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CHAIRMAN

Simon J. Scarff, O.B.E

MANAGING DIRECTOR
Zubair Ahmed

DIRECTORS
Ashok Dayal
Kunal Kashyap
P. Dwarakanath
P. Murari
Praveen K Gupta
Ramakrishnan Subramanian
Subodh Bhargava

COMPANY SECRETARY
Surinder Kumar

BANKERS
Deutsche Bank
CONTENTS
Citibank N.A.
Board of Directors, etc. 1
Bank of America
Financial Statistics 2 The Hongkong & Shanghai Banking
Financial Highlights 3 Corporation Limited

Directors’ Report 4
Management Discussion & Analysis Report 8 AUDITORS
Corporate Governance Report 11 Price Waterhouse
CEO & CFO Certification 19
Auditor’s Report 20 REGISTERED OFFICE
Balance Sheet 24 Patiala Road, Nabha 147 201
Profit & Loss Account 25
Cash Flow Statement 26 HEAD OFFICE
Schedule 1, 2 28 DLF Plaza Tower, DLF City Phase - I
Schedule 3, 4 29 Gurgaon 122 002 (Haryana)
Schedule 5, 6, 7, 8, 9 31
Schedule 10, 11, 12 32 REGISTRARS AND TRANSFER AGENTS
Schedule 13, 14, 15 33 Karvy Computershare Pvt. Ltd.
Schedule 16 34 Plot No. 17-24 Vittal Rao Nagar

Balance Sheet Abstract & Near Image Hospital, Madahapur


Company’s General Business Profile 48 Hyderabad – 500 081

1
FINANCIAL STATISTICS
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
TEN YEAR FINANCIAL STATISTICS
(Rs. Lacs)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

SOURCES OF FUNDS

Share Capital 45,38 45,38 45,38 45,38 45,38 45,38 42,06 42,06 42,06 42,06

Reserves & Surplus 2,52,01 3,29,10 3,96,04 4,37,84 4,46,73 4,83,92 4,33,06 5,00,66 6,04,29 7,18,82

TOTAL SHAREHOLDERS’
FUNDS 2,97,39 3,74,54 4,41,42 4,83,22 4,92,11 5,29,30 4,75,11 5,42,72 6,46,35 7,60,88

BORROWINGS 20,00 55,00 75,66 - - - - - - -

FUNDS EMPLOYED 3,17,39 4,29,54 5,17,08 4,83,22 4,92,11 5,29,30 4,75,11 5,42,72 6,46,35 7,60,88

DEFERRED TAX
LIABILITIES - - 28,16 35,63 28,16 31,98 27,60 24,07 17,28 6,58.45

TOTAL 3,17,39 4,29,54 5,45,24 5,18,85 5,20,27 5,61,28 5,02,71 5,66,79 6,63,63 7,67,46

APPLICATION OF FUNDS

Gross Fixed Assets 1,95,74 4,02,10 4,96,90 5,15,56 4,92,22 5,04,63 5,17,74 5,28,21 5,40,99 5,55,79

Depreciation 58,60 70,04 84,55 1,22,70 1,62,31 1,97,24 2,33,95 2,70,32 2,97,65 3,29,24

NET FIXED ASSETS 1,37,07 3,32,14 4,12,35 3,92,86 3,29,91 3,07,39 2,83,79 2,57,89 2,43,34 2,26,56

INVESTMENTS 29,00 - - 1 - - - 2,19,68 2,97,83 0.05

Gross Current Assets,


Loans and Advances 2,42,90 2,56,80 2,98,15 2,93,43 3,63,02 4,32,20 4,01,79 2,97,76 3,71,13 8,53,37

Current Liabilities &


Provisions 1,12,69 1,78,12 1,80,04 1,77,28 1,77,57 1,78,31 1,82,87 2,08,55 2,48,67 3,12,46

NET CURRENT ASSETS 1,30,21 78,68 1,18,11 1,16,15 1,85,45 2,53,89 2,18,92 89,21 1,22,46 5,40,90

MISCELLANEOUS
EXPENDITURE 21,11 18,72 14,78 9,85 4,91 - - - - -

TOTAL APPLICATION 3,17,39 4,29,54 5,45,24 5,18,85 5,20,27 5,61,28 5,02,71 5,66,79 6,63,63 7,67,46

TEN YEAR TRACK RECORD

TURNOVER 7,20,48 8,75,12 9,92,14 8,71,06 9,08,95 9,81,72 10,89,02 12,10,19 13,96,14 17,01,47

PROFIT BEFORE TAX 1,38,33 1,51,73 1,93,96 1,26,71 99,58 1,15,68 1,62,42 1,90,57 2,45,12 2,84,09

NET PROFIT 97,61 1,12,02 1,26,63 85,01 76,35 73,16 1,07,15 1,26,93 1,62,68 1,88,33

DIVIDEND PAYOUT 25,87 28,59 31,77 31,77 31,77 31,77 33,64 42,06 50,47 63,08

CORPORATE DIVIDEND TAX 2,84 6,29 3,24 - 4,07 4,15 4,72 5,90 8,58 10,72

RETAINED EARNINGS 68,90 77,14 91,62 53,24 40,51 37,24 68,79 78,98 1,03,63 1,14, 53

DIVIDEND - % 57 63 70 70 70 70 80 100 120 150

EARNINGS PER SHARE (Rs.) 21.51 24.68 27.90 18.73 16.82 16.12 24.84 30.18 38.68 44.78

NUMBER OF SHARE
HOLDERS 31,690 33,019 31,442 30,607 30,607 28,048 24,571 24,019 22,315 22,548

2
FINANCIAL HIGHLIGHTS
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED

3
DIRECTORS’ REPORT
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
Your Directors are pleased to present the Annual Report Your Company has taken several initiatives to reduce
on the business and operations of your Company and the operating costs in the business. Your Company continues
audited accounts of the Company for the year ended to operate with minimum trade pipelines, selling as per
December 31, 2008. the market demands, and maintaining a very efficient
supply chain.
FINANCIAL RESULTS
(Rs. Lacs) Year 2008 being a very uncertain year for money market,
2008 2007 the Company in the fourth quarter divested all its
investments from the Debt Market and started investing in
Sales 17,01,47.22 13,96,14.38 short term bank deposits with Banks. The year end term
Profit before Depreciation, deposits with Banks being Rs. 4,50,50 Lacs. During the
year the interest and dividend income has increased by
Amortisation and Tax 3,26,03.58 2,88,61.41 Rs. 13,54.75 Lacs.
Less: Depreciation 37,34.34 38,88.79 During the year input costs of Raw Material, Packing
Less: Amortisation of : Material and Finished Goods, as a percentage to sales
increased to 34.4% as against 32.1% last year mainly
- Patents and Trade Marks 4,60.62 4,60.62 due to higher input costs (particularly liquid milk and
Profit before Tax 2,84,08.62 2,45,12.00 skimmed milk powder).
Less: Provision for Tax DIVIDENDS

- Current Tax 1,00,80.00 84,50.00 For the year ended December 31, 2008, an Interim
dividend of Rs. 10 per equity share of Rs. 10 each was
- Deferred Tax (10,69.61) (6,78.61) declared on October 24, 2008 and paid to the shareholders
- Adjustment of on November 18, 2008. In addition, the Directors have
Previous Years - (1.93) recommended a final dividend at the rate of Rs. 5 per
share. Accordingly, the total dividend (including the
- Fringe Benefit Tax 5,65.00 4,75.00 dividend recommended) for the financial year ended
95,75.39 82,44.47 December 31, 2008 totals to Rs. 15 per equity share of Rs.
10 each.
Profit after Tax 1,88,33.23 1,62,67.54
Final dividend, if approved by the Members at the ensuing
Previous year figures regrouped/reclassified wherever Annual General Meeting to be held on April 24, 2009, will
necessary to conform to this year’s classification. be paid on or before May 14, 2009 to those Members
Appropriations whose names appear in the Company’s Register of
Members as on April 15, 2009. However, in respect of
Dividends 42,05.55 50,46.68 shares held in electronic form, the dividend will be payable
Proposed Final Dividend 21,02.78 - to those persons whose names appear as beneficial
owners, as per the details to be furnished by the
Corporate Dividend Tax 10,72.10 8,57.71 Depositories, as at the close of business hours on April
Transferred to General 15, 2009.
Reserves 1,14,52.80 1,03,63.15 RESERVES
1,88,33.23 1,62,67.54 The total Reserves as on December 31, 2008 stood at
Earnings Per Share (Rs.) 44.78 38.68 Rs. 7,18,82.30 Lacs representing an increase of 19% from
last year.
(Basic & Diluted)
EXPORTS
PERFORMANCE OF THE COMPANY
During the year the Company’s export earnings amounting
The key objective for the year was to achieve an impressive to Rs. 1,38,42.79 Lacs covering exports to Bangladesh,
top line growth while maintaining costs at lowest possible Myanmar, Sri Lanka, Middle East, Nepal, Bhutan and other
levels. Your Company is pleased to report 21.9% sales markets representing an increase of 98.7% over the
growth and 15.8% PAT growth for 2008 over the previous previous year.
year. It is heartening to note that this growth has been
driven across all regions and major brands. RESEARCH AND DEVELOPMENT

2008 was a landmark year as the Company delivered The Research & Development function in 2008 has been
fourth consecutive year of double digit growth with a a valuable contributor to the outstanding performance of
growth rate of 21.9 % in 2008. Horlicks, clinically tested to the Company. The major areas of contribution lay in
make children “Taller, Sharper & Stronger”, continues to fuelling innovation through a number of new product
grow stronger by the day. developments. This year saw the launch of two new
products, namely ActiBase and Women’s Horlicks. Several
Top line growth continues to be supported by aggressive projects are in an advanced stage of development for
advertisement and various sales and marketing initiatives. launches planned in 2009.

4
DIRECTORS’ REPORT

This good performance can be attributed to the highly through in-house and external management development
qualified and committed team of scientists at R&D, as well programmes and foreign assignments.
as adopting newer ways of working by leveraging the ENVIRONMENT AND SOCIAL COMMITMENT
technical expertise of ingredient manufacturers and
industry experts have enabled in accelerating innovation, Your Company, in its endeavour to serve the community,
to be able to effectively meet the high growth targets of continues to contribute in and around the areas where it
the company. operates.
ISO CERTIFICATION Under program on “Health & Education for Women” at
Sonepat, various activities included distribution of sewing
Your Company’s manufacturing facilities at Nabha, machines, health camp and vocational training (stitching
Rajahmundry and Sonepat continue to be certified to the & embroidery) to the rural womenfolk for empowering
latest version of ISO 9001:2000 and ISO 14001:2004 by them. Site donated furniture to schools in 2 villages and
DNV, a leading International certification Company distributed blankets to needy people. CFL lamps were
whereas the Rajahmundry site has also been accredited distributed to 450 households to generate environment
with SA8000. Nabha production facility has already been commitment.
certified for HACCP (Hazard Analysis Critical Control Point
for Food safety). During the year, both Nabha and Rajahmundry continued
environment education programme to impact younger
Manufacturing/packing sites i.e. Pratap Health Foods Ltd. generation in local schools. Computers were donated to
at Hyderabad, Parsons Ltd. at Ghaziabad, Legacy Foods improve infrastructure in needy schools. Bus shelter
at Baddi and SRDN at Guwahati have already been ISO constructed at one more location at Nabha for local
9001-2000 certified by DNV. residents. Rajahmundry site worked on enhancing the
These certifications indicate our commitment in meeting, personal hygiene aimed at reduction of communicable
in a sustainable manner, Global Quality, Environment diseases and initiated project on provision of livelihood
Health and Safety Standards. to differently abled individuals and weaker sections. Site
INFORMATION TECHNOLOGY conducted environment training for the teachers in the
Govt. schools in the district.
Your Company continues to be at the forefront of
Information Technology having implemented two ERP PARTICULARS OF EMPLOYEES
packages. During the year, your Company has rolled out Information as per Section 217 (2A) of the Companies
Business Intelligence Tool for Sales Analysis and Act, 1956, read with the Companies (Particulars of
Reporting to achieve higher sales growth. Further your Employees) Rules, 1975, as amended from time to time,
Company continued the web based Treasury operation forms part of this Report. However, as per the provisions
integrating its Payments to vendors and Collections from of Section 219(1)(b)(iv) of the Act, the Report and Accounts
customers centrally and now focusing on bringing other are being sent to all the members excluding the statement
operations under this umbrella. Connected to all its containing the particulars of employees to be provided
business locations all over the country via satellite and under Section 217 (2A) of the Act. Any member interested
terrestrial links, the Company is now concentrating on in obtaining such particulars may inspect the same at the
web based Business Solutions. Registered Office of the Company or write to the Company
CONSERVATION OF ENERGY, TECHNOLOGY Secretary for a copy.
ABSORPTION AND FOREIGN EXCHANGE EARNINGS MANAGEMENT DISCUSSION AND ANALYSIS REPORT
AND OUTGO The Management Discussion and Analysis is reported in
Information required as per the Companies (Disclosure this Annual Report.
of particulars in the Report of the Board of Directors) Rules, ACKNOWLEDGEMENTS
1988, is given in the Annexure to this Report.
The Directors wish to extend their thanks and appreciation
DIRECTORS to all the employees of the Company at all levels, agents
There was no change in the Directors of the Company and other business associates for their commitment,
during the year. dedication and respective contributions to the Company’s
AUDITORS operations during the year under review.

Messrs. Price Waterhouse, Chartered Accountants, who The Directors would also like to acknowledge the valuable
retire at the conclusion of the forthcoming Annual General guidance, technical assistance and advice being received
Meeting and being eligible, offer themselves for re- from the Associate Company in the U.K.
appointment. Your Directors look forward to the future with confidence.
HUMAN RESOURCE DEVELOPMENT For and on behalf of the Board
As in the past years, the management continued to take a S.J.Scarff Zubair Ahmed R. Subramanian
keen interest in Human Resource Development. Chairman Managing Director Subodh Bhargava
Harmonious industrial relations continued to prevail at all Directors
the units throughout the Company. The management Place : Gurgaon
continued to focus on Human Resource Development Dated : January 27, 2009

5
DIRECTORS’ REPORT

ANNEXURE TO THE DIRECTORS’ REPORT 2008 (d) Total energy consumption and energy
Particulars regarding Conservation of Energy, consumption per unit of production as per Form
Technology Absorption, Foreign Exchange Earnings “A” of the Annexure in respect of industries
and Outgo. specified in the Schedule thereto:
Sonepat factory received National Energy Conservation FORM “A”
Awards for the 3rd year in a row in the food processing 2008 2007
sector. The site achieved significant energy savings by A. Power and Fuel Consumption
implementing various initiatives and projects. 1. Electricity
A. CONSERVATION OF ENERGY a) Purchased Units (in Lacs) 3,02.97 2,68.14
Total amount (Rs. Lacs) 14,91.89 11,76.64
(a) Energy Conservation Measures Taken
Rate/Unit (Rs.) 4.92 4.39
1. Steam
b) Own Generation-
The energy conservation initiatives program such 1) DG Sets
as optimization of Boiler Efficiencies, Installation Units (in Lacs) 41.12 23.13
of Multiple Effect Evaporator at Rajahmundry and
Units per litre of Diesel oil 3.55 3.45
improvements in process efficiencies being
Cost/Unit (Rs.) 9.16 8.80
driven at sites as part of Operational Excellence
program have resulted in reduction in steam 2) Turbine
consumption at sites. Units (in Lacs)* 21.12 17.62
2. Coal Used in Boilers
2. Electricity
Quality (Calorific value ranging
The energy Conservation initiatives such as
between 2500 to 3500 BTU)
Co-generation turbine, Mist cooling tower and
Quantity (Tonnes)* 35,122 28,627
efficient barometric condensers at Nabha and
energy efficient lighting across all sites as part of Total Cost (Rs. Lacs) 14,79.95 10,33.57
Operational Excellence program have resulted Average Rate (Rs.) 4,213.74 3,610.49
in reduction in electricity consumption at sites. *Includes Coal consumed to produce steam to
The above initiatives have helped the company generate electricity from Turbine.
to minimize the adverse impact on per ton energy B. Consumption per unit of Production:
consumption, caused by higher utilization of more Current Year Previous Year
energy intensive plant and change in Coal Power Coal Power
manufacturing process. The manufacturing MT Units MT Units
process was changed to optimize overall network 1. Malt Based
efficiencies and cost. food/Energy and
(b) Additional investments and proposals, if any, Protein Health
being implemented for reduction of Food/Cereal
consumption of energy based Food/
Various steps and measures are being initiated Powdered
to continuously improve on consumption of coal Milk (Per Ton) 0.53 476 0.48 433
and electricity at all the sites. Some of the major 2. Ghee &
investments are the Multiple Effect Evaporator at Butter (Per Ton) 0.27 137 0.39 138
Rajahmundr y, Co-generation turbine, Mist In case of Ghee, the allocation procedure has been
cooling tower and energy efficient barometric revised and only the electricity consumption for ghee
condensers at Nabha, Coal fired, FBC boiler at manufacturing section has been considered.
Sonepat and energy efficient lighting across all B. TECHNOLOGY ABSORPTION
sites. All sites took a number of initiatives on
RESEARCH & DEVELOPMENT (R&D)
renewable energy and implemented wind
ventilators, Natural sun lighting in buildings and (1) Specific Areas in which R&D was carried out
Solar lights. by the Company
(c) In respect of measures at (a) and (b) above for The key focus areas for the Research and
reduction of energy consumption and Development function were: development of new
products, foray into new product categories,
consequent impact on the cost of production
development of new products with external
of goods
partnering, cost innovations, building superior
The above mentioned energy saving initiatives product claims on existing products, innovative
have helped the company to contain its utility cost and improved packaging, and ensuring
despite the increase in the rates. regulatory compliance on all our products.

6
DIRECTORS’ REPORT

(2) Benefits derived as a result of the above R&D DIRECTORS’ RESPONSIBILITY STATEMENT AS PER
Existing brands have shown considerable growth SECTION 217(2AA) OF THE COMPANIES ACT, 1956
in the year, ably supported by the technical support
The financial statements of the Company for the year
and renovation efforts of R&D; effective technical
ended December 31, 2008 have been prepared in
capabilities have been built in new categories so
conformity with the accounting standards issued by the
as to enable a strong foothold for the Company
Institute of Chartered Accountants of India and the
for entry in these segments. Cost innovations
requirements of the Companies Act, 1956. All the financial
(worth approx. Rs. 4 crores delivered this year)
statements have been prepared on a historical cost
have helped mitigate the impact due to escalating
convention, as a going concern and on the accrual basis.
input costs. Introduction of new products with
There have been no material departures in the adoption
superior scientific claims have strengthened our
and application of the accounting standards. The
position as the market leader in the Health Food
accounting policies used in the preparation of the financial
Drinks segment.
statements have been consistently applied except where
(3) Further Plan of Action otherwise stated in the notes to accounts.
The focus for R&D will be to contribute to the
Company’s high growth vision by continuing to The Board of Directors of GlaxoSmithKline Consumer
innovate strongly in both the Health Food Drinks Healthcare Limited (GSKCH) accepts the responsibility for
market as well as in new segments, with the the integrity and the objectivity of these financial
development of science-based products of high statements. The estimates and judgements relating to the
nutritional value. Supporting the business by financial statements have been made on a prudent and
delivering cost innovations in both packaging and reasonable basis in order to ensure that the financial
product is another important deliverable for R&D. statements reflect in a true and fair manner the form and
substance of the transactions and reasonably present the
(4) Expenditure on R&D
Company’s state of affairs and profits for the year. To
(Rs. Lacs)
ensure this, the Directors have taken proper and adequate
2008 2007 care for the maintenance of adequate accounting records
a) Capital 27.21 43.31 in accordance with the provisions of the Companies Act,
b) Recurring 18,58.78 13,49.90 1956. The internal control systems are reviewed, evaluated
c) Total 18,85.99 13,93.21 and updated on an ongoing basis. Our internal auditors
d) Total R&D Exp. as have conducted periodic audits to provide reasonable
a percentage of total assurance that the established policies and procedures of
turnover 1.11% 1.00% the Company have been followed for safe-guarding the
assets of the Company and for protecting any form of fraud
TECHNOLOGY ABSORPTION, ADAPTATION AND
and irregularities, subject to the inherent limitations in any
INNOVATION
system and procedure and coverage thereof that should
The Company is continuously taking steps to improve be recognized in weighing the assurance provided by
the product and process technology in an effort to system of internal controls and accounts.
provide for better value for money to consumers.
The financial statements have been audited by Price
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
Waterhouse, Chartered Accountants. The Audit Committee
(a) Activities relating to exports : Initiatives taken of GSKCH meets on a quarterly basis to review the manner
to increase exports: Development of new export in which the internal auditors are performing their
methods for products and services and export plans responsibilities and to discuss auditing, internal controls
The Foreign exchange earnings through exports have and financial repor ting issues. To ensure complete
substantially increased in the current year covering independence, the internal auditors have full and free
exports to Bangladesh, Myanmar, Sri Lanka, Middle access to the members of the Audit Committee to discuss
East and other markets. The efforts to broaden the any matter of substance.
export base to other countries in South East Asia and
the Middle East are continuing.
For and on behalf of the Board
(b) Total Foreign Exchange used and earned:
(Rs. Lacs) S.J.Scarff Zubair Ahmed R. Subramanian
2008 2007
Chairman Managing Director Subodh Bhargava
Directors
Foreign exchange Earnings 1,08,31.95 44,53.47
Place : Gurgaon
Foreign exchange outgo 23,31.05 25,59.12 Dated : January 27, 2009

7
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
INDUSTRY STRUCTURE AND DEVELOPMENT
India is the world’s second largest producer of food next to China, and has the potential of being the biggest with the food
and agricultural sector. The Indian food industry is estimated to be worth over $200 billion and is likely to double in the next
ten years. The steady growth of the Indian economy and the improving lifestyle of Indians have been instrumental in this
growth.
Sustained by high agricultural output, international demand and a strong domestic market, the Indian food industry offers
ample scope for large investments in processing technologies, skills and equipment, packaging, refrigeration of frozen
food and thermo processing. Health food and health food supplements are one of the rapidly rising segments of this
industry which is gaining vast popularity amongst the health conscious.
However, the Indian food processing industry is still in a nascent stage and its contribution to the Gross Domestic Product
(GDP) is low at 6.3 per cent. The share of India processed food in the international trade is only 1.6 per cent and the
Government of India aims to propel the industry growth through various initiatives like government subsidies, tax breaks,
increased FDI, improved infrastructure facilities, modern retail formats and international road shows to achieve the growth
target of 3 per cent by 2015.
The Food Safety and Standards (Amendment) Bill, 2008, a bill to amend the Food Safety and Standards Act, 2006 effective
7th February 2008 has been passed with a view to consolidate the laws relating to the Food in the country and for laying
down science based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import,
to ensure availability of safe and wholesome food for human consumption and for that purpose to establish the Food
Safety and Standards Authority of India.
OPPORTUNITIES, THREATS AND OUTLOOK
With rising household incomes, increasing urbanization, changing lifestyles, growth in working women’s population and
the rapid growth of the private-sector industry should lead to greater demand for processed food products. The most
promising sub-sectors includes Confectionery manufacture, Grain-based products, Beverages, Health products, Milk
processing, Ready-to-eat breakfast cereals, Food additives, Flavors etc. Increased per capita income and high corporate
interest in the organized retail market creates a platform for the Indian food industry to leap forward.
However, challenges those lie for the industry is the economy which looks very volatile with the GDP growth estimates for
2009 have been revised downwards to ~ 6%, without factoring in the impact of the recent financial crisis. The financial
crisis could accelerate and/or deepen the slow-down with a direct impact on the Indian outsourcing industry and exports
led sectors. High inflation has offset the rise in Household incomes as the disposable income of people has declined viz
a viz previous years.
PRODUCT WISE PERFORMANCE
2008 was a year of New Product Launches, where the Company ventured to a unprecedented launches of 3 new products
in 1st quarter of the year. In January we launched Women’s Horlicks – India’s first health drink designed keeping women’s
nutritional needs in mind. We also launched ActiBase under the GlaxoNutrition umbrella to tap into the fast growing
specialist nutrition segment. Finally, Boost Bites was launched. Your Company continues to perform well with a robust
sales growth of 21.9 % over 2007. Horlicks which is clinically tested to make children “Taller, Sharper & Stronger”,
continues to grow strong. Boost along with Boost Chocoblast maintained the momentum and continued to deliver double
digit sales growths. During the year the business however faced severe challenges on the cost front with Milk, Malted
Barley and other agro commodities prices plunging to the ever increasing inflation trends. However, aggressive cost
effectiveness measures taken by your Company helped to neutralize the inflation costs.
RISKS & CONCERNS
Your Company annually reviews “risk maps” to help identify potential business threats. The capability of these risk mitiga-
tion plans, developed to redress identified threats, is honed to protect the interests of all stakeholders including sharehold-
ers. Crisis management plans are well documented and simulation tests across critical business sites have been con-
ducted successfully. Learnings from these tests have helped enhance the effectiveness of the plans.
As with any agro based industry, input costs are influenced not only by the vagaries of nature but also government policies
and the movements in the international market. Your Company continues to recognize the importance of the price-value
equation and the need to be sensitive to retail price changes to counter the volatility of input costs.
FINANCIAL RISK
The Company has no loan outstanding as on December 31, 2008.
The Company has minimal import requirements for its production process. The Company exports during the year stood at
Rs. 1,38,42.79 Lacs (which includes Rs. 30,35.87 Lacs exported to Nepal & Bhutan). Hence no risk is envisaged to the
business on account of currency fluctuations.

8
MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY


The Company has an adequate system of internal controls to ensure that transactions are properly recorded, authorized
and reported apart from safeguarding its assets. The internal control system is supplemented by well-documented stan-
dard operating procedures, policies and guidelines and review carried out by the Company’s internal audit function. All
significant audit observations and follow-up actions thereon are reported to the Audit Committee. Audit Committee re-
views the adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of
audit recommendations including those relating to strengthening the Company’s risk management policies and systems.
Additionally, the following measures ensure robust control system:
• Quarterly submission of structured Internal Control Letters (ICLs) covers all functions in the Company. The self
assessment by process/ control owner is also used as the basis of CEO/CFO certification as required under
Clause 49 of the Listing Agreement with the Stock Exchange. Apart from ensuring compliance with laid down
internal control systems, it helps the business to align the control mechanism with global best practices.
• Any material variances from the budget are reviewed on a monthly basis and require approval of the Manage-
ment Team. All major policy changes are approved by Managing Director.
• The Company has a Risk Management and Compliance Board (RMCB) comprising of the Managing Director,
Director – Finance & IT, Director – Operations, EVP – Legal & Company Secretary and EVP – HR. Risk maps
stating the significant business risks, potential consequences along with mitigation plans are prepared by each
function and reviewed by RMCB on a regular basis.
• Business Continuity Plans are periodically reviewed and tested to enhance their relevance.
FINANCIAL PERFORMANCE AND RESULTS OF OPERATIONS
(A) Results of Operations
(1) Sales
Sales for 2008 increased by 21.9%, driven both by volume as well as by price/yield increases.
(2) Other Income
Other Income increased by Rs. 26,97.69 Lacs primarily due to increase in Interest and Dividend income on Non-
Trade Current Investments and also due to increase in earnings from commercial arrangement for services
rendered to two other companies, basis an independent study.
(3) Expenditure
During the year, input cost of Raw Material, Packing Material and Finished Goods, as a percentage to sales has
increased to 34.43% as against 32.07% last year mainly due to higher input costs (particularly liquid milk and
skimmed milk powder).
The Company continued to invest behind the brands and Advertisement and Promotion expenses remained
consistent as a percentage of Sales to 11%.
(4) Profit before Taxation
Profit before Taxation amounted to Rs. 2,84,08.62 Lacs and has increased by 16% over previous year.
(5) Provision for Taxation
The Company has made provisions for taxation for the year amounting to Rs. 95,75.39 Lacs (including deferred
tax and provision for fringe benefit tax) on Profits before Tax. The effective tax rate for the year is 33.99% almost
same as last year. Provision for Fringe Benefit Tax, introduced in 2005, amounted to Rs. 5,65.00 Lacs.
(B) Financial Condition
Overview
The Financial statements have been prepared in compliance with the requirements of the Companies Act and the
generally accepted Accounting Principles (GAAP) and the Accounting Standards notified by the Companies (Ac-
counting Standard) Rules, 2006.
(1) Reserves and Surplus
Reserves and Surplus increased during the year by Rs. 1,14,52.81 Lacs. The transfer was made after providing
for both Interim and Proposed Final Dividend of Rs. 73,80.43 Lacs including Dividend Tax amounting to
Rs. 10,72.09 Lacs for the year 2008.
(2) Fixed Assets
Additions of Rs. 31,63.91 Lacs during the year include primarily Plant and Machinery (Rs. 19,46.71 Lacs), Motor
Vehicles (Rs 2,02.35 Lacs), Office Equipment (Rs. 88.55 Lacs) and Information Technology Equipment
(Rs. 1,49.73 Lacs).

9
MANAGEMENT DISCUSSION AND ANALYSIS REPORT

(3) Inventories
Inventories amounted to Rs. 2,77,17.03 Lacs as at December 31, 2008 as against Rs. 1,94,82.35 Lacs as at
previous year end. The increase is primarily on account of an increase in Raw Materials from Rs. 45,24.72 Lacs
in 2007 to Rs. 73,68.95 Lacs in 2008 and Packing Materials from Rs. 15,35.11 Lacs in 2007 to Rs. 21,50.71 Lacs
in 2008. The inventories are net of provision for obsolescence amounting to Rs. 1,61.85 Lacs.
(4) Sundry Debtors
Sundry debtors amounted to Rs. 43,25.02 Lacs as at end December 31, 2008 as against Rs. 27,36.19 Lacs as
at end December 31, 2007. The debtors are net of provision for Bad and doubtful debts amounting to
Rs. 94.04 Lacs.
The debtors as at December 31, 2008 represent 10 days sale value.
(5) Cash and Bank Balances
Cash and Bank balances with scheduled banks amounting to Rs. 20,45.42 Lacs and short term deposits of
Rs. 4,50,50 Lacs with various scheduled banks.
(6) Investments
During the year the Company invested in Debt Funds till September 2008 and then the Company in the fourth
quarter divested its investments from the Debt Market and started investing in Fixed Deposits with Banks.
(7) Loans and Advances
Loans and advances amounting to Rs. 33,83.15 Lacs includes advances paid for raw and packing materials,
stores and services, pre-paid insurance, loans and advances paid to employees and advances paid to Excise
Authorities.
(8) Current Liabilities
Sundry Creditors amounting to Rs. 1,72,52.17 Lacs include creditors for advertising and promotion spends, raw
materials, packing materials and creditors for capital purchases.
Other liabilities amounting to Rs. 32,08.18 Lacs include statutory dues for miscellaneous taxes and duties
payable to various Government Agencies.
(9) Provisions
Provision for Gratuity / Leave / Post Employment Medical Benefit and Interest on Provident Fund Shortfall has
been made in accordance with the actuarial valuation as at December 31, 2008.
(10) Net Working Capital
The Company had a Working Capital (Excluding Cash and Bank Balances) of Rs. 69,92.60 Lacs as at Decem-
ber 31, 2008 as against Rs. 28,79.51 Lacs as at December 31, 2007. The increase in working capital is largely
due to higher closing inventory and loans and advances.
(11) Return on Capital Employed
The return on capital employed (average) during the year has decreased to 26.31% from 27.36% last year. The
percentage has been computed by dividing PAT by the average capital employed (shareholders’ funds plus loan
funds) during the year.
(12) Debt Equity Ratio
Your Company being a cash surplus organization has no outstanding loan and consequently has zero debt
equity ratio.
MATERIAL DEVELOPMENTS ON HUMAN RESOURCE/INDUSTRIAL RELATIONS FRONT
There was no change in the Directors of the Company during the year.
Please refer to the Directors Report on Human Resource Development.
The Company had 2651 permanent employees on its payroll as on December 31, 2008.
CAUTIONARY STATEMENT
The Management Discussion and Analysis Report may contain certain statements that might be considered forward
looking. These statements are subject to certain risks and uncertainties. Actual results may differ materially from those
expressed in the statement as important factors could influence the Company’s operations such as Government policies,
local, political and economic development, risks inherent to the Company’s growth and such other factors.
For and on behalf of the Board
Simon J. Scarff Zubair Ahmed Ramakrishnan Subramanian
Place : Gurgaon Chairman Managing Director Subodh Bhargava
Dated : January 27, 2009 Directors

10
CORPORATE GOVERNANCE REPORT
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE
GlaxoSmithKline Consumer Healthcare Ltd. is committed to following best global corporate governance practices in all its
pursuits. The guiding principle for the Company always has been to achieve shareholder’s satisfaction and maximize
shareholders’ value by following best corporate governance norms in true letter and spirit. The Company aims at achieving
this objective by ensuring transparency in its functioning by truthful and complete communication to all its stakeholders and
by inculcating a culture of ethical business conduct in all its operations.
BOARD OF DIRECTORS
Composition
The composition of the Board of Directors of the Company is in complete conformity with the requirements of Clause 49 of
the Listing Agreement. The details of the Board of Directors, their attendance records and other relevant details during the
year ended December 31, 2008 are as under:

Name of the Director Category of No. of Board Attendance No. of No. of Committee
Directorship meetings at last AGM Directorships Position held in Other
attended held on 25th in other Public Public Companies
April, 2008 Companies Chairman Member

Mr. S. J. Scarff NEC 4 Yes 1 Nil 1

Mr. Zubair Ahmed MD 4 Yes Nil Nil Nil

Mr. Ashok Dayal NED - I 4 Yes 3 1 Nil


Mr. Kunal Kashyap NED - I 2 Yes 3 2 2

Mr. P. Dwarakanath NED 4 Yes 2 Nil Nil

Mr. P. Murari NED - I 3 Yes 13 1 5

Mr. Praveen K Gupta WTD 4 Yes Nil Nil Nil

Mr. R. Subramanian WTD 4 Yes Nil Nil Nil

Mr. Subodh Bhargava NED - I 3 Yes 12 4 5


NEC - Non Executive Chairman MD - Managing Director WTD – Wholetime Director
NED - Non Executive Director NED-I - Non Executive Director–Independent
Details of Board Meetings during the year
The Board of Directors of the Company met four times during the year on January 29, 2008, April 25, 2008, July 29, 2008
and October 24, 2008.
Information to the Board
The Company holds atleast four board meetings in a year with at least one meeting in each quarter to review the quarterly
financial results. The maximum gap between two board meetings is not more than four months. Agenda papers are circulated
to the Board members and other permanent invitees to the Board meeting well in advance. In addition to the specific
matters which are taken at the Board meetings, the following information is also placed before the Board for its review:
• Annual Operating Plans and Capital budgets and any updates in connection therewith.
• Quarterly results of the Company
• Minutes of the meetings of the Audit Committee and all other Committees of the Board.
• Terms of reference of the Committees of the Board.
• Statutory Compliance Certificate
• Information on appointment and resignation of senior officers of the Company.
• Significant labour problems, if any, at any of the plant locations of the Company.
• Significant development in Human Resources/ Industrial Relations front like signing of wage agreement,
implementation of Voluntary Retirement Scheme etc.

11
CORPORATE GOVERNANCE REPORT

• Information on strikes, lockouts, retrenchment, fatal accidents, dangerous occurrences, any material effluent or
pollution problems or any other materially important incident, if any.
• Show cause, demand, prosecution notices and penalty notices of material importance.
• Any material default in financial obligations to and by the Company, or substantial non recovery for sale of goods
by the Company.
• Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment
of dividend, delay in share transfer etc.
• Details of any joint venture or collaboration agreement.
• Sale of a material nature, of investments and/ or assets, which are not in the normal course of business.
• Any issue involving possible public or product liability claims of a substantial nature, including any judgement or
order which may have passed strictures on the conduct of the Company.
COMMITTEES OF THE BOARD
The Board of Directors decides the composition and terms of reference of the Board Committees. The composition, terms
of reference and the dates of these Committee meetings is given below :
a) Audit Committee
The Audit Committee comprises of three members, all of whom are Independent Directors and possess financial and/
or accounting knowledge. The Committee comprises of Mr. Subodh Bhargava as the Chairman with Mr. Kunal Kashyap
and Mr. Ashok Dayal, as the other two members. Mr. Surinder Kumar, Company Secretary acts as Secretary to the
Committee. The Chairman, Managing Director, Finance Director and Operations Director are permanent invitees to the
Audit Committee Meetings. The Head of Internal Audit, Executive Vice President - Human Resources, the concerned
Partners of Price Waterhouse, the Statutory Auditors and the Cost Auditors are also invited to the Audit Committee
meetings.
The Company has a multi disciplinary Internal Audit Team which submits its report directly to the Audit Committee on
a quarterly basis. The Head of the Internal Audit Department reports to the Audit Committee. The Chairman of the Audit
Committee attended the last Annual General Meeting held on April 25, 2008 to answer shareholders queries.
Terms of reference:
The functioning and terms of reference of the Audit Committee including the role, powers and duties, quorum for
meetings and frequency of meetings, have been devised keeping in view the requirements of Section 292A of the
Companies Act, 1956 and the Listing Agreement with the Stock Exchanges. The terms of reference of the Audit
Committee include:-
1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that
the financial statement is correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the
statutory auditor and the fixation of audit fees.
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.
4. Reviewing, with the management, the annual financial statements before submission to the board for approval,
with particular reference to:
a) Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in
terms of clause (2AA) of section 217 of the Companies Act, 1956.
b) Changes, if any, in accounting policies and practices and reasons for the same.
c) Major accounting entries involving estimates based on the exercise of judgment by management.
d) Significant adjustments made in the financial statements arising out of audit findings.
e) Compliance with listing and other legal requirements relating to financial statements.
f) Disclosure of any related party transactions.
g) Qualifications in the draft audit report.
5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval.

12
CORPORATE GOVERNANCE REPORT

6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control
systems.
7. Reviewing the adequacy of the internal audit function, if any, including the structure of the internal audit department,
staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal
audit.
8. Discussion with internal auditors on any significant findings and follow up there on.
9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected
fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board.
10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post
audit discussion to ascertain any area of concern.
11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders
(in case of non payment of declared dividends) and creditors.
12. To review the functioning of the Whistle Blower mechanism.
13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
14. The Audit Committee to mandatorily review the following information:
a) Management discussion and analysis of financial condition and results of operations;
b) Statement of significant related party transactions (as defined by the Audit Committee), submitted by
management;
c) Management letters / letters of internal control weaknesses issued by the statutory auditors;
d) Internal audit reports relating to internal control weaknesses; and
e) Reviewing the appointments, removal and terms of remuneration of the Chief Internal Auditor.
Five meetings of the Audit Committee were held during the year. Attendance at meetings during the year:

Director No. of meetings attended


Mr. Subodh Bhargava 4
Mr. Kunal Kashyap 2
Mr. Ashok Dayal 5

b) Remuneration Committee
The Company has a Remuneration Committee which comprises of three members. The Committee comprises of
Mr. Ashok Dayal as the Chairman and Mr. Simon Scarff and Mr. P Dwarakanath as the other two members. Mr. Surinder
Kumar, Company Secretary acts as Secretary to the Committee.
Terms of reference:
The functioning and terms of reference of the Committee have been finalised in line with the recommendations as
prescribed under the Listing Agreement with the Stock Exchanges. The Committee determines the Company’s policy
on all elements of remuneration packages of all the Directors including salary, benefits, bonus, stock options, pension
rights and compensation payment etc., details of fixed component and performance linked incentives alongwith
performance criteria, service contracts, notice period, severance fees, etc., stock option details, if any, and also
determines the remuneration of the Non Executive Directors. It also reviews all other aspects of benefits and
compensation to employees throughout the Company including policies on the same.
Four meetings of the Remuneration Committee were held during the year. Attendance at meetings during the year:

Director No. of meetings attended

Mr. Ashok Dayal 4


Mr. Simon J Scarff 4

Mr. P. Dwarakanath 4

13
CORPORATE GOVERNANCE REPORT

Remuneration Policy
Payment of Commission and Sitting Fees to the Non Executive Directors and payment of Salary, Commission and
Perquisites to the Wholetime Directors are made in accordance with industry norms and subject to the overall ceilings
imposed by the Companies Act, 1956 and other applicable statutes, if any. The basis is also determined by carrying out
an annual analysis of the industry trends by an independent and reputed HR Management Consultant firm which is
scrutinized and recommended by the Remuneration Committee. Performance linked incentives and bonus paid to the
Wholetime Directors are determined on the basis of achievement of overall financial and other objectives set for the
Company at the beginning of the year and the achievement of individual objectives.
The retirement age of the Wholetime directors of the Company is 60 years while for Non Executive Directors it is 75
years. The Notice period for the Wholetime Directors is three months’ notice on either side. The Service contracts are in
the range of 3 to 5 years.

Remuneration of Directors
Details of remuneration of the Directors for the financial year ended December 31, 2008:

(Rs.)
S. No. Name Designation/ Salary Benefits Performance Grand
Position Incentive Total

1. Mr. Zubair Ahmed Managing Director 1,80,69,170 36,59,962 68,12,625 2,85,41,757

2. Mr. Praveen K Gupta Director - Operations 84,50,673 19,25,110 18,03,776 1,21,79,559

3. Mr. R Subramanian Director - Finance 72,50,917 18,34,724 15,13,496 1,05,99,137


& Information
Technology

(Rs.)

S.No. Name Particulars Sitting Fees Commission Total

1. Mr. Ashok Dayal Non Executive Director - Independent 1,95,000 3,00,000 4,95,000

2. Mr. Kunal Kashyap Non Executive Director - Independent 60,000 3,00,000 3,60,000

3. Mr. P. Dwarakanath Non Executive Director 1,70,000 3,00,000 4,70,000

4. Mr. P. Murari Non Executive Director - Independent 65,000 3,00,000 3,65,000

5. Mr. Simon J. Scarff Non Executive Chairman 1,30,000 3,00,000 4,30,000

6. Mr. Subodh Bhargava Non Executive Director - Independent 85,000 3,00,000 3,85,000

In addition to Sitting Fees and Commission, as indicated above, a payment of Rs. 11,85,406 was made to
Mr. P Dwarakanath during the year ended December 31, 2008 towards Share Value Plan which accrued to him during
his tenure as Wholetime Director.

Shareholding of Non Executive Directors


None of the Non Executive Directors of the Company is holding any shares in the Company.
c) Investor Grievance Committee
The Investor Grievance Committee of the Company has three members. The Committee comprises of Mr. Simon Scarff
as the Chairman and Mr. P Murari and Mr. P Dwarakanath as the other two members. Mr. Surinder Kumar, Company
Secretary acts as Secretary to the Committee and also as the Compliance Officer.
Terms of reference:
The functioning and terms of reference of the Committee are in conformity with the requirements of the Listing Agreement
with the Stock Exchanges with particular reference to transfer, dematerialisation, complaints of shareholders etc.

14
CORPORATE GOVERNANCE REPORT

Four meetings of the Investor Grievance Committee were held during the year. Attendance at meetings during the year:

Director No. of meetings attended


Mr. Simon J Scarff 4
Mr. P. Dwarakanath 4
Mr. P. Murari 3
The total number of complaints received and replied to the satisfaction of the shareholders during the year under review
were 224. The Company ensures that the investor’s correspondence is attended to expeditiously and endeavour is made
to send a satisfactory reply within three days of receipt, except in cases that are constrained by disputes or legal impediments.
There are no pending share transfer complaints as on December 31, 2008. The Company has advised Karvy Computershare
Pvt. Ltd, its Registrar and Share Transfer Agent, to despatch the shares after transfer within two days from approval at the
Share Transfer Committee.
GENERAL BODY MEETINGS
Particulars of last three AGMs
Year Date Time Venue Special Resolution passed
2006 April 29, 2006 10.00 a.m. Payment of Commission and Sitting Fees to
Punjab Public School Non Executive Directors except those employed
Auditorium, The Punjab with GSK group of Companies
Public School (Senior
2007 April 27, 2007 09.30 a.m. Wing), Nabha 147 201 Amendment of Article 96 of the Articles of
(Punjab) Association of the Company

2008 April 25, 2008 09.30 a.m. No Special resolution

Postal Ballot Resolution


No Postal ballot resolution was passed during the year 2008. No special resolution requiring a postal ballot is being
proposed for the ensuing Annual General Meeting.
DISCLOSURE
• Materially significant related party transactions that may have potential conflict with the interests of Company at large
- During the year 2008, the Company has related party transactions as envisaged under the Corporate Governance
Code which have been mentioned in Note 23 under Schedule 16 to the Accounts.
• During the year under review, the Company entered into a contract with Allegro Capital Advisors Pvt. Ltd. for taking
some consultancy services. Since Mr. Kunal Kashyap, a Director of the Company is also a Director on the board of
Allegro Capital Advisors Pvt. Ltd., the Contract was excuted after taking Central Government’s approval under Section
297 of Companies Act, 1956 vide their Letter No. 4/128/T-3/08/P/6318 dated 02.06.08.
• There has not been any non compliances, penalties or strictures imposed on the Company by any Stock Exchange or
SEBI or any statutory authority on any matter related to capital markets, during the last three years.
Whistle Blower Policy
The Company has formulated a Whistle Blower policy and procedure with an aim to deter and detect misconduct and to
ensure that genuine concerns of misconduct / unlawful conduct, which an individual believes may be taking place, are
raised at an early stage in a responsible and confidential manner. For the year 2008, the members of the Committee were
Mr. Zubair Ahmed, Managing Director, Mr. Ramakrishnan Subramanian, Director - Finance & IT, Mr. Praveen K Gupta,
Director - Operations, Mr. Surinder Kumar, EVP - Legal & Company Secretary and Mr. Arun Sehgal, EVP - HR. Apart from
these members, the Committee has a Coordinator. The Audit Committee is kept informed of all the proceedings of the
Whistle Blower Committee at regular intervals.
Code of Conduct
The Board of Directors has adopted a Code of Conduct for Directors and Senior Management of the Company. An annual
affirmation of compliance with the Code of Conduct is taken from all the Directors and Senior Management members of the
Company to whom the Code applies. The Code of Conduct has also been posted at the website of the Company
www.gsk-ch.in. CEO’s affirmation that the Code of Conduct has been complied with by the Board of Directors and Senior
Management is given at the end of this report.
Policy for Insider Trading
The Company has a Policy for the Prevention of Insider trading in the securities of the Company. The policy applies to all
persons connected or deemed to be connected (Directors, officers and employees of the Company etc.) with the Company
who are required to comply with the same.

15
CORPORATE GOVERNANCE REPORT

Compliance
Mandatory Requirements
The Company has followed all the mandatory requirements prescribed under Clause 49 of the Listing Agreement.
Non Mandatory Requirements
Following non mandatory requirements of Clause 49 of the Listing Agreement have been complied with by the Company:
1. The Company has a Remuneration Committee whose composition is in conformity with the requirements of Clause 49.
The details regarding composition and terms of reference of the Committee are given in this report.
2. The Company has adopted a Whistle Blower Policy, details of which regarding composition and terms of reference are
given in this report. It is affirmed that no member has been denied access to the Audit Committee and the Whistle
Blower Committee.
CEO & CFO Certification
The Certificate issued by the Managing Director (CEO) and Director – Finance & IT (CFO) certifying the accuracy of the
financial statements and adequacy of internal controls for financial reporting, as required under Clause 49 of the Listing
Agreement, forms part of this Annual Report.
Management Discussion and Analysis Report setting out Opportunities and Threats and also Risks and Concerns forms
part of the Directors Report and is reported in this Annual Report.
MEANS OF COMMUNICATIONS
Quarterly Results
Wide publicity is accorded to the Quarterly Results by publishing them in a widely circulated English daily (Financial
Express) and a Punjabi daily (Punjabi Tribune) as per the requirements of the Listing Agreement with the Stock Exchanges.
The results are also faxed to the Stock Exchanges where the Company is listed. The Company also has its own official
press releases in various newspapers through its Public Relations agency.
The Quarterly results of the Company are also displayed on the website of the Company at www.gsk-ch.in.
Half yearly Report to each household of shareholders
Half-yearly reports are provided to shareholders on a request being made to the Company in this regard.
Presentations made to institutional investors or to analysts
Regular meetings & teleconferences were held with the Financial Institutions, Foreign Institutional Investors and Analysts.
About six meetings and nine teleconferences were held during the year with different Financial Analysts. They are also
provided with a copy of the quarterly results after the same have been faxed to the Stock Exchanges.
GENERAL SHAREHOLDER INFORMATION
Annual General Meeting:
Date: The Fiftieth Annual General Meeting is scheduled to be held on April 24, 2009
Time: 9.30 a.m.
Venue: Punjab Public School Auditorium, The Punjab Public School (Senior Wing), Nabha, 147 201 (Punjab)
Financial Year: January 1, 2008 to December 31, 2008
Financial Calendar:
S.No. Particulars Date of Board meeting
1. Quarter ending March 31, 2009 End April, 2009
2. Quarter ending June 30, 2009 End July, 2009
3. Quarter ending September 30, 2009 End October, 2009
4. Quarter ending December 31, 2009 End January 2010
Book closure:
The books will be closed, for the purpose of Annual General Meeting and Dividend payment, from April 16, 2009 to April
24, 2009 (both days inclusive).

16
CORPORATE GOVERNANCE REPORT

Dividend payment:
For the year ended December 31, 2008, an Interim dividend of Rs. 10 per equity share of Rs. 10 each was declared on
October 24, 2008 and paid to the shareholders on November 18, 2008. In addition, the Directors have recommended a
final dividend at the rate of Rs. 5 per share. Accordingly, the total dividend (including the dividend recommended) for the
financial year ended December 31, 2008 totals to Rs. 15 per equity share of Rs. 10 each.
Dividend Date of Declaration Date of Payment Rate per equity share
Interim October 24, 2008 November 18, 2008 Rs. 10/-
Final dividend April 24, 2009 May 14, 2009 Rs. 5/-
(if declared)
Listing on Stock Exchanges and Stock Code:
The shares of the Company are listed at two Stock Exchanges in India, the addresses of which are given below:
Stock Exchange Stock Code
The Stock Exchange, Stock Exchange Towers, Dalal Street, Fort, Mumbai - 400 023 Physical 676
Demat 500676
The National Stock Exchange Ltd., Exchange Plaza, Bandra - Kurla Complex, GSKCONS
Bandra (East), Mumbai - 400 051
The Listing Fee for the year 2008-2009 has been paid to the Stock Exchanges where the shares of the Company are
listed.
Stock Market Data: High and Low during each month in last financial year from January, 2008 – December, 2008 on the
Stock Exchange, Mumbai
MONTH HIGH LOW MONTH HIGH LOW
January, 2008 734.00 555.00 July, 2008 662.10 590.00
February, 2008 660.00 560.00 August, 2008 683.50 612.00
March, 2008 700.00 489.00 September, 2008 750.00 575.00
April, 2008 681.45 535.85 October, 2008 650.00 525.00
May, 2008 737.90 600.00 November, 2008 603.00 480.00
June, 2008 766.00 623.25 December, 2008 600.00 482.50

Performance in comparison to BSE Sensex:

Registrar and Transfer Agents:


Karvy Computershare Pvt. Ltd., Plot No. 17-24 Vittal Rao Nagar, Near Image Hospital, Madahapur, Hyderabad - 500 081

17
CORPORATE GOVERNANCE REPORT

Distribution of shareholding as on 31st December, 2008:


No. of Shares No. of Shareholders No. of Shares Percent of total shares
01 to 250 16,211 13,49,327 3.21
251 to 500 4,175 14,15,113 3.37
501 to 1000 1,309 9,15,883 2.18
1001 to 2000 387 5,63,577 1.34
2001 to 3000 127 3,16,627 0.75
3001 to 4000 60 2,14,462 0.51
4001 to 5000 45 2,03,228 0.48
5001 to 10000 105 7,64,474 1.82
10001 and above 129 3,63,12,847 86.34
In transit - - -
Total 22,548 4,20,55,538 100.00

S.No. Particulars No. of Shares Held Percent of shares held (rounded off)
1. Promoters - M/s Horlicks Limited 1,81,52,243 43.16
2. Mutual Funds & UTI 55,90,050 13.29
3. Banks, Financial Institutions &
Insurance Companies 57,01,145 13.56
4. Foreign Institutional Investors 11,37,200 2.71
5. Private Corporate Bodies 41,84,778 9.95
6. Indian Public 71,21,023 16.93
7. NRIs / OCBs 1,69,099 0.40
8. Any others - -
Total 4,20,55,538 100.00
Dematerialisation of shares and liquidity:
As on December 31, 2008, we have dematerialised 50.74% of our equity share capital, whilst 43.16% is held by Horlicks Ltd. in the
physical form. Therefore, apart from Horlicks Ltd. holding, only 6.10% is held in physical form.
Outstanding GDRs/ADRs/warrants or any convertible instruments, conversion date and likely impact on equity:
We have no GDRs/ADRs or any commercial instrument.
Plant locations:
Nabha Plant: GlaxoSmithKline Consumer Healthcare Limited, Patiala Road, Nabha – 147 201 (Punjab).
Rajahmundry Plant: GlaxoSmithKline Consumer Healthcare Limited, Industrial Area, Dowleswaram - 533 124
(Andhra Pradesh).
Sonepat Plant: GlaxoSmithKline Consumer Healthcare Limited, 14 km Stone, Sonepat – Meerut Road,
Village Khewra, P.O. Bahalgarh – 130 121, District Sonepat (Haryana).
Address for correspondence:
Registered Office: GlaxoSmithKline Consumer Healthcare Limited, Patiala Road, Nabha – 147 201 (Punjab).
Head Office: DLF Plaza Tower, DLF City, Phase I, Gurgaon – 122 002 (Haryana)
Registrars and Share Transfer Agents: Karvy Computershare Pvt. Ltd.
Plot No. 17-24 Vittal Rao Nagar, Near Image Hospital, Madahapur, Hyderabad - 500 081
Phone: 040-23420818, Fax: 040-23420814
Name, Address and contact numbers of the Compliance Officer:
Surinder Kumar, Company Secretary, DLF Plaza Tower, DLF City, Phase I, Gurgaon - 122 002
Telephone: (0124) 409 7200 or (0124) 254 0724, Facsimile: (0124) 254 0734
Email for Investors: igkcpl@karvy.com, investor.2.co@gsk.com
Company’s website address: www.gsk-ch.in
For and on behalf of the Board
Place : Gurgaon Zubair Ahmed
Dated : January 27, 2009 Managing Director

18
CORPORATE GOVERNANCE REPORT
DECLARATION AS REQUIRED UNDER CLAUSE 49 OF THE LISTING AGREEMENT
All Directors and Senior Management members of the Company have affirmed compliance with the Code of Conduct for
Directors and Senior Management of GlaxoSmithKline Consumer Healthcare Limited for the financial year ended December
31, 2008.
Place : Gurgaon Zubair Ahmed
Dated : January 27, 2009 Managing Director

AUDITORS’ CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDER


CLAUSE 49 OF THE LISTING AGREEMENTS
To the Members of GlaxoSmithKline Consumer Healthcare Limited
We have examined the compliance of conditions of Corporate Governance by GlaxoSmithKline Consumer Healthcare
Limited (‘the Company’) for the year ended December 31, 2008 as stipulated in Clause 49 of the Listing Agreements of the
Company with stock exchanges in India.
The compliance of conditions of Corporate Governance is the responsibility of the Company’s management. Our examination
was carried out in accordance with the Guidance Note on Certification of Corporate Governance as stipulated in Clause
49 of the Listing Agreement, issued by the Institute of Chartered Accountants of India and was limited to procedures and
implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance.
It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company
has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.
We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.
Anupam Dhawan
Partner
Membership No: F 084451
For and on behalf of
Place : Gurgaon Price Waterhouse
Dated : January 27, 2009 Chartered Accountants

CERTIFICATION BY CHIEF EXECUTIVE OFFICER & CHIEF FINANCIAL OFFICER OF THE COMPANY
To the Board of Directors
GlaxoSmithKline Consumer Healthcare Limited
We, Zubair Ahmed, Managing Director and Ramakrishnan Subramanian, Director – Finance & IT, to the best of our
knowledge and belief certify that:
1. We have reviewed the Balance Sheet and Profit and Loss Account of the Company for the year ended December 31,
2008 as well as the Cash Flow Statement as on that date and that to the best of our knowledge and belief, we state that:
a) these statements do not contain any materially untrue statement or omit any material fact or contain statements
that might be misleading;
b) these statements together present a true and fair view of the Company’s affairs and are in compliance with
existing accounting standards, applicable laws and regulations.
2. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which
are fraudulent, illegal or violative of the Company’s code of conduct.
3. We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated
the effectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosed
to the Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of
which we are aware and necessary steps have been taken to rectify these deficiencies.
4. We have indicated to the Auditors and the Audit committee:
a) significant changes, if any, in internal control over financial reporting during the year;
b) significant changes, if any, in accounting policies during the year and the same have been disclosed in the notes
to the financial statements; and
c) instances of significant fraud of which we have become aware and the involvement therein, if any, of the
management or an employee having a significant role in the Company’s internal control system over financial
reporting.
Place : Gurgaon Ramakrishnan Subramanian Zubair Ahmed
Dated : January 27, 2009 Director – Finance & IT Managing Director

19
AUDITORS’ REPORT

TO THE MEMBERS OF GLAXOSMITHKLINE (d) In our opinion, the Balance Sheet, Profit and
CONSUMER HEALTHCARE LIMITED Loss Account and Cash Flow Statement dealt
with by this report comply with the accounting
1. We have audited the attached Balance Sheet of
standards referred to in sub-section (3C) of
GlaxoSmithKline Consumer Healthcare Limited, as
Section 211 of the Act;
at December 31, 2008, and the related Profit and Loss
Account and Cash Flow Statement for the year ended (e) On the basis of written representations
on that date annexed thereto, which we have signed received from the Directors, as on December
under reference to this report. These financial 31, 2008 and taken on record by the Board of
statements are the responsibility of the Company’s Directors, none of the Directors is disqualified
management. Our responsibility is to express an as on December 31, 2008 from being
opinion on these financial statements based on our appointed as a Director in terms of clause (g)
audit. of sub-section (1) of Section 274 of the Act;

2. We conducted our audit in accordance with the (f) In our opinion and to the best of our information
auditing standards generally accepted in India. Those and according to the explanations given to us,
Standards require that we plan and perform the audit the said financial statements together with the
to obtain reasonable assurance about whether the notes thereon and attached thereto give in the
financial statements are free of material misstatement. prescribed manner the information required
An audit includes examining, on a test basis, evidence by the Act and give a true and fair view in
supporting the amounts and disclosures in the conformity with the accounting principles
financial statements. An audit also includes assessing generally accepted in India:
the accounting principles used and significant (i) in the case of the Balance Sheet, of the
estimates made by management, as well as state of affairs of the Company as at
evaluating the overall financial statement December 31, 2008;
presentation. We believe that our audit provides a
(ii) in the case of the Profit and Loss Account,
reasonable basis for our opinion.
of the profit for the year ended on that
3. As required by the Companies (Auditor’s Report) date; and
Order, 2003, as amended by the Companies (Auditor’s
(iii) in the case of the Cash Flow Statement,
Report) (Amendment) Order, 2004, issued by the
of the cash flows for the year ended on
Central Government of India in terms of sub-section
that date.
(4A) of Section 227 of ‘The Companies Act, 1956’ of
India (the ‘Act’) and on the basis of such checks of the Anupam Dhawan
books and records of the Company as we considered Partner
appropriate and according to the information and Membership Number: F 084451
explanations given to us, we give in the Annexure a
For and on behalf of
statement on the matters specified in paragraphs 4
Place : Gurgaon Price Waterhouse
and 5 of the said Order.
Dated : January 27, 2009 Chartered Accountants
4. Further to our comments in the Annexure referred to
in paragraph 3 above, we report that: ANNEXURE TO AUDITORS’ REPORT

(a) We have obtained all the information and [Referred to in paragraph 3 of the Auditors’ Report of even
explanations, which to the best of our date to the members of GlaxoSmithKline Consumer
knowledge and belief were necessary for the Healthcare Limited on the financial statements for the year
purposes of our audit; ended December 31, 2008]

(b) In our opinion, proper books of account as 1. (a) The Company is maintaining proper records
required by law have been kept by the showing full particulars including quantitative
Company so far as appears from our details and situation of fixed assets.
examination of those books; (b) The fixed assets are physically verified by the
(c) The Balance Sheet, Profit and Loss Account management according to a phased programme
and Cash Flow Statement dealt with by this designed to cover all the items over a period of
report are in agreement with the books of three years, which in our opinion, is reasonable
account; having regard to the size of the Company and the

20
AUDITORS’ REPORT

nature of its assets. Pursuant to the programme, across nor have been informed of any continuing
a portion of the fixed assets has been physically failure to correct major weaknesses in the aforesaid
verified by the management during the year and internal control system.
no material discrepancies between the book
5. (a) In our opinion and according to the information
records and the physical inventory have been
and explanations given to us, the particulars of
noticed.
contracts or arrangements referred to in Section
(c) In our opinion and according to the information 301 of the Act have been entered in the register
and explanations given to us, a substantial part required to be maintained under that Section.
of fixed assets has not been disposed off by the
(b) In our opinion and according to the information
Company during the year.
and explanations given to us, the transaction
2. (a) The inventory (excluding certain stocks with third made in pursuance of such contracts or
parties) has been physically verified by the arrangements and exceeding the value of
management during the year/year end. In respect Rupees Five Lakhs in respect of a party during
of inventory lying with third parties and not the year have been made at a price which is
physically verified, confirmations have been reasonable having regard to the prevailing market
obtained. In our opinion, the frequency of price at the relevant time.
verification is reasonable.
6. The Company has not accepted any deposits from
(b) In our opinion, the procedures of physical the public within the meaning of Sections 58A and
verification of inventory followed by the 58AA of the Act and the rules framed there under.
management are reasonable and adequate in
7. In our opinion, the Company has an internal audit
relation to the size of the Company and the nature
system commensurate with its size and nature of its
of its business.
business.
(c) On the basis of our examination of the inventory
8. We have broadly reviewed the books of account
records, in our opinion, the Company is
maintained by the Company in respect of products
maintaining proper records of inventory. The
where, pursuant to the Rules made by the Central
discrepancies noticed on physical verification of
Government of India, the maintenance of cost records
inventory as compared to book records were not
has been prescribed under clause (d) of sub-section
material.
(1) of Section 209 of the Act and are of the opinion
3. (a) The Company has not granted any loans, secured that prima facie, the prescribed accounts and records
or unsecured, to companies, firms or other parties have been made and maintained. We have not,
covered in the register maintained under Section however, made a detailed examination of the records
301 of the Act and accordingly clauses 3 (a) to (d) with a view to determine whether they are accurate or
of the Order are not applicable. complete.

(b) The Company has not taken any loans, secured 9. (a) According to the information and explanations
or unsecured, from companies, firms or other given to us and the records of the Company
parties covered in the register maintained under examined by us, in our opinion, the Company is
Section 301 of the Act and accordingly clauses 3 regular in depositing the undisputed statutory
(e) to (g) of the Order are not applicable. dues including provident fund, investor education
and protection fund, employees’ state insurance,
4. In our opinion and according to the information and
income-tax, sales-tax, wealth tax, service tax,
explanations given to us, having regard to the
customs duty, excise duty, cess and other material
explanation that certain items purchased are of special
statutory dues as applicable with the appropriate
nature for which suitable alternative sources do not
authorities.
exist for obtaining comparative quotations, there is
an adequate internal control system commensurate (b) According to the information and explanations
with the size of the Company and the nature of its given to us and the records of the Company
business for the purchase of inventory, fixed assets examined by us, the particulars of dues of income-
and for the sale of goods and services. Further, on the tax, sales-tax, wealth tax, service tax, customs
basis of our examination of the books and records of duty, excise duty and cess as at December 31,
the Company, and according to the information and 2008 which have not been deposited on account
explanations given to us, we have neither come of disputes, are as follows -

21
AUDITORS’ REPORT

Name of the Statute Nature of dues Amount under Period to Forum where
dispute not which the the dispute
yet deposited amount relates is pending
(Rs. Lacs)
Excise Duty
The Central Excise Interest on duty on 71.02 2001 Customs, Excise,
Act, 1944 Freight & Insurance Service Tax Appellate
Tribunal (CESTAT),
New Delhi
The Central Excise Valuation Cases and 1,75.79 1983-2003 Customs, Excise,
Act, 1944 Other matters Service Tax Appellate
Tribunal (CESTAT),
various States
The Central Excise Valuation Cases and 49.31 1991-2007 Commissioner of Central
Act, 1944 Other matters Excise (Appeals)
The Central Excise Valuation Cases, 48,59.92 1995-2007 Commissioner/Additional/
Act, 1944 Refund of duty and Deputy Commissioner of
Other matters Central Excise
Sub Total 51,56.04
Sales Tax
Andhra Pradesh Turnover Tax on 13.18 1997-1999 Andhra Pradesh
General Sales Tax Milk Purchases High Court
Act, 1957
Tamil Nadu General Additions on account 1,61.40 1990-2008 Chennai High Court
Sales Tax Act, 1959 of concessional rates
of Tax and Differential
Value Added Tax
As per Statutes Demand on Freebies, 42.35 1983-2006 Sales Tax
applicable in the Addition on account of Appellate
following states- disllowance of Credit Tribunal/Revenue
Chattisgarh, Uttar notes and Others Board
Pradesh, Rajasthan,
West Bengal, Bihar,
Orissa and
Andhra Pradesh
As per Statutes Miscellaneous 1,53.14 2001-2005 First Appellate
applicable in the demands Authorities of
following states- Bihar, various states
West Bengal, Orissa,
Madhya Pradesh,
Maharashtra, Punjab
As per Statutes Miscellaneous 24.55 2000-2006 Adjudication Level
applicable in the demands
following states-
Punjab, Delhi, Uttar
Pradesh, Rajasthan,
Goa, West Bengal,
Bihar, Jharkhand, Assam
Sub Total 3,94.62
Income Tax
Income Tax Act, 1961 Demand on account of 4,43.34 2000-01 to Commissioner of
Market research 2004-05 Income Tax (A)
expense, Renovation
expense, PLA deposits
Income Tax Act, 1961 Fringe Benefits Tax 2,44.03 2005-06 Additional Commissioner
demand on account of of Income Tax
Freebies, Free products,
Celebrity Expenditure
Sub Total 6,87.37
Grand Total 62,38.03
Note: The above details exclude Departmental Appeals to higher authorities as there is no stay on the order of lower
authority favouring the Company and the amount is not ascertainable.

22
AUDITORS’ REPORT

10. The Company has no accumulated losses as at according to the information and explanations
December 31, 2008 and it has not incurred any given to us, there are no funds raised on a short-
cash losses in the financial year ended on that term basis which have been used for long-term
date or in the immediately preceding financial investment.
year.
18. The Company has not made any preferential
11. According to the information and explanations allotment of shares to parties and Companies
given to us and the records of the Company covered in the register maintained under Section
examined by us, the Company has not availed 301 of the Act during the year.
any loan from financial Institutions or banks as at
19. The Company has not issued any debentures
the balance sheet date. Accordingly, there have
during the year and accordingly, no securities or
been no defaults in repayment of dues.
charges have been created.
12. The Company has not granted any loans and
20. The Company has not raised any money by public
advances on the basis of security by way of
issues during the year.
pledge of shares, debentures and other
securities. 21. During the course of our examination of the books
and records of the Company carried out in
13. The provisions of any special statute applicable
accordance with the generally accepted auditing
to chit fund/nidhi/mutual benefit fund/societies are
practices in India, and according to the information
not applicable to the Company.
and explanations given to us, the instances of
14. In our opinion, the Company is not a dealer or fraud on the Company, noticed or reported during
trader in shares, securities, debentures and other the year and informed to us by the management,
investments. were not material

15. In our opinion and according to the information


and explanations given to us, the Company has Anupam Dhawan
not given any guarantee for loans taken by others Partner
from banks or financial institutions during the year. Membership Number: F 084451
16. The Company has not obtained any term loans. For and on behalf of

17. On the basis of an overall examination of the Place : Gurgaon Price Waterhouse
balance sheet of the Company, in our opinion and Dated : January 27, 2009 Chartered Accountants

23
BALANCE SHEET
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
AS AT DECEMBER 31, 2008
Schedule As at As at
No. December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share Capital 1 42,05.55 42,05.55
Reserves and Surplus 2 7,18,82.30 6,04,29.49
7,60,87.85 6,46,35.04
DEFERRED TAX LIABILITY (net) 6,58.45 17,28.06
[Schedule 16 (Notes 1(i) (b), 16)]
TOTAL 7,67,46.30 6,63,63.10
APPLICATION OF FUNDS
FIXED ASSETS
Gross Block 3 5,39,46.80 5,23,67.55
Less: Depreciation 3,29,23.59 2,97,65.17
Net Block 2,10,23.21 2,26,02.38
Capital Work in Progress 16,32.69 17,31.12
2,26,55.90 2,43,33.50
INVESTMENTS 4 0.05 2,97,83.48
CURRENT ASSETS, LOANS AND ADVANCES
Inventories 5 2,77,17.03 1,94,82.35
Sundry Debtors 6 43,25.02 27,36.19
Cash and Bank Balances 7 4,70,97.69 93,66.61
Other Current Assets 8 28,13.73 19,43.80
Loans and Advances 9 33,83.15 35,84.36
8,53,36.62 3,71,13.31
Less: CURRENT LIABILITIES AND PROVISIONS
Current Liabilities 10 2,50,01.61 2,18,10.45
Provisions 11 62,44.66 30,56.74
3,12,46.27 2,48,67.19
NET CURRENT ASSETS 5,40,90.35 1,22,46.12
TOTAL 7,67,46.30 6,63,63.10
Notes to the Accounts 16

This is the Balance Sheet referred The schedules referred to above form an
to in our report of even date. integral part of the Balance Sheet.

Anupam Dhawan S. J. Scarff Ramakrishnan Subramanian


Partner Chairman Subodh Bhargava
Membership No.: F 084451 Directors
For and on behalf of Zubair Ahmed
Price Waterhouse Managing Director
Chartered Accountants
Place : Gurgaon Surinder Kumar
Dated : January 27, 2009 Company Secretary

24
PROFIT AND LOSS ACCOUNT
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
FOR THE YEAR ENDED DECEMBER 31, 2008
Schedule Year ended Year ended
No. December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
INCOME
Sales [Schedule 16 (Notes 1(h) and 6)] 17,01,47.22 13,96,14.38
Less: Excise Duty 1,58,69.36 15,42,77.86 1,17,67.70 12,78,46.68
Other Income 12 95,48.00 68,50.31
Total 16,38,25.86 13,46,96.99
EXPENDITURE
Consumption of Raw Materials 4,70,68.54 3,47,65.52
Packing Material Expenses 1,61,11.10 1,23,01.85
Employees’ Cost 13 1,71,95.41 1,54,93.83
Expenses 14 5,54,52.17 4,55,67.45
Depreciation / Amortization 3
- On Patents and Trade Marks 4,60.62 4,60.62
- On Other Fixed Assets 37,34.34 41,94.96 38,88.79 43,49.41
Adjustment due to (Increase)/Decrease in
Stock of Finished Goods and Goods in Process 15 (46,04.94) (22,93.07)
Total 13,54,17.24 11,01,84.99

PROFIT BEFORE TAX 2,84,08.62 2,45,12.00


Tax for the year - Current Tax 1,00,80.00 84,50.00
- Deferred Tax Charge / (Credit) (10,69.61) (6,78.61)
- Fringe Benefits Tax 5,65.00 4,75.00
- Adjustment relating to
previous years - (1.93)
Schedule 16 [Notes 1(i) and 16]
PROFIT AFTER TAX 1,88,33.23 1,62,67.54
APPROPRIATIONS:
Dividend - Interim 42,05.55 50,46.68
Proposed Dividend - Final 21,02.78 -
Corporate Dividend Tax [Includes Corporate Dividend
Tax on Proposed Final Dividend Rs. 357.36 Lacs] 10,72.09 8,57.71
Transferred to General Reserve 1,14,52.81 1,03,63.15
1,88,33.23 1,62,67.54
Earnings Per Share (Nominal value of Rs.10 each)
Basic/Diluted (Rs.) [Schedule 16 (Note 18)] 44.78 38.68
Notes to the Accounts 16
This is the Profit and Loss Account referred The schedules referred to above form an
to in our report of even date. integral part of the Profit and Loss Account.
Anupam Dhawan S. J. Scarff Ramakrishnan Subramanian
Partner Chairman Subodh Bhargava
Membership No.: F 084451 Directors
For and on behalf of Zubair Ahmed
Price Waterhouse Managing Director
Chartered Accountants
Place : Gurgaon Surinder Kumar
Dated : January 27, 2009 Company Secretary

25
CASH FLOW STATEMENT
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
FOR THE YEAR ENDED DECEMBER 31, 2008
Year ended Year ended
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
A. CASH FLOW FROM OPERATING ACTIVITIES
PROFIT BEFORE TAX 2,84,08.62 2,45,12.00
Add : Depreciation / Amortization
- On Patents and Trade Marks 4,60.62 4,60.62
- On Other Fixed Assets 37,34.34 38,88.79
Provision for Doubtful Debts 0.11 4.36
Provison for Doubtful Other current
assets/Advances Written off 73.99 1,33.82
Provision for Stock Obsolescence/Stock
written off 2,77.37 74.33
Interest Expense 6,96.61 4,61.07
Loss on Sale of Fixed Assets (net) 17.95 -
Loss on Fixed Assets retired from active use/
Capital work in progress written off 3,36.24 70.76
Less : Interest Income 18,12.08 7,28.99
Dividend Income 18,03.15 17,60.79
Release of accruals 5,53.47 4,27.94
Profit on sale of Fixed Assets (net) - 19.10
Profit on redemption of Long Term Investments 2,29.28 -
Operating Profit Before Working Capital Changes 2,96,07.87 2,66,68.93
Add/(Less): (Increase)/Decrease in Current Assets
Sundry Debtors (15,88.93) 67.88
Loans and Advances (6,03.80) 4,16.10
Other Current Assets (3,69.37) (5,03.14)
Inventories (85,12.06) (49,99.42)
Add/(Less): Increase/(Decrease) in Current Liabilities and Provisions 49,44.23 36,60.98
Cash Generated from Operations 2,34,77.94 2,53,11.33
Less: Income Tax paid (net of refunds) [excludes tax
deducted at source]
- Current Tax 98,60.88 59,64.62
- Fringe Benefits Tax 5,50.00 5,40.90
Net Cash flow from Operating Activities 1,30,67.06 1,88,05.81

B. CASH FLOW FROM INVESTING ACTIVITIES


Purchase of Fixed Assets /
Additions to Capital Work in Progress (30,71.15) (25,46.95)
Sale proceed of Fixed Assets 1,38.84 28.24
Interest Received 12,37.52 6,68.37
Dividend Received 18,03.15 17,60.79
Sale proceeds of Long Term Investments 22,29.28 -
Purchase of Long Term Investments - (20,00.00)
Net Cash flow from Investing Activities 23,37.64 (20,89.55)

26
CASH FLOW STATEMENT
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED
FOR THE YEAR ENDED DECEMBER 31, 2008
Year ended Year ended
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)

C. CASH FLOW FROM FINANCING ACTIVITIES

Interest Paid (5,36.42) (4,28.16)


Dividends Paid - Interim (42,05.86) (50,40.09)

Dividend Tax Paid (7,14.73) (8,57.68)


Net cash flow from Financing Activities (54,57.01) (63,25.93)

Net Increase/(Decrease) in Cash and Cash Equivalents 99,47.69 1,03,90.33

Cash and Cash Equivalents at the beginning of the year


Cash and Bank Balances [including exchange fluctuation 3,71,50.00 2,67,59.67

(gain)/loss Rs. 5.4 Lacs (Previous Year Rs. 2.3 Lacs)]


Cash and Cash Equivalents at the end of the year

Cash and Bank Balances [including exchange fluctuation 4,70,97.69 3,71,50.00


(gain)/loss (Rs. 0.51 Lacs) (Previous Year Rs. 5.4 Lacs)]

Net Increase/(Decrease) in Cash and Cash Equivalents 99,47.69 1,03,90.33

Notes:

1. The above Cash Flow Statement has been prepared under the ‘Indirect Method’ as set out in the Accounting
Standard-3 on Cash Flow Statement issued by Institute of Chartered Accountants of India.

2. Cash and Cash equivalents include Cash & Bank Balances [Refer Schedule 7] and Current Investments in money
market mutual funds Rs. Nil (Previous Year Rs. 2,77,83.43 Lacs) [Refer Schedule 4]

3. Cash and Cash eqivalents include balances with Scheduled Banks on Dividend accounts Rs. 1,22.56 Lacs
(Previous Year Rs. 1,22.87 Lacs) and Rs. 1.10 Lacs (Previous Year Rs. 1.10 Lacs) lodged as Security Deposits,
which are not available for use by the Company.

4. Notes to the Accounts (Schedule 16) form an integral part of the Cash Flow Statement.

5. Previous Year’s figures have been regrouped wherever necessary to conform to the current year’s classification.

This is the Cash Flow Statement referred to in our report of even date.

Anupam Dhawan S. J. Scarff Ramakrishnan Subramanian


Partner Chairman Subodh Bhargava
Membership No.: F 084451 Directors
For and on behalf of Zubair Ahmed
Price Waterhouse Managing Director
Chartered Accountants
Place : Gurgaon Surinder Kumar
Dated : January 27, 2009 Company Secretary

27
SCHEDULES
FORMING PART OF THE ACCOUNTS
As at As at
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)

1. SHARE CAPITAL
AUTHORISED
6,00,00,000 Equity Shares of Rs. 10 each 60,00.00 60,00.00

ISSUED AND SUBSCRIBED


4,20,55,538 (Previous Year 4,20,55,538) Equity
Shares of Rs. 10 each fully paid-up 42,05.55 42,05.55

42,05.55 42,05.55

Notes:
1. 2,17,386 Equity Shares of Rs. 10 each were allotted
as fully paid-up pursuant to a contract for
consideration other than cash.
2. 2,77,60,539 Equity Shares of Rs.10 each were allotted as
fully paid-up bonus shares by capitalisation of reserves
Rs. 27,10.02 Lacs and share premium Rs. 66.03 Lacs in the
year 1995.
3. 1,70,17,733 Equity Shares of Rs.10 each were allotted as
fully paid-up bonus shares by capitalisation of reserves
Rs.17,01.77 Lacs in the year 1997.
4. 33,25,083 Equity Shares of Rs. 10 each fully Paid up
were bought back by capitalisation of reserves
Rs. 3,32.51 Lacs in the year 2005.

2. RESERVES AND SURPLUS

GENERAL RESERVE
As per last Balance Sheet 6,00,96.98 4,97,33.83

Transferred from Profit and Loss Account 1,14,52.81 1,03,63.15


7,15,49.79 6,00,96.98

CAPITAL REDEMPTION RESERVE * 3,32.51 3,32.51


7,18,82.30 6,04,29.49

*Schedule 1[Note 4]

28
SCHEDULES
FORMING PART OF THE ACCOUNTS
3. FIXED ASSETS *
(Rs.Lacs)
GROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK
Cost as at Additions Deletions/ Cost as at Upto During Deletions/ Upto As at As at
January during Adjustments December January the Year Adjustments December December December
1, 2008 the Year during the Year 31, 2008 1, 2008 during the Year 31, 2008 31, 2008 31, 2007

Tangible Assets
Land (Freehold) 2,25.13 - - 2,25.13 - - - - 2,25.13 2,25.13
Buildings*** 90,24.15 3,74.32 6.18 93,92.29 18,95.26 2,80.25 2.05 21,73.46 72,18.83 71,28.89
Plant & Machinery**° 2,99,26.50 19,46.71 5,45.65 3,13,27.56 1,78,18.46 27,98.94 3,42.28 2,02,75.12 1,10,52.44 1,21,08.04
Information Technology
Equipments 19,30.23 1,49.73 2,81.89 17,98.07 14,79.56 2,03.46 2,73.47 14,09.55 3,88.52 4,50.67
Furniture & Fittings 10,87.45 1,21.60 57.85 11,51.20 7,45.92 84.34 51.20 7,79.06 3,72.14 3,41.53
Office Equipment**° 20,10.68 88.55 4,73.65 16,25.58 12,01.36 1,73.66 1,97.65 11,77.37 4,48.21 8,09.32
Motor Vehicles 9,80.12 2,02.35 2,19.44 9,63.03 4,00.94 1,72.21 1,69.89 4,03.26 5,59.77 5,79.18
Leasehold Improvements 5,41.57 2,80.65 - 8,22.22 5,41.57 21.48 - 5,63.05 2,59.17 -

Intangible Assets
Patent and Trade
Marks *** 66,41.72 - - 66,41.72 56,82.10 4,60.62 - 61,42.72 4,99.00 9,59.62
5,23,67.55 31,63.91 15,84.66 5,39,46.80 2,97,65.17 41,94.96 10,36.54 3,29,23.59 2,10,23.21 2,26,02.38

Previous Year 5,21,68.71 18,95.55 16,96.71 5,23,67.55 2,70,32.30 43,49.38 16,16.51 2,97,65.17

Capital Work in Progress includes Capital Advances - Rs 2,90.88 Lacs (Previous Year Rs 1,58.33 Lacs) 16,32.69 17,31.12
2,26,55.90 2,43,33.50

* Schedule 16 [Notes 1(b), 19]

** Includes Rs. 64.50 Lacs (Previous Year Rs. 64.50 Lacs) paid to State Electricity Board for electrical installations not represented by physical assets
owned by the Company and depreciated over a period of 5 years.

° Includes assets retired from active use, being carried at their estimated realisable value aggregating to Rs. 24.68 Lacs (Previous Year Rs. 3.69 Lacs).
(Also refer schedule 14)

*** Includes Dwelling Units valuing Rs. 1,23.95 Lacs (Previous Year Rs. 1,23.95 Lacs) and Patents and Trade Marks valuing Rs. 66,41.72 Lacs (Previous Year
- Rs. 66,41.72 Lacs) for which registration is awaited.

As at As at
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)

4. INVESTMENTS *

Long Term Investments (Non-Trade) Unquoted

Government Securities at Cost


7 - Year National Savings Certificates
(Lodged with Government Authorities) 0.05 0.05

Investments in Fixed Maturity Plans (FMP)

HSBC Fixed Term Series - 25 Institutional Growth Nil


(Previous Year 1,00,00,000 units) Redeemed during the
Year 1,00,00,000 units (Previous year Nil) - 10,00.00

Franklin Tempelton fixed Horizon Fund-13 Months Plan -


Institutional Growth Nil units (Previous Year 1,00,00,000 units)
Redeemed during the Year 1,00,00,000 units (Previous Year Nil Units) - 10,00.00

Aggregate value of Unquoted Long Term Investments (A) 0.05 20,00.05

29
SCHEDULES
FORMING PART OF THE ACCOUNTS
As at As at
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)

Current Investments (Non-Trade) Unquoted- Investments in


Money Market Mutual Funds

HSBC Liquid Plus- Regular- Daily Dividend Nil (Previous Year 4,53,75,025 units)
Purchased during the Year 1,51,43,385 (Previous Year 7,90,68,763 units)
Re-invested during the Year 29,18,377 (Previous Year 30,82,558 units)
Redeemed during the Year 6,34,36,787 (Previous Year 6,69,15,686 units) - 45,43.20

DWS Money Plus Fund- Daily Nil (Previous Year 5,36,39,885 units)
Purchased during the Year 1,49,99,590 (Previous Year 5,19,75,369 units)
Re-invested during the Year 34,94,089 (Previous Year 18,86,169 units)
Redeemed during the Year 7,21,33,564 (Previous Year 1,72,97,301 units) - 53,68.40

Prudential ICICI Floating Rate Plan D - Daily Dividend Nil


(Previous Year 1,66,62,503 units)
Purchased during the Year 1,49,99,386 (Previous Year 1,65,84,550 units)
Re-invested during the Year 79,429 (Previous Year 95,625 units)
Redeemed during the Year 3,17,41,318 (Previous Year 52,29,960 units) - 16,66.60

HDFC Floating Rate Income Fund- Wholesale Plan- Daily Dividend Nil
(Previous Year 7,11,34,839 units)
Purchased during the Year Nil (Previous Year 7,05,95,889 units)
Re-invested during the Year 40,33,331 (Previous Year 5,38,950 units)
Redeemed during the Year 7,51,68,170 (Previous Year 4,39,76,613 units) - 71,71.00

Grindlays Floating Rate Long Term Institutional Plan - Plan B- Daily Dividend Nil
(Previous Year 60,08,614 units)
Purchased during the Year 4,59,82,746 (Previous Year 4,91,36,382 units)
Re-invested during the Year 22,50,727 (Previous Year 8,48,845 units)
Redeemed during the Year 5,42,42,087 (Previous Year 4,39,76,613 units) - 6,01.20

Principal Floating Rate Fund - FMP Nil (Previous Year 7,21,93,424 units)
Purchased during the Year Nil (Previous Year 8,35,50,614 units)
Re-invested during the Year 38,27,795 (Previous Year 26,54,639 units)
Redeemed during the Year 7,60,21,219 (Previous Year 1,40,11,829 units) - 72,28.20

SBI Debt Fund Series - 90 Days - Dividend Nil (Previous Year 1,20,47,591 units)
Purchased during the Year Nil (Previous Year 1,20,00,000 units)
Re-invested during the Year 1,69,835 units (Previous Year 47,591 units)
Redeemed during the Year 1,22,17,426 units (Previous Year 1,40,11,829 units) - 12,04.83

Aggregate value of Unquoted Current Investments (B) - 2,77,83.43

Total (A)+(B) 0.05 2,97,83.48

*Schedule 16 [Notes 1(d), 14]

30
SCHEDULES
FORMING PART OF THE ACCOUNTS
As at As at
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
5. INVENTORIES *
(At lower of Cost and Net Realisable Value)
Raw Materials [Includes Goods in Transit Rs. 1,33.27
Lacs (Previous Year- Rs. 98.97 Lacs)] 73,68.95 45,24.72
Packing Materials [Includes Promotional material
Rs. 6,84.95 Lacs (Previous Year Rs. 7,23.16 Lacs)] and
Goods in Transit [Rs. 61.62 Lacs (Previous Year Rs. 46.53 Lacs)] 21,50.71 15,35.11
Goods in Process 14,31.96 6,70.26
Finished Goods (including Bulk powder) 1,58,21.40 1,19,93.15
Stores and Spare parts 8,30.20 6,42.06
By-products (at Net Realisable Value) 1,13.81 1,17.05
2,77,17.03 1,94,82.35
* Schedule 16 [Notes 1(e)]
6. SUNDRY DEBTORS
(Considered good, unless otherwise stated)
Over six months
Secured - Considered good 28.67 27.19
Unsecured - Considered good 98.83 40.52
Unsecured - Considered doubtful 94.04 95.34
Less: Provision for doubtful debts (94.04) 1,27.50 (95.34) 67.71
Others
Secured - Considered good 5,00.36 5,46.01
Unsecured - Considered good 36,97.16 41,97.52 21,22.47 26,68.48
43,25.02 27,36.19
7. CASH AND BANK BALANCES
Cash and cheques in hand 2.27 2.96
With Scheduled Banks:
On Current accounts 19,21.76 30,89.68
On Dividend accounts 1,22.56 1,22.87
On Fixed Deposit Accounts 4,50,50.00 61,50.00
Post Office in Savings Bank Accounts (Lodged
as security deposits) 1.10 1.10
4,70,97.69 93,66.61
8. OTHER CURRENT ASSETS
(Considered Good, unless otherwise stated)
Interest accrued on Fixed Deposit Accounts / Loans 6,59.69 85.13
Others Receivables - Considered good 8,53.98 10,12.58
Other Receivables - Considered doubtful 1,54.09 80.26
Less: Provision for Doubtful receivables (1,54.09) 8,53.98 (80.26) 10,12.58
Security Deposits 13,00.06 8,46.09
28,13.73 19,43.80
9. LOANS AND ADVANCES
(Considered Good, unless otherwise stated)
Advances recoverable in cash or in kind or for
value to be received *
- Unsecured 29,67.19 33,04.68
- Secured 3,09.87 32,77.06 2,62.64 35,67.32
Balances with Excise authorities 32.62 17.04
Advance Tax [net of Provision for Tax
Rs. 6,54,63.13 Lacs] 73.47 -
33,83.15 35,84.36
* Includes amount due from Directors/
Officers of the Company. - -
Maximum amount outstanding during the Year 13.88 6.97

31
SCHEDULES
FORMING PART OF THE ACCOUNTS
As at As at
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)

10. CURRENT LIABILITIES *


Sundry Creditors other than Small and Micro enterprises 1,72,52.17 1,43,93.14
Other Liabilities 32,08.18 31,74.61
Advances from Customers 6,85.92 3,09.98
Trade Security Deposits 37,32.78 38,09.84
Unclaimed Dividend 1,22.56 1,22.88
2,50,01.61 2,18,10.45
* Schedule 16 [Notes 21 & 25]

11. PROVISIONS *
Income Tax
[Previous Year Net of Advance Tax Rs. 5,47,97.51 Lacs] - 4,58.90
Fringe Benefits Tax [Net of Advance Tax
- Rs. 18,50.90 Lacs (Previous Year Rs. 13,00.90 Lacs)] 1,44.87 94.10
Employee Benefits 23,94.74 23,63.71
Proposed Final Dividend 21,02.78 -
Corporate Dividend Tax 3,57.36 -
Other Provisions 12,44.91 1,40.03
62,44.66 30,56.74
* Schedule 16 [Notes 1(g), 1(i), 1(l), 15, 25, 27(a)]

Year ended Year ended


December 31, December 31,
2008 2007
(Rs.Lacs) (Rs. Lacs)

12. OTHER INCOME *


Miscellaneous Sales 4,76.19 3,44.72
Business Auxillary Service Commission 36,60.87 31,01.81
Insurance and other claims 2,61.54 2,71.56
Miscellaneous Income 2,43.62 1,95.41
Release of accruals 5,53.47 4,27.94
Profit on sale of Fixed Assets (net) - 19.10
Exchange fluctuation (net) 5,07.80 -
Profit on redemption of Investments
-Long Term (Non-trade) Unquoted 2,29.28 -
Interest Income (gross)
[Tax Deducted at Source Rs. 4,04.42 Lacs
(Previous Year Rs. 51.63 Lacs)]
- Loans/Deposits 6.10 9.18
- Bank Deposits 17,90.54 2,30.80
- Income tax refunds - 4,75.39
- Others 15.44 18,12.08 13.61 7,28.98
Dividend Income on Current Investments
(Non-Trade) Unquoted-Investments in
Money Market Mutual Funds 18,03.15 17,60.79
95,48.00 68,50.31
* Schedule 16 [ Notes 1(c), 1(h), 14, 23(c), 24(b)]

32
SCHEDULES
FORMING PART OF THE ACCOUNTS
Year ended Year ended
December 31, December 31,
2008 2007
(Rs.Lacs) (Rs. Lacs)
13. EMPLOYEES’ COST *
Salaries, Wages and Bonus 1,25,62.87 1,13,94.63
Contribution to Provident and Other Funds 26,68.84 22,17.04
Welfare Expenses 19,63.70 18,82.16
1,71,95.41 1,54,93.83
* Schedule 16 [Notes 1(g), 15, 20, 24(a)]

14. EXPENSES *
Stores and Spare Parts consumed 1,68.60 93.54
Conversion charges to third parties 68,29.22 50,59.92
Repairs & Maintenance
- Buildings 2,01.56 1,96.62
- Plant & Machinery 6,90.05 8,08.93
- Others 5,15.34 4,66.74
Power and fuel 44,24.16 30,43.68
Rent (including Lease Rent) 14,65.85 9,24.53
Rates and taxes 8,16.01 6,29.65
Insurance 5,92.50 6,25.47
Travelling 11,31.03 9,60.87
Carriage and freight 77,88.11 65,78.77
Service charges paid to selling agents 2.74 12.41
Discounts - Sales 23.10 50.40
Donations 17.82 62.75
Advertising and Promotions 1,94,03.69 1,64,09.80
Royalty 56,44.63 54,31.25
Loss on Fixed Assets retired from active use/
Capital work in progress written off 3,36.24 70.76
Loss on sale of Fixed Assets (net) 17.95 -
Exchange fluctuations (net) - 1,27.47
Scientific Research and Development 5,31.95 1,65.75
Interest Expense - Others 6,96.61 4,61.07
Provision for Stock Obsolescence/Stock written Off 2,77.37 74.33
Provision for Doubtful Other current assets/Advances Written off 73.99 1,33.82
Provision for Doubtful Debts 0.11 4.36
Other General Expenses 38,03.54 31,74.56
5,54,52.17 4,55,67.45
* Schedule 16 [Notes 1(c), 1(f), 1(j), 1(k), 1(I), 5, 8, 9, 26, 27(a)]

15. ADJUSTMENT DUE TO (INCREASE) / DECREASE IN


STOCK OF FINISHED GOODS AND GOODS IN PROCESS
Opening Stock
Finished Goods (including Bulk power) 1,19,93.15 91,93.47
Goods in Process 6,70.26 7,88.99
By-products 1,17.05 1,27,80.46 63.72 1,00,46.18
Less: Closing Stock
Finished Goods (including Bulk power) 1,58,21.40 1,19,93.15
Goods in Process 14,31.96 6,70.26
By-products 1,13.81 1,73,67.17 1,17.05 1,27,80.46
Excise duty adjustment for movement
in Finished Goods inventory (18.23) 4,41.21
Net (Increase)/Decrease (46,04.94) (22,93.07)

33
SCHEDULES
FORMING PART OF THE ACCOUNTS
16. NOTES TO ACCOUNTS

1. Significant Accounting Policies:

a. Accounting Convention

The Financial Statements are prepared to comply in all material aspects with all the applicable Accounting Standards
notified by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act,
1956.

b. Fixed Assets and Depreciation / Amortisation

All tangible fixed assets are stated at historical cost less accumulated depreciation. Cost includes all incidental
expenditure net of CENVAT wherever applicable. The Company follows the Straight Line Method of charging
depreciation, on all its tangible fixed assets, on pro-rata basis except for assets costing less than and upto Rs. 5,000
which are fully depreciated in the year of purchase. The Company has provided depreciation at higher of the rates
determined by the management or those specified in Schedule XIV to the Companies Act, 1956. The depreciation
rates which are different from the principal rates specified in Schedule XIV to the Companies Act, 1956 are as
follows: -

(Rates in Percentages)
Assets acquired Assets acquired Assets acquired Assets acquired
after December 31, after April 30, after March 31, upto March 31,
1994 1986 but upto 1983 but upto 1983
December 31, 1994 April 30, 1986
Buildings
- Factory - - 3.5 2/3.5/5.5
- Non – factory 2/6.67 2 2 2/2.5
- Tubewells 10 10 10 10/100
Plant and Machinery
- Triple Shift 12.5 12.5 - -
- Double Shift 10/12.5 10/12.5 - -
- Single Shift 10/12.5/20/33.33 10/12.5 - -
Information Technology
Equipment (including
Computer Software
acquired for internal use) 20/25/33.33 25 25 25
Motor Vehicles 14.28/20 14.28/20 14.28/20 14.28/20/25
Furniture and Fittings 10/20 10/20 10/20 10/20
Office Equipment 10/12.5 10 10 10

Patents and Trade Marks (Intangible Assets) are accounted at their cost of acquisition and amortized over their
estimated economic life not exceeding 10 years. Leasehold improvements are charged to the Profit and Loss
Account over the period of lease. At each Balance Sheet date, the Company assesses whether there is any
indication that assets may be impaired. If any such indication exists, the Company estimates the recoverable
amount. If the carrying amount of the assets exceeds its recoverable amount, an impairment loss is recognized in the
accounts to the extent the carrying amount exceeds the recoverable amount. Also Refer Notes (c), (j) below.

c. Foreign Currency Transactions

Transactions in Foreign Exchange are accounted for at the exchange rates prevailing on the date of transactions.
The exchange differences arising out of the settlements, including those on liabilities relating to fixed assets acquired
outside India are dealt with in the Profit and Loss Account. Monetary assets and liabilities are restated at the year
end rates and the resultant gains or losses are recognized in the Profit and Loss account.

34
SCHEDULES
FORMING PART OF THE ACCOUNTS
d. Investments
Long term Investments are stated at cost less provision, if any, for diminution other than temporary in the value of
such investments. Current investments are valued at lower of cost and net realizable/fair value.
e. Inventories
Inventories are valued at lower of cost and net realizable value, except for ghee, a by-product, which is valued at
selling price. Cost is determined on the basis of the weighted average method. It includes all the appropriate
allocable overheads and excise duty wherever applicable. Provision for inventory obsolescence is made based on
the best estimates of management.
f. Research and Development
The revenue expenditure is charged against the profits for the year in which it is incurred. Capital expenditure is
accounted in the same way as fixed assets.
g. Employee Benefits
The Company has a Defined Contribution plan for post employment benefits namely Superannution Fund which is
recognized by the income tax authorities. This funds is administered through trustees and the Company’s contribution
thereto is charged to revenue every year.
The Company’s contributions to State plans namely Employee’s State Insurance Fund and Employee’s Pension
Scheme 1995 are charged to revenue every year.
The Company has Defined Benefit plans namely leave encashment/compensated absences for workers, Gratuity
and Provident Fund for all employees and post-employment medical assistance scheme for certain employees, the
liability for which is determined on the basis of a actuarial valuation at the end of the year. The Gratuity Fund and
Provident Fund are recognized by the income tax authorities and are administered through trustees. The post-
employment medical assistance scheme is an insured benefit plan wherein the Company annually pays insurance
premium to NIC (National Insurance Company) and the liability for future premiums in respect of the underlying
benefits is determined on the basis of an actuarial valuation at the year end. The Company provides for Earned/Sick/
Special leave encashment for Management Staff (Short term defined benefit) during the year on an arithmetical
basis.
Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions
and are recognised immediately in the Profit and Loss Account as income or expense.
Termination benefits are recognised as an expense immediately.
In the year of transition, the transitional liability was adjusted against the opening revenue reserves of the relevant
financial year in accordance with Accounting Standard AS 15 (revised 2005) ‘Employee Benefits’.
h. Revenue Recognition
Sales comprise of value of sale of goods (net of returns) excluding sales tax and trade discounts but including
excise duty. Sales are recognized at the point of despatch to the customers. Insurance and other Claims are
recognized on an accrual basis. Dividend income is accounted for in the year in which the right to receive the same
is established. Interest on Investments is recognized on a time proportion basis taking into account the amounts
invested and the fixed rate of interest. Also Refer Note 23(c).
i. Taxation
Tax expense/(saving) is the aggregate of current year tax and deferred tax charged/(credited) to the Profit and Loss
Account for the year.
a) Current Tax
Provision for taxation is based on assessable profits of the Company as determined under the Income Tax Act,
1961. The Company also provides for such disallowances made on completion of assessments pending
appeals, as considered appropriate depending on the merits of each case. Provision for taxation for the
Company’s financial year ended December 31, 2008 has been determined based on the results for 3 months
ended March 31, 2008 (Assessment Year 2008-2009) and for the 9 months ended December 31, 2008
(Assessment Year 2009-2010). The ultimate liability for the Assessment Year 2009-2010, however, will be
determined on the total income of the Company for the year ending on March 31, 2009.

35
SCHEDULES
FORMING PART OF THE ACCOUNTS
b) Deferred Tax

Deferred tax assets & liabilities resulting from timing differences between book profits and tax profits are
accounted for under the liability method and measured at substantially enacted rates of tax at the Balance
Sheet date to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be
available against which such deferred tax asset/virtual liability can be realized.

c) Fringe Benefits Tax

Provision for Fringe Benefits Tax has been made in respect of employee benefits and other specified expenses
as determined under the Income Tax Act, 1961.

j. Borrowing Costs

The interest on working capital management is charged against the profits for the year in which it is incurred. Interest
on borrowings for capital assets is capitalized till the date of commencement of commercial use of the asset.

k. Leases

Lease rentals in respect of operating leases are charged to the Profit and Loss Account on a straight line basis over
the term of the lease.

l. Provisions and Contingent Liabilities

A provision is recognized when there is a present obligation as a result of past events for which it is probable that an
outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made.
These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed after an evaluation of the facts and legal aspects of the matters involved.

As at At at
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
2. Estimated amount of Contracts remaining to be executed
on Capital account (net of Capital advances) and not provided for 10,47.35 7,03.40

Year ended Year ended


December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
3. Remuneration to Directors (Amount paid/payable)
Salaries and allowances (including Termination Benefits) 4,39.95 3,84.57
Contribution to Provident and other Funds 59.78 69.91
Value of Perquisites 13.47 16.30
Directors’ sitting fees 7.05 6.10
Commission/Other payments to Non-Executive Directors* 29.85 18.00
5,50.10 4,94.88

*Includes payment of Rs. 11.85 Lacs that (Previous year Rs. Nil) accrued to a Non-Executive Director during his
employment

Note:

i. The contribution to Gratuity Fund and Post Employment Medical assistance has been made on a group basis based on
an actuarial valuation and separate figures applicable to an individual employee are not available and accordingly, the
same has not been considered in the above computation.

36
SCHEDULES
FORMING PART OF THE ACCOUNTS
Year ended Year ended
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
Computation of Net Profits under Section 198/349 of the Companies Act, 1956
and calculation of Commission payable to Non-Executive Directors -
Profit before Tax 2,84,08.62 2,45,12.00
Add: Directors’ Remuneration 5,13.20 4,70.78
Directors’ sitting fees 7.05 6.10
Commission / other payament to Non-Executive Directors 29.85 18.00
Provision for doubtful other current assets / advances / debts 73.95 84.61
Voluntary Retirement Scheme 2,63.72 2,79.44
Provision for Stock Obsolecence 1,61.85 -
Loss on fixed assets retired from active use 2,97.46 70.76
(Profit) / Loss on sale of fixed assets (net) 17.95 (19.10)
Other Provisions 11,04.88 1,51.03
Profit on redemption of Investments (Long Term) 2,29.28 -
Less: Provision for Doubtful Debts adjusted - (6.00)
Net Profits under section 198/349 on which Commission is payable 3,11,07.81 2,55,67.62
Commission payable to Non-Executive Directors:
Maximum allowed as per the Companies Act, 1956 at 1% 3,11.08 2,55.67
Restricted by the Board of Directors to 18.00 18.00
Note: The Company depreciates its fixed assets based on estimated useful lives that in certain cases are lower than those
implicit in Schedule XIV of the Companies Act, 1956. Accordingly, the rates of depreciation used by the Company in
such cases are higher than the minimum rates prescribed by Schedule XIV.
4. Payments in respect of Auditors’ Remuneration*
(i) Statutory Audit 24.72 20.22
(ii) Tax Audit 17.98 17.70
(iii) In other capacity 23.60 15.87
(iv) Out-of-Pocket expenses 6.46 5.92
* includes service tax 72.76 59.71
5. Expenditure indicated below allocated to other Revenue Accounts
Consumption of Stores and Spare Parts 23,85.03 14,40.84
Insurance 3,07.01 2,83.83
Scientific Research and Development 13,26.83 11,84.15
Year ended Year ended
December 31, 2008 December 31, 2007
Unit Quantity Value Quantity Value
(Rs. Lacs) (Rs. Lacs)
6. Sales / Turnover
Class of Goods :
(i) Malt Based food / Cereal Based
Beverage / Protein Rich Food DOZS* 1,46,59,876 16,32,83.25 1,26,20,809 13,39,59.64
(ii) Biscuits DOZS* 87,74,326 60,21.78 72,04,780 48,47.83
(iii) Ghee (By product) MT 590 8,42.19 545 7,65.23
(iv) Milk MT - - 290 41.68
17,01,47.22 13,96,14.38
*Converted into uniform pack size

37
SCHEDULES
FORMING PART OF THE ACCOUNTS
Year ended Year ended
December 31, 2008 December 31, 2007
Unit Quantity Value Quantity Value
(Rs. Lacs) (Rs. Lacs)
7. Raw Materials Consumed (Refer Note 9)
(Includes goods processed by third parties)
Milk Powder MT 7,900 1,11,15.79 6,522 85,24.70
Liquid Milk MT 54,308 93,45.56 48,178 76,33.00
Malt and Malt Extract MT 55,000 1,24,85.72 44,745 84,49.12
Flour (Wheat) MT 30,541 45,56.72 25,292 35,27.61
Others 1,02,24.02 72,05.90
4,77,27.81 3,53,40.33
Year ended Year ended
December 31, 2008 December 31, 2007
Percentage Value Percentage Value
(Rs. Lacs) (Rs. Lacs)
8. Imported and Indigenous Raw Materials,
Spare Parts and Stores consumed:
(a) Raw Materials (Refer Note 9):
Imported 0.02 9.71 0.37 1,31.20
Indigenous 99.98 4,77,18.10 99.63 3,52,09.13
100.00 4,77,27.81 100.00 3,53,40.33
(b) Spare Parts and Stores (Refer Note 5):
Imported 0.05 1.21 0.27 4.18
Indigenous 99.95 25,52.42 99.73 15,30.20
100.00 25,53.63 100.00 15,34.38
9. Raw Materials consumed as shown under Notes 7 and 8 (a) above includes Rs. 4,70.78 Lacs (Previous Year Rs. 4,51.23
Lacs) being the cost of materials consumed on samples used for promotional purposes included under Advertising and
Promotion expenses (Refer Schedule 14), Rs. 1,41.81 Lacs (Previous Year Rs. 1,23.58 Lacs) being the cost of stock
breakages recoverable from Insurance company and provision for stock obsolescence Rs. 46.68 Lacs
(Previous Year Rs. Nil).
Year ended Year ended
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
10. Value of Imports calculated on C.I.F. basis:
Raw Materials 36.50 82.21
Spares 13.07 6.25
Capital Goods 37.83 89.28
87.40 1,77.74
11. Expenditure in Foreign Currency (on cash basis)
Travelling 14.38 12.25
Advertisement & Promotions 45.54 44.33
Consultancy 1,17.99 60.45
Software 57.10 4.01
Others 1,93.42 82.07
4,28.43 2,03.11

38
SCHEDULES
FORMING PART OF THE ACCOUNTS
Year ended Year ended
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
12. Amount remitted in Foreign Currency for Dividend :
(a) Number of non-resident shareholders 1 1
(b) Number of shares held (Equity Shares
of Rs. 10 each) 1,81,52,243 1,81,52,243
(c) Interim Dividend
- Current Year 18,15.22 21,78.27
13. Earnings in Foreign Exchange :
- Export of goods on F.O.B. basis 1,38,42.79 69,66.64
[Including sales to Nepal and Bhutan
Rs. 30,35.87 Lacs (Previous Year Rs. 25,70.37 Lacs)]
- Royalty 25.03 57.20

14. Detail of Investments purchased, reinvested and redeemed during the year:

Particulars of Mutual Funds Purchased and Sold during the year No. of Units

Purchased Reinvested Redeemed

SBI - SHF - Liquid Plus - Institutional Plan - Daily Dividend 1,22,11,320.25 36,394.96 1,22,47,715.21
DWS Insta cash Plus Fund - Institutional Plan - Daily Dividend 1,49,70,806.93 11,866.76 1,49,82,673.69

DWS Liquid Plus - Institutional Daily Dividend 7,20,84,587.16 3,30,682.84 7,24,15,270.00


ICICI Prudential Institutional Liquid - Super Institutional Daily
Dividend Reinvest Dividend 1,49,99,250.04 2,535.84 1,50,01,785.88

HSBC Cash Fund - Institutional Plus - Daily Dividend 39,97,761.25 664.94 39,98,426.19

Standard Chartered Liquidity Manager - Plus - Daily Dividend 4,59,903.42 80.35 4,59,983.77
Tempelton India Treasury Management Account - SIP -
Daily Dividend reinvestment 79,980.00 13.07 79,993.07

Templton India Ultra Short Bond Fund Institutional Plan -


Daily Dividend 79,86,691.38 18,494.90 80,05,186.28
Tempelton India Ultra Short Bond Fund Super Institutional
Plan - Daily Dividend 2,31,07,393.87 8,00,856.55 2,39,08,250.42

Year ended Year ended


December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)

15. (a) The Company has classified the various benefits provided to employees as under -

I. Defined Contribution Plans

Indian Senior Executive Superannuation Fund

During the year, the Company has recognised the following amounts
in the Profit and Loss Account -

- Employers’ Contribution to Indian Senior Executives Superannuation Fund * 5,48.15 4,98.27

39
SCHEDULES
FORMING PART OF THE ACCOUNTS
Year ended Year ended
December 31, December 31,
2008 2007
(Rs. Lacs) (Rs. Lacs)
II. State Plans
a. Employers’ Contribution to Employee’s State Insurance
b. Employers’ Contribution to Employee’s Pension Scheme 1995.
During the year, the Company has recognised the following amounts in the
Profit and Loss Account
- Employers’ Contribution to Employee’s State Insurance * 24.53 27.80
- Employers’ Contribution to Employee’s Pension Scheme 1995 * 2,06.92 2,09.73
* Included in Contribution to Provident and Other Funds under Employees’ Cost (Refer Schedule 13)

III. Defined Benefit Plans


In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done as at December 31, 2008
in respect of following defined Benefit Plans:
a. Contribution to Provident Funds
b. Contribution to Gratuity Funds - Employee’s Gratuity Fund, Senior Staff Gratuity Fund
c. Leave Encashment / Compensated Absences for workers – (Earned leave, Sick leave and Special leave)
d. Post - employment Medical Assistance Scheme based on the following assumptions -

Leave Encashment Employee’s Senior Staff Provident


/ Compensated Gratuity Gratuity Fund
Absences Fund Fund
2008 2007 2008 2007 2008 2007 2008 2007
Discount Rate (per annum) 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Rate of increase in Compensation levels 8.00% 6.50% 8.00% 6.50% 8.00% 6.50% 8.00% 6.50%
Rate of Return on Plan Assets N.A. N.A. 8.72% 8.35% 9.30% 8.59% N.A. N.A.
Expected Average remaining working
lives of employees (years) 12.75 13.24 14.74 15.22 20.32 20.64 Nil Nil

(i) In case of Employee’s Gratuity Fund and Senior Staff Gratuity Fund and Provident Fund, merger of allowances has
been assumed to be 100% of the remaining allowances as per the policy of the Company.
(ii) In calculating the leave encashment liability, 20% of the earned / special leave has been assumed to be availed of
during the service before separation.
(iii) In calculating the compensated absences for sick leave liability, 50% of the leave has been assumed to be availed
of during the service before separation.
(iv) The liability for Gratuity Fund for the year 2009 has not been worked out as the same is based on the increase in the
basic salary in April 2010.
(v) The expected rate of return on Gratuity Fund assets has been worked out based on the full year’s interest on the
investment as at December 31, 2008 after reducing the amount of amortization of premium for one year.
(vi) In case of Provident Fund, Plan members are assumed to withdraw in accordance with the following table:

Age Withdrawal Rate %

Up to 30 years 3.0

Up to 44 years 2.0

Above 44 years 1.0

40
SCHEDULES
FORMING PART OF THE ACCOUNTS
A) Changes in the Present Value of Obligation (Rs. Lacs)

Leave Encashment / Employee’s Senior Staff


Compensated Gratuity Gratuity
Absences Fund Fund
2008 2007 2008 2007 2008 2007
Present Value of Obligation as at January 1 1,42.82 1,03.58 15,02.98 12,08.61 24,60.60 19,48.81
Interest Cost 11.46 8.29 1,20.57 96.69 1,97.39 1,55.90
Past Service Cost Nil Nil Nil Nil Nil Nil
Current Service Cost 19.13 14.79 1,34.49 1,13.10 3,16.13 1,86.13
Curtailment Cost / (Credit) Nil Nil Nil Nil Nil Nil
Settlement Cost / (Credit) Nil Nil Nil Nil Nil Nil
Benefits paid (3.79) (3.77) (1,19.32) (1,48.63) (2,14.07) (2,19.81)
Actuarial (gain)/ loss on obligations 12.52 19.93 1,01.88 2,33.21 6,61.53 3,89.57
Present Value of Obligation as at
December 31 1,82.14 1,42.82 17,40.60 15,02.98 34,21.58 24,60.60

B) Changes in the Fair value of Plan Assets (Rs. Lacs)


Leave Encashment / Employee’s Senior Staff
Compensated Gratuity Gratuity
Absences Fund Fund
2008 2007 2008 2007 2008 2007
Fair Value of Plan Assets as at January 1 Nil Nil 12,23.48 9,92.29 19,96.60 15,64.94
Expected Return on Plan Assets N.A. N.A. 1,06.69 1,00.92 1,85.68 1,67.40
Actuarial Gains and Losses N.A. N.A. 12.31 (4.91) 16.59 (8.90)
Contributions Nil Nil 5,16.24 2,83.81 9,95.11 4,93.02
Benefits Paid Nil Nil (1,19.34) (1,48.63) (2,14.06) (2,19.86)
Fair Value of Plan Assets at December 31 Nil Nil 17,39.38 12,23.48 29,79.92 19,96.60
Unpaid Amount Nil Nil (0.22) (0.22) (15.64) (6.80)
Fair Value of Plan Assets at
December 31 (net of unpaid amount) Nil Nil 17,39.16 12,23.26 29,64.28 19,89.80

C) Reconciliation of Present Value of Defined Benefit Obligation and the Fair value of Assets (Rs. Lacs)
Leave Encashment / Employee’s Senior Staff
Compensated Gratuity Gratuity
Absences Fund Fund
2008 2007 2008 2007 2008 2007
Present Value of funded / (unfunded)
Obligation as at December 31 (1,82.14) (1,42.82) 17,40.60 15,02.98 34,21.58 24,60.60
Fair Value of Plan Assets as at the end of
the period Nil Nil 17,39.16 12,23.26 29,64.28 19,89.80
Funded Status Nil Nil (1.44) (2,79.72) (4,57.30) (4,70.80)
Present Value of unfunded Obligation as at
December 31 1,82.14 1,42.82 Nil Nil Nil Nil
Unrecognized Actuarial (gains) / losses Nil Nil Nil Nil Nil Nil
Unfunded Net Asset / (Liability)
recognized in Balance Sheet (1,82.14)* (1,42.82)* (1.44)* (2,79.72)* (4,57.30)* (4,70.80)*
* included in Employee Benefits (Refer Schedule 11)

41
SCHEDULES
FORMING PART OF THE ACCOUNTS
D) Expense recognised in the Profit and Loss Account (Rs. Lacs)

Leave Encashment / Employee’s Senior Staff


Compensated Gratuity Gratuity
Absences Fund Fund

Year ended Year ended Year ended Year ended Year ended Year ended
December December December December December December
31, 2008 31, 2007 31, 2008 31, 2007 31, 2008 31, 2007

Current Service Cost 19.13 14.79 1,34.49 1,13.10 3,16.13 1,86.13


Past Service Cost Nil Nil Nil Nil Nil Nil
Interest Cost 11.46 8.29 1,20.57 96.69 1,97.39 1,55.90
Expected Return on Plan Assets Nil Nil (1,06.69) (1,00.92) (1,85.68) (1,67.40)
Curtailment Cost / (Credit) Nil Nil Nil Nil Nil Nil
Settlement Cost / (Credit) Nil Nil Nil Nil Nil Nil
Net actuarial (gains) / losses recognized
in the period 12.52 19.93 89.59 2,38.12 6,44.94 3,98.51
Total Expenses recognized in the
Profit & Loss Account 43.11*** 43.01*** 2,37.96** 3,46.99** 9,72.78** 5,73.14**
** included in Contribution to Provident and Other Funds (Refer Schedule 13)
*** included in Salaries, Wages and Bonus (Refer Schedule 13)

E) Constitution of Plan Assets (Rs. Lacs)


Leave Encashment / Employee’s Senior Staff
Compensated Gratuity Gratuity
Absences Fund Fund

As at As at As at As at As at As at
December December December December December December
31, 2008 31, 2007 31, 2008 31, 2007 31, 2008 31, 2007

Equity Instruments - - Nil Nil Nil Nil


Debt Instruments - - 16,68.59 11,66.59 27,64.17 18,50.17
Property - - Nil Nil Nil Nil
Other Assets - - 70.57 56.67 2,00.11 1,39.63
Total of the Plan Assets - - 17,39.16 12,23.26 29,64.28 19,89.80

(b) The Guidance Note on Implementing AS 15, Employee Benefits (Revised 2005) issued by the Accounting Standard
Board (ASB) states that Provident Funds set up by employers that guarantee a specified rate of return and which require
interest shortfall to be met by the employer would be defined benefit plans in accordance with the requirements of
paragraph 26(b) of AS 15. Pursuant to the Guidance Note, the Company has accounted for the shorfall of interest
earnings of Provident Fund aggregating Rs. 1,21.31 Lacs (Previous Year Rs. 1,51.22 Lacs) [Refer Schedule 11] determined
on the basis of an actuarial valuation carried out as at December 31, 2008 as an other long term benefit. The Company’s
actuary has stated in his certificate that the valuation is in respect of “Other Long Term Employee Benefits” and accordingly
the detailed disclosures stated in A-E above are not required.

(c) The Company pays insurance premium annually to NIC (National Insurance Company) to assure the underlying
benefits under a post-employment medical assistance sheme, a Defined Insured Benefit plan. The Compnay has
accounted for the liability for insurance premium amounting to Rs. 16,32.55 Lacs (Previous Year Rs. 13,06.65 Lacs)
[Refer Schedule 11] determind on the basis of an actuarial valuation carried out as at December 31, 2008. The Company’s
actuary has stated in his certificate that the valuation is in respect of “Other Long Term Employee Benefits” and accordingly
the detailed disclosures stated in A-E above are not required.

42
SCHEDULES
FORMING PART OF THE ACCOUNTS
16. The Company estimates the deferred tax charge/(credit) using the substantially enacted tax rate applicable rate of
taxation based on the impact of timing differences between financial statements and estimated taxable income for the
current year. The movement of provision for deferred tax is given below :- (Rs. Lacs)
Deferred Tax Liability / (Asset) Balance as at Charge/ (Credit) Balance as at
January 1, January 1, Year Ended Year Ended December December
2008 2007 December December 31, 2008 31, 2007
31, 2008 31, 2007
Depreciation / Amortisation 23,34.65 28,64.97 (5,12.46) (5,30.32) 18,22.19 23,34.65
Section 43B Disallowances (2,95.47) (1,85.06) (5,09.48) (1,10.41) (8,04.95) (2,95.47)
VRS (2,40.10) (2,33.82) 4.18 (6.28) (2,35.92) (2,40.10)
Others Disallowances (71.02) (39.42) (51.85) (31.60) (1,22.87) (71.02)
Deferred Tax Liability (net) 17,28.06 24,06.67 (10,69.61) (6,78.61) 6,58.45 17,28.06
17. The Company’s Nutritional business is organized and focused in India as a single business segment. Accordingly,
Segment information is not required to be disclosed pursuant to Accounting Standard 17, Segment Reporting.
18. Earnings Per Share (EPS) – The numerator and denominator used to calculate Basic and Diluted Earnings per Share
Year ended Year ended
December 31, 2008 December 31, 2007
- Profit attributable to the Equity Shareholders (Rs.)- (A) 1,88,33,23,334 1,62,67,54,285
- Basic/Weighted average number of Equity Shares
outstanding during the year- (B) 4,20,55,538 4,20,55,538
- Nominal value of Equity Shares (Rs.) 10.00 10.00
- Basic/ Diluted Earnings per Share (Rs.) – (A)/(B) 44.78 38.68
19. As at December 31, 2008, the Company has reviewed the future earnings of all its cash generating units in accordance
with the Accounting Standard 28 “Impairment of Assets”. As the carrying amount of assets does not exceed the future
recoverable amount, consequently, no adjustment to the carrying amount of assets is considered necessary by the
management.
20. As part of the restructuring process, the Company has during the year made certain exgratia payments to its employees
as per the VRS scheme duly approved by the Board of Directors aggregating Rs. 2,63.72 Lacs (Previous Year
Rs. 2,79.44 Lacs) included under Employee’s Cost (Refer Schedule 13).
21. The Company is in the process of compiling the information required to be disclosed under the Micro, Small and Medium
Enterprises Development Act, 2006. The management does not envisage any material impact on the financials in this
regard, which has been relied upon by the auditors.

22. Details of Class of Goods -


ANNUAL CAPACITY ACTUAL PRODUCTION* STOCK OF GOODS PRODUCED

LICENSED INSTALLED YEAR YEAR OPENING CLOSING


ENDED ENDED
31.12.08 31.12.07 31.12.08 31.12.07 31.12.08 31.12.07 AS ON 01.01.08 AS ON 01.01.07 AS ON 31.12.08 AS ON 31.12.07

QTY QTY QTY QTY QTY QTY QTY VALUE QTY VALUE QTY VALUE QTY VALUE
MT MT MT MT MT MT MT Rs. Lacs MT Rs. Lacs MT Rs. Lacs MT Rs. Lacs
1. MALT BASED FOODS 91,100 91,100 98,000 94,400 69,963 66,884 10,352 9,688.61 9,217 7,781.50 11,254 11,084.65 10,352 9,688.61
2. CEREAL BASED
BEVERAGE
3. MILKOSE BABY FOODS
2,000
-
2,000
228
} -
-
-
-
1,275
-
1,204
-
214
-
251.15
-
-
-
-
-
257
-
336.15
-
214
-
251.15
-
4. POWDERED MILK
5. PROTEIN RICH FOODS
3,000
3,000
3,528
3,000
} 2,200
-
2,200
- 1,105
-
768
-
210
- -
485.28 88
-
168.80
-
306
-
666.51
-
210
-
485.28
-

6. MALT BASED FOODS - - - - 19,398 9,366 1,431 1,142.20 1,128 855.20 3,335 3,000.82 1,431 1,142.20
TOTAL (1+2+3+4+5+6) 99,100 99,856 100,500 96,600 91,741 78,222 12,207 11,567.24 10.433 8,805.50 15,154 15,088.13 12.207 11,567.24
7. GHEE 6,000 6,000 4,000 4,000 556 594 109 117.15 68 63.69 69 113.81 109 117.15
8. BISCUITS - - - - 11,449 9,412 956 425.81 874 388.00 1,296 626.37 956 425.81
9. NUTRITION BAR SWEETMEAT - - - - 32 - - - - - 31 106.90 - -

12,110.20 9,257.19 15,935.21 12,110.20

* Actual Production includes Bulk production and does not include Trial Production

43
SCHEDULES
FORMING PART OF THE ACCOUNTS
Notes:
1. The Installed Capacities on triple shift basis are as per certificates given by the Director-Operations and have be not
been verified by the Auditors, being a technical matter.
2. Production figure is net of captive consumption.
3. Powdered Milk is for captive consumption and accordingly the same have been included in Goods in Process in
Schedule 5 & 15. Boost Intermediate/Horlicks Intermediates are included in Goods in Process in Schedule 5 & 15
as these are semi-finished products.
4. Licensed Capacity listed under Serial No. 1, 2, 4, 5 & 7 above are in respect to all the three factories of the Company
and are covered by Industrial Entrepreneurs’ Memorandums (IEMs) in terms of Notification No. 477 (E) dated 25th
July, 1991 of the Department of Industrial Development, Ministry of Industry, Government of India. Industrial Licences
for 228 MT of Milkose Body Food and 528 MT of Powdered milk held by the company under the Industries
(Development and Regulated) Act, 1951 have been surrendered to Central Government. The Products under Serial
No. 3 to 5 are manufactured in an integrated plant and, therefore, Installed Capacity can not be given separately.
5. The Products under Serial No. 1 to 2 and 3 to 5 are manufactured in an integrated plant and, therefore, Installed
Capacity can not be given separately.
6. The Products listed under Serial No. 6, 8 & 9 are processed by Third Parties.
7. Closing Stock is net of samples, internal consumption and other stock losses.
23. (a) In accordance with the requirements of Accounting Standard (AS) – 18 ‘Related Party Disclosures’ the names of the
related party where control exists/able to exercise significant influence along with the aggregate transactions and
year end balance with them as identified and certified by the management in the ordinary course of business and
on arms’ length basis are given below:
A. Promoter Company - Horlicks Limited, (a subsidiary of GlaxoSmithKline Plc UK) holds 43.16% of equity shares of
the Company.
B. Other related parties in GlaxoSmithKline group where Common Control exits-
(a) GlaxoSmithKline Asia Private Limited (o) Glaxo SmithKline Philippines Inc.
(b) GlaxoSmithKline Pharmaceuticals Limited (p) GSK Plc., UK
(c) Sterling Drugs (Malaya) Sdn Bhd (q) SB Corporate Centre
(d) GlaxoSmithKline Services Unlimited (U.K.) (r) SmithKline Beecham Corporation.
(e) GlaxoSmithKline Consumer (s) GlaxoSmithKline Nigeria
Healthcare Sdn Bhd (Malaysia) (t) SmithKline Beecham (Pvt.) Ltd. (Sri Lanka)
(f) GlaxoSmithKline Exports Ltd (u) GlaxoSmithKline Pte Ltd.
(g) GlaxoSmithKline Ltd., Hong Kong (v) Glaxo Wellcome Indonesia
(h) SB (Mauritius) Ltd. (w) Glaxo Wellcome Manufacturing Pte Ltd.
(i) GlaxoSmithKline Bangladesh Ltd. (x) GlaxoSmithKline Consumer Healthcare Gmbh
(j) SmithKline Beecham Corp CB (U.S.A.) (y) GlaxoSmithKline Trading Services Limited
(k) GlaxoSmithKline Australia Pty (z) GSK Financial Service Ltd, UK
(l) Tianjin SmithKline & French Labs Ltd., China (aa) PT. Sterling Products, Indonesia
(m) SB Pharmaceutical Services (bb) SmithKline Beecham Research Ltd.
(n) GSK Indonesia
C. Trusts under Control of the Company -
a. Senior Staff Gratuity Fund c. Provident Fund
b. Employees’ Gratuity Fund d. Indian Senior Executives Superannuation Fund
D. Key Managerial Personnel-
a. Zubair Ahmed
b. Gautam K. Chakraborty (resigned as a Wholetime Director effective November 30th, 2007
c. R. Subramanian (nominated as a Wholetime Director effective December 1st, 2007)
d. Praveen K Gupta

44
23. (b) The following transactions were carried out with the related parties in the ordinary course of business (Rs. Lacs)
Year ended December 31, 2008 Year ended December 31, 2007
Particulars Promoter Companies Key Trust under Total Promoter Companies Key Trust under Total
Company under common Management the control Company under Management the control
control Personnel of Board of common personnel of Board of
trustees control trustees
Sale of goods (Exports) - 73,44.87 - - 73,44.87 - 18,77.27 - - 18,77.27
SmithKline Beecham (Pvt) Ltd., Sri Lanka - 59,33.28 - - 59,33.28 - 18,73.20 - - 18,73.20
GlaxoSmithKline Bangladesh Ltd. - 14,11.59 - - 14,11.59 - - - - -
Others - - - - - - 4.07 - - 4.07
Consignment Sales (Net) - 2,42,56.57 - - 2,42,56.57 - 2,07,95.02 - - 2,07,95.02
GlaxoSmithKline Asia Pvt Ltd - 1,73,32.19 - - 1,73,32.19 - 1,44,96.03 - - 1,44,96.93
GlaxoSmithKline Pharmaceuticals Ltd. - 69,24.38 - - 69,24.38 - 62,98.09 - - 62,98.09
Purchase of Materials
GlaxoSmithKline Pharmaceuticals Ltd. - 0.27 - - 0.27 - 4.57 - - 4.57
IT Services received (Paid / Payable)
GlaxoSmithKline Australia Pty - 53.74 - - 53.74 - 58.99 - - 58.99
Shared Services
GlaxoSmithKline Pharmaceuticals Ltd. - - - - - - 6.00 - - 6.00
Payment on Behalf of Fellow Subsidiaries
(Received / Receivable) ** - 23,94.13 - - 23,94.13 - 22,57.77 - - 22,57.77
GlaxoSmithKline Asia Pvt Ltd - 4,30.52 - - 4,30.52 - 4,02.44 - - 4,02.44
GlaxoSmithKline Pharmaceuticals Ltd. - 3,18.10 - - 3,18.10 - 3,60.00 - - 3,60.00
GlaxoSmithKline Pte. Ltd - 3,07.50 - - 3,07.50 - 2,68.52 - - 2,68.52
SmithKline Beecham Corporation - 74.46 - - 74.46 - 5,69.81 - - 5,69.81
SB Pharmaceutical Services - 2,78.45 - - 2,78.45 - 1,69.19 - - 1,69.19
Glaxo SmithKline Exports Ltd - 3,74.26 - - 3,74.26 - 1,43.77 - - 1,43.77
Others - 6,10.84 - - 6,10.84 - 3,44.04 - - 3,44.04
Reimbursements of Expenses (Paid / Payable) ** - 1,32.01 - - 1,32.01 - 2,72.21 - - 2,72.21
SCHEDULES

GlaxoSmithKline Services Unlimited (U.K.) - 60.00 - - 60.00 - 42.24 - - 42.24


GlaxoSmithKline Consumer Healthcare GmbH - 51.50 - - 51.50 - - - - -
GlaxoSmithKline Pte. Ltd - 3.43 - - 3.43 - 1,78.72 - - 1,78.72
Others - 17.08 - - 17.08 - 51.25 - - 51.25
Business Auxilliary Service Commission* - 41,13.35 - - 41,13.35 - 34,84.02 - - 34,84.02
GlaxoSmithKline Asia Private Limited - 32,96.43 - - 32,96.43 - 27,41.02 - - 27,41.02
FORMING PART OF THE ACCOUNTS

GlaxoSmithKline Pharmaceuticals Ltd. - 8,16.92 - - 8,16.92 - 7,43.00 - - 7,43.00


Rent paid
GlaxoSmithKline Asia Private Limited - 1,65.06 - - 1,65.06 - 1,29.58 - - 1,29.58
Rent received
GlaxoSmithKline Asia Private Limited - 0.72 - - 0.72 - 0.72 - - 0.72
Licence agreements (Royalty Paid/Payable)*
GlaxoSmithKline Asia Private Limited - 58,23.56 - - 58,23.56 - 55,57.64 - - 55,57.64
Dividend Paid
Horlicks Limited 18,15.22 - - - 18,15.22 21,78.27 - - - 21,78.27
Remuneration paid*** - - 5,13.21 - 5,13.21 - - 4,70.78 - 4,70.78
G. K. Chakraborty - - - - - - - 1,02.80 - 1,02.80
Praveen Kumar Gupta - - 1,21.80 - 1,21.80 - - 1,01.32 - 1,01.32
Zubair Ahmed - - 2,85.42 - 2,85.42 - - 2,58.18 - 2,58.18
R Subramanian - - 1,05.99 - 1,05.99 - - 8.48 - 8.48

45
46
Year ended December 31, 2008 Year ended December 31, 2007
Particulars Promoter Companies Key Trust under Total Promoter Companies Key Trust under Total
Company under common Management the control Company under Management the control
control Personnel of Board of common personnel of Board of
trustees control trustees
Annual Contributions made by the Company - - - 42,81.55 42,81.55 - - - 37,67.70 37,67.70
Provident Fund Trust - - - 23,30.24 23,30.24 - - - 19,39.60 19,39.60
Senior Staff Gratuity Fund - - - 9,81.61 9,81.61 - - - 5,80.00 5,80.00
Employees Gratuity Fund - - - 2,37.96 2,37.96 - - - 3,43.60 3,43.60
Indian Senior Executives Superannuation Scheme - - - 7,31.74 7,31.74 - - - 9,04.50 9,04.50
Payments made by the Company to the employees
on behalf of Trust towards their settlement - - - 23,52.01 23,52.01 - - - 20,13.10 20,13.10
Provident Fund Trust - - - 19,33.35 19,33.35 - - - 15,68.60 15,68.60
Senior Staff Gratuity Fund - - - 2,21.36 2,21.36 - - - 2,20.00 2,20.00
Employees Gratuity Fund - - - 1,19.45 1,19.45 - - - 1,48.60 1,48.60
Indian Senior Executives Superannuation Scheme - - - 77,85 77,85 - - - 75.90 75.90
Interest Shortfall on Provident Fund
Trust written back - - - - - - - - 35.42 35.42
Recoveries made from Trusts on account of
Settlement and Investments - - - 24,28.54 24,28.54 - - - 21,77.70 21,77.70
Provident Fund Trust - - - 19,41.15 19,41.15 - - - 16,04.90 16,04.90
Senior Staff Gratuity Fund - - - 2,84.39 2,84.39 - - - 3,11.00 3,11.00
Employees Gratuity Fund - - - 1,22.94 1,22.94 - - - 1,87.50 1,87.50
Indian Senior Executives Superannuation Scheme - - - 80.06 80.06 - - - 74.30 74.30
Interest Shortfall on Provident Fund Trust - - - 1,72.65 1,72.65 - - - 1,51.22 1,51.22
Balances as at year end
Receivables - 22,04.18 - 1,47.02 23,51.20 - 9,41.75 - 2,23.50 11,65.25
SmithKline Beecham (Pvt) Ltd., Sri Lanka - 13,51.98 - - 13,51.98 - 3,27.61 - - 3,27.61
GlaxoSmithKline Bangladesh Ltd - 4,14.99 - - 4,14.99 - - - - -
SCHEDULES

SmithKline Beecham Corporation - 34.76 - - 34.76 - 4,15.45 - - 4,15.45


Provident Fund Trust - - - 1,23.47 1,23.47 - - - 1,31.30 1,31.30
Senior Staff Gratuity Fund - - - 7.00 7.00 - - - 70.00 70.00
Employees Gratuity Fund - - - 16.55 16.55 - - - 20.00 20.00
Indian Senior Executives Superannuation Scheme - - - - - - - - 2.20 2.20
Others - 4,02.45 - - 4,02.45 - 1,98.69 - - 1,98.69
FORMING PART OF THE ACCOUNTS

Payables (2,20.09) (12,81.91) (0.89) (8,34.69) (23,37.58) - (17,26.87) (0.27) (15,23.50) (32,50.64)
GlaxoSmithKline Asia Private Ltd. - (6,66.99) - - (6,66.99) - (9,84.53) - - (9,84.53)
GlaxoSmithKline Pharmaceuticals Ltd. - (5,50.44) - - (5,50.44) - (6,57.16) - - (6,57.16)
Provident Fund Trust - - - (3,25.48) (3,25.48) - - - (3,31.50) (3,31.50)
Senior Staff Gratuity Fund - - - (4,57.30) (4,57.30) - - - (4,70.80) (4,70.80)
Employees Gratuity Fund - - - (1.44) (1.44) - - - (2,79.70) (2,79.70)
Indian Senior Executives Superannuation Scheme - - - (50.47) (50.47) - - - (4,41.50) (4,41.50)
Zubair Ahmed**** - - (0.88) - (0.88) - - (0.27) - (0.27)
Ramakrishnan Subramanian**** - - (0.01) - (0.01) - - - - -
GSK Plc, U.K (2,20.09) - - - (2,20.09) - - - - -
Others - (64.48) - - (64.48) - (85.18) - - (85.18)
* Amount is inclusive of Service Tax
** Includes recovery of expenses on account of Employee’s Cost, Travelling Expenses, Consultancy Fees, Sales and Distribution expenses and Other General expenses.
*** The contribution to Gratutity Fund and Post Employment Medical Assistance Scheme has been made on a group basis based on an acturial valuation and separate figures applicable to an individual
employee are not available and accordingly , the same has not been considered above except where paid during the year.
**** Excludes payable on account of Long Term Incentive Plan.
(c) The Company recovers Business Auxilliary Service Commission from certain related Companies for the selling and
distribution of the latter’s products in accordance with the recommendations of an independent study. Further, the
Company also recovers the employee benefit cost in respect of employees seconded by it to Group companies.
24. (a) The Company has initiated a long term incentive plan to maintain its competitiveness in attracting and retaining
Senior Grade Managers. In terms of this plan, the eligible employees will receive cash equivalent to the market price
of the shares of GSK Plc. at the end of the three years restricted period provided eligible employees are in continuous
employment with the Company during that time. Accordingly, a sum of Rs. 1,62.69 Lacs (Previous Year
Rs. 1,12.41 Lacs) has been accounted in these financial statements on a prorata basis as Salaries, Wages, Bonus
under ‘Employees’ Cost’ (Refer Schedule 13).
(b) Release of accruals in the previous year included a Prior Period adjustment aggregating Rs. 100.80 Lacs (net)
pertaining to the long term incentive scheme of 2005.
25. The Company has unpaid disputed Excise Duty, Sales Tax and Income Tax demands outstanding at the year end
amounting to Rs. 51,56.04 Lacs, Rs. 3,94.62 Lacs and Rs. 6,87.37 Lacs respectively against which adequate liability /
provisions, have been provided / made in these accounts, wherever considered necessary by management.
26. In accordance with the requirements of Accounting Standard (AS) - 19 ‘Leases’, the Company has entered into two non-
cancellable operating leases in respect of office premises. The terms of the said lease include terms for the renewal,
increase in rents in future periods for premises and terms of cancellation. The total lease payments recognized in the
statement of Profit and Loss Account for the period amounted to Rs. 2,29.06 Lacs (Previous Year Rs. Nil). Total of future
Minimum Lease Payment under non-cancellable leases in case of the premise on lease:
- Not later than 1 year Rs. 3,82.27 Lacs
- Later than 1 and not later than 5 years Rs. 11,86.75 Lacs
- Later Than five years Rs. Nil
27. (a) In accordance with AS 29 - “Provisions, Contingent Liabilities and Contingent Assets”, the Company has been
prudent to consider the following provisions which have been disclosed as under:
January 1, Additions Utilizations Reversals/ December
2008 Adjustments 31, 2008
(a) Indirect Taxes 85.03 9,15.71 - - 10,00.74
(b) Other Matters 55.00 1,89.17 - - 2,44.17
Total 1,40.03 11,04.88 - - 12,44.91
Future cash outflow in respect of the above is determinable only on occurrence of uncertain future events.
(b) Contingent Liabilities not provided for include cheques under Cash Management System amounting to Rs. 28 Lacs
(Previous Year Nil)
28. Previous Year’s figures have been regrouped, wherever necessary, to conform to the current year’s classification.

47
BALANCE SHEET ABSTRACT AND GENERAL BUSINESS PROFILE
OF
GLAXOSMITHKLINE CONSUMER HEALTHCARE LIMITED

I. REGISTRATION DETAILS
Registration No. 0 2 2 5 7 State Code 1 6
Balance Sheet Date 3 1 1 2 0 8
II. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)
Public Issue Rights Issue
N I L N I L
Bonus Issue Private Placement
N I L N I L
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands)
Total Liabilities Total Assets
3 1 9 0 4 7 2 1 0 7 9 9 2 5 2
SOURCES OF FUNDS
Paid -up Capital Reserves & Surplus
4 2 0 5 5 5 7 1 8 8 2 3 0
Secured Loans Unsecured Loans
N I L N I L
Deferred Tax Liability (net)
6 5 8 4 5
APPLICATION OF FUNDS
Net Fixed Assets Investments
2 2 6 5 5 9 0 5
Net Current Assets Misc Expenditure
5 4 0 9 0 3 5 N I L
Accumulated Losses
N I L
IV PERFORMANCE OF THE COMPANY (Amount in Rs. Thousands)
Turnover (Sales* and Other Income) Total Expenditure
1 6 3 8 2 5 8 6 1 3 5 4 1 7 2 4
* Sales are net of Excise Duty
Profit/Loss Before Tax Profit/Loss After Tax
+ 2 8 4 0 8 6 2 + 1 8 8 3 3 2 3
Earning per share in Rs ** Dividend @%
4 4 . 7 8 1 5 0 . 0 0
** Basic/Diluted
V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY
Item Code No.(ITC Code) 1 9 0 1 1 0 . 0 1
Product Description M A L T B A S E D
F O O D
Item Code No.(ITC Code) 1 9 0 5 3 0 . 0 3
Product Description B I S C U I T S

48

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