Fourth Quarter/Full Year - Dabur India Limited

Dabur India LimitedFY04-05 Earnings Conference CallApril 29, 2005Conference Call on the Audited Financial Results for the Year Ended 31 st March, 2005performance of Dabur India Ltd.Dabur India Ltd.’s ParticipantsMr. Sunil Duggal, CEO (Chairperson)Mr. Rajan Varma, CFOMr. N. Venkatakrishnan, VP-CommercialMr. D. K. Chhabra, AGM-FinanceMr. Ashok Jain, AGM-Finance and Company SecretaryMrs. Gagan Ahluwalia, DGM-Corporate AffairsSunil Duggal : Good afternoon ladies and gentlemen. I am pleased to present to you theannual results of Dabur India for the year 2004-05. Fiscal 04-05 has seen revival ofconsumption both in rural as well as in the urban sectors of the economy, which isdemonstrated by the higher category growth, especially in categories like hair oils,shampoos, and tooth paste. The industry is expected to maintain its current momentum ingrowth and with normal monsoon this growth could further accelerate.Dabur India Limited has posted growth in sales of 15.6% on consolidated basis and 10.5%on standalone basis. The growth in net profit was 46% both for standalone and theconsolidated entity. The company’s strategy to pursue strong growth through aggressivenew product programme, expansion into new markets, and becoming more cost efficient isbearing results which are evident in these numbers.While the domestic business has grown at 13.5%, the international business posted a strong43% growth, increasing its share to 12% of total sales. We also managed to post marketshare gains in almost all the categories in which we operate.In the consumer care division, the hair care category has registered growth of 11%. Dabur’slargest brand, Dabur Amla hair oil, grew by 15%, crossing sales of 200 crores. Our secondlargest brand in this category, Vatika hair oil, posted a 13% growth and also increased itsmarket in this category from 6.9% to 7.6%.The shampoo portfolio reported 14% volume growth, although in value terms it was flat dueto price rationalization. This happened across the industry.The oral care category performed well with 10% growth, and the key growth driver here wasRed toothpaste, which has touched sales of 50 crores in the second year of its launch.While Lal Dant Manjan declined marginally due to de-growth in the entire category, theoverall Red franchise has grown by 11%. As you would know our presence in the oralcategory would now by further strengthened with the acquisition of the three toothpastebrands of Balsara, however, they are not as yet reflected in the financials as the Balsarabusiness has been taken over with effect from 1 st April 2005 and will become part of ourconsolidated operations current quarter onwards.Page 1 of 1

The health supplement category recorded moderate growth of 2.3% due to marginal declinein chawanprash. The entire chawanprash category was impacted by delayed and shortenedwinter and witnessed a de-growth of around 6%. However, our brand maintained its shareof 61%.Dabur Honey continued its strong growth trend recording 24.6% increase over last year.In digestives and confectionary, while overall growth was just 2%, the key brand, Hajmola,showed a strong recovery with 9.2% growth, reflecting the inherent potential of the brand.Focus in this category would be to consolidate the new launches made under the Hajmolaumbrella, such as Hajmola Anardana and Yumsticks.The baby and skin care category performed well with 13.7% growth, and in this segmentDabur Lal Tel and Gulabari posted strong growth. Two additional launches were madeduring the year into skin care, namely, Anmol cold cream and Vatika honey and saffronsoap, which will provide entry into the mainstream skin care segment.The foods business, which is currently the fastest growing business, grew by 51% to touchsales of Rs. 130 crore. The fruit juice brand Real crossed the 100 crore mark during theyear. With this impressive volume growth the profitability of Dabur Foods improvedsignificantly to Rs. 5.3 crore from Rs. 1.5 crore last year. The subsidiary of Dabur Foods,Pasadensa Foods, which manufactures fruit concentrates for the foods business, becameoperational during the year.As you know a dedicated team has been put in place to grow the southern market in aconcerted manner. The strategy for this region began to be implemented and startedyielding results with 24% growth in this market resulting in an increase in contribution ofsouth region from 6.5% to 8%.On the international front, the growth strategy has gained momentum, which is reflected inthe strong growth of 43% in revenues. Markets like Bangladesh, Pakistan, Egypt, Russiaetc., performed well with almost 100% growth in some of these. Middle-East, being a moremature market for us, grew at 24%. The unit in Nigeria has started operations and isexpected to be scaled up significantly in the near future.On the whole, the company did well on the sales front. On the profitability side as well, thegrowth has been quite significant. This has been a result of EBIDTA margin expansion ofabout 280 basis points, and a reduction in interest cost. The savings from newly set upmanufacturing units are contributing to this growth in EBIDTA besides the cost efficiencieswhich are flowing in due to the company’s focus on optimizing costs on all front, be itprocurement, supply chain, or administration.The company commissioned its largest facility in Uttaranchal during the year, which becamefully operational in the last quarter. This plant is a modern facility and conforms to worldstandards in terms of quality and manufacturing practices. A beverage unit has beenacquired at Jaipur by Dabur Foods to supplements its manufacturing capacity for smallpacks and indigenous flavors at a cost of Rs. 6 crore.The company had signed a deal to acquire the Balsara Hygiene and Homecare business inJanuary 2005. The deal was completed on 1 st of April 2005 after obtaining shareholders’approval. With this the three Balsara entities have become subsidiaries of Dabur IndiaLimited. The integration of this business with Dabur is underway. The sales and distributionset up has been completed integrated and the back end operations are in the process ofbeing integrated. The focus on the near-term would be on revitalizing the brands with goodadvertising and marketing support and bringing the business back on track within a year orPage 2 of 2

so. The profitability of Balsara business is also expected to improve to Dabur standards afterthe initial investment phase is over.On the balance sheet front, the working capital of the company reduced further to negativeRs. 70 crore from minus 16.9 crore last year. The significant reduction happened due tobetter management of creditors. The inventory days was slightly up because of theupheaval in trade channels that took place due to VAT implementation.As you would have seen the return on capital employed of Dabur India has increased by 400basis points to 39%, and the return on equity has gone up to 45%. The company hasmaintained its pay out ratio close to 50% in spite of the major capex program of Rs. 56 croreand the Balsara acquisition of Rs. 143 crore during the year. All these have been managedwithout any major increase in the debt equity ratio of the company.As we enter the third year of our strategic road map which was laid out in 2002-03, we areconfident of achieving the milestone of Rs. 2000 crore turnover by 2006-07 and improvingour profitability and efficiency to best in class levels.With this I invite questions, which I will be happy to answer.Nikhil (SSKI Securities) : Hi Sunil this is Nikhil here.Sunil Duggal : Hi Nikhil.Nikhil: Congrats on the numbers, you keep surprising every quarter. Just post this Balsaraacquisition, is it fair to presume that once the integration is through, which you are already inthe process of, the margins for the consolidated entity would be flat for the current year?Sunil Duggal : We would seek improvement in the consolidated margins even in the nextyear; however, the rate of increase of the margin expansion would certainly slow down a bit,because of the acquisition. Acquisition should be profitable next year but certainly wont getthe same kind of margins as we generate in Dabur India.Nikhil : Okay, and you would assume that would be the same case even couple of yearsdown the line, that the Balsara portfolio will not have the similar margin structure as theDabur portfolio ?Sunil Duggal : Balsara inherently has got similar margin structure, it is just that it has to gothrough an investment phase over the next two years in terms of building up brands etc.Currently, the business is highly profitable, in fact the home care portfolio of Balsara enjoysmuch higher margins than the Dabur business.Nikhil : Okay, and within the Balsara portfolio any product line or segments which youbelieve you would not pursue as aggressively?Sunil Duggal : Not at this point in time. ‘Odopic’ could be a bit of a question mark, but at thispoint in time we are committed to going ahead. But we may re-evaluate the options for thiscomparatively minor brand in the next few months.Nikhil : Okay, thanks Sunil.Sunil Duggal :You are welcome.Page 3 of 3

Sameer Deshmukh (Capital Market): Hello sir and congratulations for the excellent numbers.My question relates to the Real juice. Sir congratulations for crossing the turnover of 100crore in that respect. Where do you see the top line growth of this segment in the nextcouple of years?Sunil Duggal : I wont be surprised if brand Real crosses 150 crores in the next fiscal. Thegrowth rates are very fast, the momentum in the business is high, and we see no reasonswhy growth should slow down.Sameer : Okay, and one more question sir, with respect to Dabur Lal Dant manjan, thevolumes have come down by around 7.1%, whereas in case of Dabur Red toothpaste theturnover has increased to around 50 crores. So is this a general trend that this dantmanjansegment is decreasing or is it specific to Dabur India?Sunil Duggal : I think the tooth powder segment is not increasing as fast as toothpastesegment. Now whether it is declining is a moot point because it need not decline in nextyear, but certainly we don’t expect the pace of growth to be commensurate with toothpaste,that is where the growth comes from. We would seek to maintain our LDM volume, I think itwill be unrealistic to expect it to grow sharply, and strongly build the toothpaste franchise.And the acquisition was strategically very important for us because the trend is towards thisspace.Sameer : And sir one last question is relating to the international business. Is the productportfolio in the international business more or less similar to the domestic business ?Sunil Duggal : Yes, in a sense it is substantially similar. It is similar even though it will followthe same architecture but there would be, let us say, more emphasis on health supplementsand nutraceuticals for the developed market as compared to the others markets. So let ussay for the semi-developed markets there is greater emphasis on personal care portfolio.For the developed markets health care is the focus.Sameer :Okay. Thank you very much sir and congratulations for the numbers again.Hemant Patel (Enam Securities) :Hi Sunil, I just had one particular question pertaining to, a.)the VAT issue, and in that Dabur India Limited actually showed a slowed pace in growth forthis particular quarter, was it predominantly because the trade actually took up less stock atthe last quarter?Sunil Duggal : Yes, I think so. I think the growth in quarter four would have been higher hadit not been for VAT. Trade was not inclined to buy. They were pretty skittish and theywanted to scale down investment consequent to the uncertainties. Now, we could have gotsales by extending credits and by giving them terms, which were not acceptable. We did notwant to do that, so we said we would rather take some hit on the top line.Hemant Patel : But is it supposed to, I mean, looking at the inventory levels at which theindustry is functioning at, would we see this like evening out going ahead in the nextquarter?Sunil Duggal : Absolutely, it would even out. Because even if trade down stocks, that is aone-time hit, ultimately everything depends upon the consumer off take. Consumer off takeremaining pretty aggressive, I do not think this is something, which we need to worry about.Hemant Patel : What would be the average inventory level at the stockist level?Page 4 of 4

Sunil Duggal : Currently we carry inventories of around 30 days with the stockists. I think itcame down to a level of around 22 days by end of March. In April, we are seeing furthershrinkage happening with regard to wholesale even though retail is normal. So overall thestock pressure in the trade channels has substantially reduced in the last two months, butwe are seeing now revival happening in the last week of April because the down stockinghas happened to replenishment levels. But I think next month onwards we should see goodsales happening once again.Hemant Patel : Could you give me an overall view of this particular trend which we areseeing in terms of rural demand or urban demand and up-grading which has been talkedabout quite widely?Sunil Duggal : We saw definitely stronger urban demand happening last year. Ruraldemand was weak because of the monsoon, and hopefully the trend should reverse now.We should see, I think, the whole sector would expect strong revival in rural demand now toreally take up growth to the next level. If that does not happen consequent to a poormonsoon, yes, then the growths would be modest once again.Hemant Patel : Okay. Thanks a lot Sunil.Sunil Duggal : You are welcome.Princy (Citi Group) : Hi Sunil. Actually this is Princy. Congrats on very good set of numbers.Just one question was on your margins, essentially for FY05. We have seen that excisesavings have primarily been the lever for margin expansion. Going forward do you see anyadditional levers, which could drive up margins, especially for 06 and probably Balsara couldbe a potential drag on margins, that is my first question. And my second question is on yournew product pipeline, you have done fairly well in terms of introducing new products over thelast few quarters and scaling them up as well. Could you throw some light on what could be,you know, future product pipeline for 06, which would drive your growth? Thanks very much.Sunil Duggal : Yeah, now to answer your question, we would certainly see a marginexpansion happening next year over what we have achieved in current year. Q4 issubstantially ahead of the average for the year. But the pace of growth of the expansion inmargins would perhaps slow down little bit because the excise benefits have been by andlarge captured. But definitely we see margin expansion happening. Balsara is small ascompared to the Dabur business, so even if the margin is lower, it would not impact overallmargins to that extent. Also at consolidated level, we are looking at margin expansionhappening in foods and international business, so overall we would look at margin growth tocontinue. On the second part of your question on new products, yes, a very aggressive newproduct introduction program as usual. We are looking at a new nutritional supplement, veryinteresting product, which we will test launch next month. We have test-launched soap inthe fag end of the last year in Bengal, and we would hope to extend it nationally. We arelooking at new variants of Vatika shampoo, at least one variant of Vatika Shampoo. Veryinterestingly, we are looking at now fragmenting chywanparash, we are looking at variantsfor different consuming segments and multiple number of OTC products under our consumerhealth division’s umbrella. So, yes, lot of new product activity. We are budgeting itsubstantially both in terms of revenues and advertising investment. So, the pace ofintroduction of new products would continue at very aggressive levels.Princy :Sunil, just a follow up, if you could give me the absolute excise number for full year05, FY05?Page 5 of 5

Sunil Duggal : Absolute excise numbers, okay, just hang on for a minute, we will give themto you. I have the percentages but not the absolute numbers. The net saving, just toanswer your question in a different way, has been 20 crores.Princy :Okay. No problem. And also on the, given that you have a very aggressive pipelinefor new products, what would be the guidance in advertising revenue, I mean, would they bestable or could we see them going up as a percentage of sales.Sunil Duggal : We would look at growth from 14.5% going up to around 15%.Princy :Thanks very much Sunil. Thanks a lot.Harish Zaveri (Edelweiss Capital) : Hi Sunil. Just a call on Balsara’s revenues, last quarterwhen you acquired the company, at that point in time we were told that Balsara hadrevenues of around 176 crores a year ago, but they were declining. So, what sort ofamalgamated Balsara will you take into account from 1st of April, that is one question. Andthe second part is, we do seem to be seeing a stronger demand happening across FMCGactually, and I just want to know the dynamics, the underlying dynamics of what has actuallychanged. Is it really buoyancy of the economy, is it people wanting to upgrade, what hasactually changed, within your product portfolio are you actually seeing people move up thechain say to your higher end products or is it basically new products which are driving overallsales?Sunil Duggal : To answer your first question, we would be looking at revenue base fromBalsara, both overseas sales and domestic sales, in the region of 200 crores next fiscal, justto give you a feel for Balsara numbers. Current year (2004-05), they would be more in theregion of around 150, but then there was substantial amount of clean up obviously in the lastpart of the year and pressure on the Balsara business because of the consolidation process.We do not see any great deal of movement in terms of people going up the value chain, thatdoes not seem to be visible. What is happening is that the value proposition at the economylevel is improving dramatically. So you have better products coming at lower price points,with this for example in toothpaste, in shampoos, etc., so people are buying more of thoseproducts. The economy segment is today the fastest growing, and hopefully we will seepeople go up the value chain over a period of time, but it is not very visible now.Harish Zaveri : Okay. I missed last part of your answer to Nikhil actually, in which you werementioning that home care enjoys better margins within Balsara’s product portfolio. Butwithin the portfolio itself you would be taking a call on within three months on a particularproduct line, I missed the last part of your answer…Sunil Duggal : There is a comparatively minor product called Odopic which is a scourerwhich has got strong franchise in West, but not much elsewhere. So we have to take a callon that whether we would like to scale up the product, maintain it, or scale it down. Andother than that, in terms of the other three brands, Odomos, Odonil, and Sanifresh, wewould invest behind them substantially.Harish Zaveri : Okay. Overall in terms of your own product portfolio, we have seen healthsupplements actually decline…Sunil Duggal :The Chyawanparash, yes, honey has actually grown…Harish Zaveri :And clearly it was like one of your, if I were to look at the erstwhile Daburportfolio, it would be like 2/3rd of your portfolio, this would be like almost 13-14% ofrevenues, maybe it has gone down over this period of 12 months or so, but clearly in yourPage 6 of 6

core portfolio, two brands, Lal Dantmanjan and chyawanparash, don’t seem to be doing aswell as you would have possibly like them to…Sunil Duggal :That is right, Chyawanparash only in the current year. Even LDM for thematter, only the current year. But I think the issues with regard to LDM are more structural,more environmental, basically lower growth in tooth powders, shift of consumer preferencesto toothpaste. We are well prepared for that because of its expansion in toothpastefranchise. The issues with regards to chyawanparash I think are more one off, partly onaccount of environmental factors, partly on account of things within our control. Sochyawanparash we expect to put quickly back on rails. In the case of LDM, while notbudgeting or really expecting a decline to happen, we would be prepared for a decline byscaling up toothpastes to counter that.Harish Zaveri :In your opening remarks at the end of your opening remarks you hadmentioned that you would be looking crossing the 2000 crore mark, that was what, by FY06.Sunil Duggal : 06-07. We have come pretty close to that, but crossing it, I think the milestonewould be crossed in 07.Harish Zaveri : Fair enough. Thanks a lot sir.Sunil Duggal : Thanks.Balaji (Sundaram Mutual Fund) :Yeah sir, just one small question. Any of the sales that wasmade during this quarter, was it on a returnable basis?Sunil Duggal : No, no… We don’t do any such sale. Nothing was on returnable basis. Like Isaid we took a hit on sale, we could have sold more if we had given in to demands of thetrade that we treat it as returnable basis or consignment sales or whatever, but we didn’t gointo the temptation. That is why you would see little bit lower growth in top line in quarterfour. Our trade channels are very clean, you can see it if you go to the market. We havevery high levels of hygiene on the ground and that is one of the reasons our business hasgrown progressively over the years.Balalji. :Okay. Thank you.Madhusudan (Citi Group) : Congratulations to the team. Actually I had a small question,since you are making the saving on excise, how much of it is being re-ploughed in thebusiness?Sunil Duggal : Well it is hard to answer the question, but I would say part of it beingdeployed. Part of it is flowing down into the bottom line, part of it is being deployed in adpro,and also to capture these excise benefits, we have incurred some costs, but that was onetime. But substantial amount of these benefits would go down to the bottomlineMadhusudan :Okay, and just to get this number ahead, you said Rs. 33 crores is the savingyou had on excise right?Sunil Duggal : Rs. 20 crores. See excise savings, you have to look at it a bit more carefully.There is gross excise, which come to a very high number. But there are some costs such asloss of first point sales tax, freight disadvantage, and very importantly loss of MODVAT, sothey scrape away around half of the gross gain. So what you see is around half of what thegross excise benefits are. While the benefits are substantial, they are not as much as theyappear on paper for excise.Page 7 of 7

Madhusudan : Is that a feel on stand alone number?Sunil Duggal :No, stand-alone like I said is Rs. 20 crores , that is the excise benefit whichflowed in. So, out of our profit of Rs. 148 crores, Rs. 20 crores can be attributed to excise.Madhusudan :Okay, and can we assume a similar or slightly bigger number in FY-06?Sunil Duggal: Excise savings will be more, yes, because we will get the full year of benefit.Madhusudan :No, I am asking on an incremental basis, Rs. 20 crores you have alreadysaved this last year, so on an incremental basis, can another Rs. 20 crores come in terms ofsavings in FY-06?Sunil Duggal :Probably not Rs. 20 crores.Madhusudan :You want to make a guess?Sunil Duggal : No.Madhusudan :Thanks and good luck.Sunil Duggal :Thank you.Nishid (Birla Sunlife) : Hello sir. Congrats for the excellent financial year. I have twoquestions. The first is the performance of the foods and the international business has beenexcellent, so what would be the outlook going forward for both these businesses, and thesecond is again on your food business, as you scale up, do you expect margins to improve?Sunil Duggal : Yes, definitely. The business is operating on comparatively low grossmargins, somewhere in the high 20s. As the business grows, the costs won’t go upcommensurately with increase in revenues. A lot of margin expansion, which you have seenin foods has come in because of top line, in fact almost entirely on account of top line.Definitely the business will progressively improve in profitability. Similar will be the situationin the international business.Nishid :Okay. Thanks.Yasmin (Anand Rathi Securities): Good evening sir. I just had one question. You havebeen telling that you will be launching some products in chawanprash - you were talking of anew range all together. How much have new products contributed to sales this year in FY-05 and how much do you anticipate them to be in FY-06?Sunil Duggal : The contribution of new product sales was approximately 6% to revenues inthe last financial year. This would not be very much off the mark in the next financial year.New products is inherently very unstable category, so it is hard to predict numbers for that,roughly 6% of sales is what you can expect.Yasmin :Right sir, and in the existing brands like chawanprash and all, barring the newlaunches what you are talking about, is there anything else that is left to be done to kind ofrejuvenate the category?Sunil Duggal :Absolutely, there is lots to be done. At the moment, we have been treating aschawanprash as a monolith brand for all the unique segments. There is a lot of merit infragmenting in the brand.Page 8 of 8

Yasmin :Okay, sir the last question pertains to, have you lost shares in any of thecategories?Sunil Duggal : None. We have maintained or improved shares in every category in which wehave been working in. There has been no share loss.Yasmin :Thank you sir.SSKI Securities.Nikhil (SSKI Securities) :Hello, Nikhil here. Just one thing on Balsara, how much of theproduction facilities are likely to shift in Baddi or any one of our existing facilities?Sunil Duggal :Substantial amount of Balsara production would come out of Baddi facility -very, very substantial amount. But other production facilities would be maintained.Gagan :Just to add to that, the Balsara business itself has a facility in Baddi.Nikhil :But that facility does not really enjoy the tax benefits, I believe, it is nearing the endright?Gagan :No this facility was also setup in 2004-2005, so it enjoys the same benefits.Sunil Duggal : Balsara also were following the same path of setting up units in excise freeareas and lot of production would be coming out of that. In fact, we would be moving someof our production also to Baddi unit.Nikhil : So we are seeing that part of the facilities will get shifted to our unit in Baddi andpartly you will utilize your existing facilities of Balsara.Sunil Duggal :Our facility is already operational. We were planning to expand capacities inour facility, which may not be necessary now because there is surplus capacity available inthe Balsara plant in Baddi. So we will make the most efficient production program. This willsave us a little bit in terms of capex, because we need not expand our own facility -toothpaste for example. We had substantial expansion plans, which may not be requirednow.Nikhil :Okay, thanks.Sunil Duggal :You are welcome.Janesh (Network Stockbroking) :Sir, I just have a few questions. One is on the Balsara,what kind of growth you had in FY-05, and you have said that you will be matching themargins for Balsara to the level of Dabur India?Sunil Duggal : That is not an immediate thing, that would take a little bit of time.Janesh :But is it excise benefit that would be the first or the major part which would becontributing it or it will be through other means also. Basically, I just want to understand howthe journey for margin growth would be for Balsara then?Sunil Duggal : The journey would be, one would be excise, which is one and the easiestone, but most importantly it would be by both extracting cost and revenue synergies with theamalgamation of the two businesses. We would be taking out a lot of cost from the Balsarasystem, and adding a lot of revenues synergies on account of the higher leverage we enjoyPage 9 of 9

ecause of the combined businesses. For example, buying media would be under onegroup and the combined business would be able to extract better leverage from the mediavendor. Similarly, for all procurement issues, we have to manage supply chain better, moreefficiently, we have disbanded in fact the entire Balsara clearing and forwarding agentnetwork. We would be better able to manage sales and distribution very importantly. Wehave integrated the entire S&D in the last couple of months of Balsara and Dabur, so a lot ofwork has been done in terms of the synergies part. I think most importantly and hardest toquantify would be the better skills and capabilities, which the Dabur management wouldbring on to the Balsara business, which would enable it to grow faster.Janesh :And what it the timeframe by which you will be matching the margin.Sunil Duggal : Well I would say two to three years, we should arrive at the same marginslevels for the Balsara business.Janesh :Okay, and how much was the growth you had in FY-05 for Balsara?Sunil Duggal : FY-05 it is not growth, because it was the year of consolidation and also inFY-05, the numbers were not did not flow into the Dabur books, so we were able to clean upall the Balsara system and the business. While the numbers are still being audited, it wouldshow some decline in terms of the revenues, but we are looking at very aggressive growthnow going forward for the Balsara brands.Janesh :And sir for the exports, there was a robust growth of 43% in FY-05, what kind ofgrowth do you foresee for FY-06 and what are the markets you are looking at beyond theexisting presence what you have?Sunil Duggal : We are looking at a very strong growth, not much lower than what we saw lastyear. Last year, in a sense, the growth was little bit exaggerated on account of theacquisition which we did in the fag end of FY-04, the full numbers of which came in FY-05and only part of which flowed into the previous year. You can expect very strong growth,much in excess of the domestic business coming from international, and the key drivers ofgrowth as far as current business plans would be markets like Russia and CIS, Nigeriawhere we are setting up a local subsidiary, Bangladesh which would now be scaled upsubstantially in addition to the core markets of Gulf. And UK would be another market, whichwould provide us with substantial growth.Janesh :Thank you sir.Sunil Duggal :You are welcome.Abhijit Kundu (Angel Brokings) :Congrats for a good set of numbers. I just had a singlequestion on your quarterly performance. I just lost the first part of presentation, that’s why.What was the reason behind your lower raw material costs?Sunil Duggal :Just give us a minute to get the numbers. We did save substantial amount onaccounting on raw honey, groundnut oil, amla etc. These were the key raw material itemswhere we realized substantial savings and that meant a decrease of 5.7% of material costduring the fourth quarter. Honey was a big upside, a very big upside, and also groundnut oil,which showed a marked softeningAbhijit :Okay thanks a lot.Page 10 of 10

GaganThis brings us to the end of the conference call. Thank you everyone for joining this call.We apologize for the slight delay and disturbance, which was happening. For yourreference, archived copy of this conference will be available at the website in addition to thetranscript. You are welcome to contact me for any queries if you have. Thank you verymuch once again and have a good day._________________________________________________________________________Page 11 of 11