Company Specific 1. Market share Dabur is expected to post 10% volume growth in FY13.

. By the second quarter of FY13 the rural exposure will increase to 28000 villages as compares to current 14000 villages. Daburs domestic advertisement to sales ratio stood 10.6%, its lowest in the past 4 years. Strong branding brings pricing power and higher profit margins. PBIDT of GSK & Colgate in FY12 were 22% & 24% respectively while Dabur was 17% due to lack of advertising.

2. Market structure

3. Barriers to entry Nearly 95% of all the FMCG players sell their products through traditional outlets. Modern retail accounts only to 5%. The countrys retail outlets total more roughly 9 million, while modern retail outlets total up to a mere 3000. So even if multinationals are given allowance it is not going to have a macro affect.

4. Quality of management The management is a mixture of professional & family based having professional expertise under the chairmanship of Dr. Anand Burman. The company has complied with all the guidelines of Corporate Governance practices. During the year under review the Company has sustained its long term credit rating of AAA. 5. Quality of plant Dabur has set its sights on certifying all its operational locations with the Integrated Management system OHSAS 18001 and ISO 14001 Occupational Health, Safety and Environment. Moving towards this goal, Dabur has got nine of its twelve manufacturing locations accredited by TUV NORD. This standard is the foundation of the overall health, safety and environment framework of Dabur. Dabur today has manufacturing plants in 12 locations, Baddi (Himachal Pradesh), Pantnagar (Uttaranchal), Sahibabad (Uttar Pradesh), Jammu, Silvassa, Nasik, Alwar, Katni, Narendrapur, Pithampur, Newai (Rajasthan) and Siliguri (West Bengal). During 2011-12 the company added a Honey plant in Baddi. Another unit has been established in Baddi and commissioned in March 2012 to manufacture Chyawanprash, Toothpaste, Glucose and Odonil.

6. Process technology Dabur has wide range of products from herbal to ayurvedic to hair care, baby care, skin care, health products & food & juices. The Supreme courts proposal on the ban of plastic in packaging can seriously impact the revenues of Fmcg companies. 7. Locational advantage In Pakistan the business of Dabur was 23.13 cr in 2010-11. The govt. has now taken initiative to increase bilateral trade. This is supposed to increase the sales of dabur. Dabur India cash reserve increased from 662 cr in 2009-10 to 1128 cr in 2011-12 due to acquisition of Hobi Kozmetik (Turkey) in 2010 and Namaste Group (US) in 2011. The companys debt increased from 106cr in 2009-10 to 273cr in 2011-12. Steep valuations in the domestic market have limited the number of domestic deals. Fmcg stocks have gained 2025% in revenue. 8. Quality of labour

9. Industrial relations Dabur HR Team is also actively involved in Corporate Social Responsibility initiatives across various locations and works towards promoting health, education and alternative employment opportunities to the not so privileged members of the society. 10. Cost structure Increase of cost of raw materials & rupee depreciation has made imports more expensive. fmcg companies increased prices by 8-10% since july 2011. In presence of policy paralysis the rupee is expected to perform badly and further increases prices.

11. Marketing set up During the year the company undertook a distribution re-alignment exercise, in which Daburs erstwhile strategic business units, Consumer Care Division (CCD) which focused on Healthcare, Home & Personal Care and Foods and Consumer Health Division (CHD) which focused on over-the-counter (OTC) healthcare brands and traditional Ayurvedic medicines were integrated into a unified structure or SBU called Consumer Care Business 12. 13. 14. 15. 16. 17. 18. Effective rate of protection Financial Ratios Net Working Capital Current Ratio Quick Ratio Inventory Turnover Average Collection Period

19. 20. 21. 22. 23. 24. 25.

Average Payment Period Fixed Asset Turnover Total Asset Turnover Debt Ratio Debt-Equity Ratio Times Interest Earned Fixed Charge Coverage

Industry Specific 1. Input Output Relations Due to increase in cost of raw materials and rupee depreciation which have made imports costlier FMCG companies have increased prices by 8-10% since july 2012. In lack of implementation of recent reforms the rupee depreciation is expected on account of lower growth. With weakening monsoon the expected in the coming fiscal, the rural consumption is expected to be affected which contributes to about 40% the companys business.

2. Consumption Patterns The consumption patterns are based on the GDP numbers and usually expected to grow 23% in excess to the GDP numbers, thereby the consumption is expected to revolve around 10 to 11% in future. FMCG sector is expected to grow in the range of 12% to 17% upto 2020 and would touch a market size between of Rs. 4,000 to Rs 6,200 billion by 2020.

3. Industry Life Cycle

4. Industry Demand-Supply Gap 5. Input Costs & Taxes The rise in sugar, wheat, milk can raise input costs. In 2011 despite of a cut in excise duty to 9% by the govt., Dabur had to increase its product cost by 4%. 6. Dependence on Scarce Resources

Rural India Contributes to a third of the FMCG sector in India. In the near to medium term rural growth may be impacted by deficient rainfall. And the quality of input may need to be compromised.

7. Energy Intensity of Processes

8. Environmental Impact of Processes Rainfall deficiency, which was at c. 22% (as of July 25, 2012), if continues may impact rural demand and prices of agribased inputs going ahead. The weather office has declared 2012 as a drought year which means it would impact the crop output, rural income & demand. Rural India Contributes to a third of the FMCG sector in India. In the near to medium term rural growth may be impacted by deficient rainfall.

9. Waste Disposal Constraints Small yet significant steps are being taken to not only reduce our carbon footprint but also continuously monitoring waste generation and constantly improving effluent waste treatment plants across all our manufacturing units. Efforts are also on in full swing to conserve and maintain ground water level through a variety of measures, and we are proud to announce that Dabur has achieved zero discharge of water at its units.

Economy Specific 1. GNP Projections India has projected an growth of 6.9% & 7.3% in GDP for the year 2012 & 2013 respectively. Though growth has resumed post 2008 economic crisis, the global environment continues to remain challenging. But Indian economy faced some slowdown in growth trajectory with Real GDP growth at 6.5% for FY12. GDP growth rate slowed down from 8.4% in FY11 to 6.9% in FY12. As per a recent study by Knight Frank and Citi Private Bank, the North American and Western European share of world real GDP will fall from 41% in 2010 to just 18% in 2050 while, developing Asias share is expected to rise from 27% to 49% in 2050. China will overtake the U.S. to become the worlds largest economy by 2020, which in turn will be overtaken by India in 2050.

2. Business cycle / Growth rate cycle

3. Macro-economic policy changes

4. Fiscal Policy

5. Tax Regime Reforms in Goods & Services Tax (GST) will be booster for consumption. Consumption in India is somewhere between 60 to 65%. GST standardizes procedures across the country & addresses the concern of lowering price of consumer products, encourage consumption & eliminate tax erosion. 6. Monetary Policy 7. Foreign Trade Policy 8. Industrial Policy 9. Labour Laws 10. Population projections Population in Rural areas expected to be 833.1 million & 377.1 in urban areas. So the FMCG sector is expected to perform well on account of increased performance. By 2020 the percentage of Indias population living in cities will rise to 35% from 31% in 2010. Urban dwellers not only tend to increase their purchases but also spend on different items thereby giving a boost to consumption. The share of nuclear families has risen from 61% in 2006 to 66% in 2010 and the per capita spending of nuclear families is 20 to 50 per cent higher than traditional joint families.

11. Demographic profile 12. Income distribution Disposable income continued upward trend in FY12 but there may be near term pressures. It is growing at 15% CAGR.

The average household income is set to rise nearly 3 times between 2010 and 2020. The income pyramid in India which typically had a wide base of struggler households (having per capita income <US$ 3,300) is quickly becoming a diamond, as household incomes of the middle income groups grow. As income levels are rising there is also a clear trend of increase in share of non-food expenditure in both rural and urban India. The relative share of expenditure on non-food items is a strong indicator of economic development and prosperity as with economic wellbeing people tend to spend more on categories other than food. This is exactly what has happened in India with the share of non-food expenditure increasing from 36.0% in 1987-88 to 46.4% 2009-10 for rural India and from 43.6% to 59.3% in urban India.

13. Global developments