence in the southern region?

Sunil Duggal : Currently, around 11% of the revenues come from South. We obviously are
very keen to expand that base. South is growing a little bit ahead of the rest of the country,
but we intend to I mean grow it much quicker than what it is today. I would ideally like
growth from South to be driving as much as the rest of the country, and we are
strengthening our organization in the South to make that happen. Also having South
specific products, which we never did earlier. One of them has been test launched in
Bangalore, and we are planning to now extend it all over South.

Thodi : Okay, would there be regional advertising also along with…

Sunil Duggal : Yes, very much so. That is already done, and we have seen the results of
that come up in the last couple of years. South was stagnating before we launched

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aggressive regional advertising initiatives, and now we are going beyond that into regional
product initiatives.

Thodi : Alright. This is the last thing. Is there any benchmark which Dabur has like number
of people per village or income level targeted, in the rural areas?

Sunil Duggal : Our business is different in different parts of the country. For example, we
do more business per capita in say UP than we do in Andhra. So we penetrate deeper into
UP than we would do in Andhra because the cost of it should be proportionately lower there.
It is really that governing factor, so we build brands and build our equities and then penetrate
into the population strata, but to the extent that the cost of servicing is reasonable. Where it
crosses a certain threshold, then we use indirect channels like wholesale, etc.

Thodi : Alright, thank you so much.

Sunil Duggal : You are welcome.

Sunita Sachdev from UBS Securities : Hello sir, how are you?

Sunil Duggal : Hello, how are you?

Sunita Sachdev from UBS Securities : Sir a couple of questions. When should we see the
OTC pipeline in health care division really starting?

Sunil Duggal : We are testing out several options here and the products are being fine
tuned, they are being put into clinical trials. I think you should see these set of products
emerging by the third quarter of this year.

Sunita Sachdev from UBS Securities : : Q3?

Sunil Duggal : Q3 under single OTC umbrella and we are testing out various options in that
area, so Q3 is when hopefully we will be launching these.

Sunita Sachdev from UBS Securities : Okay. Second one is, what is the operating margin
in the international business?

Sunil Duggal : 13.9% EBITDA margins and operating margins would be around the same
because there is no other income or any extraordinary items.

Sunita Sachdev from UBS Securities : Okay. What is really driving the growth in the
glucose category, 50%?

Sunil Duggal : It is basically share gains. We are gaining over Heinz by offering greater
value, by having substantially better quality of distribution, that is one big advantage we
have.

Sunita Sachdev from UBS Securities : What is the category growing at, the glucose
category?

Gagan Ahluwalia : Glucose category is growing now at around 24.5% in value terms.

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Sachdev from UBS Securities : Okay, that helps, thank you very much. And one last one,
you said in your retail stores, you are expecting a revenue of Rs. 20,000 - 24,000 per sq. ft.
per annum, of which how much would be Dabur’s own sales?

Sunil Duggal : I don’t expect it to be more than 5%, but again this is really a call which will
be taken by the H&B management. The business unlike our other subsidiaries which are
managed entirely by the same Dabur team would be managed by an independent CEO who
is already in place, people like me would be on the board of that venture and we would
facilitate that business but the pursuits they take would be largely their own.

Sunita Sachdev from UBS Securities : So the product split is entirely on the basis of …..

Sunil Duggal : Entirely on the basis of business delivery.

Sunita Sachdev from UBS Securities : It is not really a Dabur vehicle.

Sunil Duggal : No, no, not at all. Dabur will obviously, I hope, has some presence in those
stores, but beyond that it is entirely the management call and how much emphasis they give
to Dabur and we will be negotiating terms with that enterprise like we do with any other
modern trade.

Sunita Sachdev from UBS Securities : Like an arms length basis.

Sunil Duggal : Yes.

Sunita Sachdev from UBS Securities : Okay, and this Rs. 140 crores of equity you said is
over three years?

Sunil Duggal : It is over three years.

Sunita Sachdev from UBS Securities : And what would be this year’s investment in equity.

Gagan Ahluwalia : Currently, I think it is in the range of around Rs. 7-10 crores.

Sunil Duggal : I think it will be under Rs. 10 crores.

Sunita Sachdev from UBS Securities: It will be staggered as you open up more stores.

Sunil Duggal : Yes.

Sunita Sachdev from UBS Securities : And your soaps division, you said, the growth has
been excellent from Rs. 3 crores whole of last year to Rs. 5.7 crores in this quarter, and you
said that it is Rs. 30 crores for the while of 2008.

Sunil Duggal : Rs. 30 crores will be the Vatika franchise.

Sunita Sachdev from UBS Securities : May be including Dabur it will be …..

Sunil Duggal : Dabur it will be more, but Dabur is yet to be launched, so I wouldn’t hazard a
guess on the numbers.

Sunita Sachdev from UBS Securities : My question on this is what is the extent of
promotion that you have on this brand?

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Sunil Duggal : At the moment, we have gross margins in the region of 35%. We expend
around 20% to 22% on A&P, so the portfolio at the pack level more or less breaks even,
which is fine by us because we are owning the brand. It should become profitable when it is
around Rs. 50 crores which should be sometime next year, but we expect both profitability to
come out of the Red brand as well which will be higher priced of the two.

Sunita Sachdev from UBS Securities : A more premium offering?

Sunil Duggal : Yes, so Vatika soaps is not central to the Vatika brand, it is not at the core of
our strategy, but it is an interesting initiative which we feel enhances Vatika equity and
provides us with a better connect with the consumer. So it is something which we are going
to pursue but it is not something which is going to be very central to our strategy.

Sunita Sachdev from UBS Securities : What about Vatika skin creams?

Sunil Duggal : May be not. We are planning to take the initiatives under a different brand. I
think we will stop at body wash as far as Vatika is concerned and concentrate upon hair
care. When you come to core skin care, then we believe that the Vatika equities may not be
relevant.

Sunita Sachdev from UBS Securities : Okay, and that will be another brand.

Sunil Duggal : That would be another brand, yes. We are looking at two new brands
coming up in the current year, one would be a skin care brand and one would be a hard
surface cleaners brand.

Sunita Sachdev from UBS Securities : What is the second thing you said?

Sunil Duggal : Hard surface cleaners.

Sunita Sachdev from UBS Securities : The hard surface cleaners, under Odomos?

Sunil Duggal : No, Odomos is insecticide. It is a repellant. This would be hard surface
cleaners like tile cleaners, marble cleaners, floor cleaners, etc.

Sunita Sachdev from UBS Securities : You had a surface cleaner in Balsara.

Sunil Duggal : There was a toilet cleaner. Now with toilet cleaner, it is hard to extend into
other cleaners so you won’t buy a toilet cleaner to clean your utensils.

Sunita Sachdev from UBS Securities : Okay. No that is a different category.

Sunil Duggal : Sanifresh will be siloed in the toilet cleaner domain. I wish we could extend
it, but we cannot. So, we have a new brand for our hard surface cleaners.

Sunita Sachdev from UBS Securities : Thank you sir.

Sunil Duggal : You are welcome.

Abhijit Kundu from Prabhudas Lilladher : One last question, what could be a very
sustainable growth in health supplements. During this quarter, I understand that glucose
has mainly driven growth.

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Sunil Duggal : Yes, glucose and honey. Honey has extremely well. But again a word of
caution, the health supplement category is driven by Chyawanprash more than the other two
products put together. Not depend upon how Chyawanprash performed, which is really a
Q3 type of initiative. If nothing, we would do 15% odd of Chyawanprash saying as a overall
health supplements would grow 20-25%. But the Chyawanprash game will really be played
in October to December or October to January, that is when Chyawanprash is sold and
depends upon the intensity of winter, the onset of winter, and whole host of other factors, but
I think even in the worst case scenario, even if it is the bad winter or a warm winter etc., our
Chyawanprash with its variants would record pretty handsome growth over last year.

Abhijit Kundu : Okay, so in Chyawanprash you expect to get about 15% growth for the
year?

Sunil Duggal : If you talk about Chyawanprash portfolio, I would be very disappointed with
that. If you take Chyawanprash as a standalone brand, 15% growth is a pretty decent one.

Abhijit Kundu : Okay, thank you.

Sunil Duggal : Okay.

Gaurav Deolalkar from First Global : Good evening sir. Just one question; in your annual
report, we did figure out net fixed assets have reduced substantially, and I believe that is
write off from goodwill, so is there any write-off of goodwill in this year FY07?

Rajan Varma : This is last year when we merged our entities of the three Balsara Group
companies, the accounting treatment that was given on the goodwill and in consolidation it
had to be eliminated which resulted in the reduction that you are referring to.

Gaurav Deolalkar : Okay. I believe there are increasing loans as well, mainly short-term
loans, is there is any specific reason for that?

Rajan Varma : There is nothing, it is only a timing issue, there is nothing extraordinary. A
little bit borrowing on Dabur Foods expansion, but nothing, that is only a timing issue.

Gaurav Deolalkar : Okay. Thanks a lot.

Gagan Ahluwalia : Thank you Rita. I thank all the participants for joining the call. The
transcript and the recorded webcast of this call will be put up on the website shortly for your
reference. Once again I thank you very much and have a nice evening.

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