New Delhi: Personal care and food products maker Dabur India Ltd posted a 10% rise in March quarter on higher volumes and lower costs, but plans to hike prices to maintain profitability, a top official said.
Dabur expects a growth of 15-20% in sales in FY11. “With a good monsoon, it (sales growth) would be towards 20%. With a bad monsoon, it would be close to 15%,” chief executive Sunil Duggal told Reuters over the telephone.
India’s weather office has forecast normal monsoon rains this year. A good monsoon means better harvest for farmers and a higher consumption in rural areas, which comprise half of Dabur’s domestic market. International business contributes a fifth of total sales.
The company reported a 10.36% rise in standalone net profit at Rs101 crore for the quarter ended 31 March, 2010. Net sales rose 12.71% to Rs695 crore.
The operating margin expanded by 180 bps to 20% during the fourth quarter as the company benefitted from lower input prices locked in the first half of the fiscal, and also from higher margins in its overseas operation.
But a surge in a commodity prices have now forced Dabur to increase prices by 4-5% on some its products including hair oil and toothpaste.
“We expect to neutralise rise in input cost by increasing prices,” Duggal said, adding more hikes could come next month.
India’s food price index rose 17.70% in the 12 months to 27 March, while the fuel index was up 12.71%, government data showed on 8 April.
Duggal said Dabur would focus on consolidation rather than launching new brands in the current fiscal, but would look for acquisition overseas in the personal care segment.
Dabur expects its international division to grow 20-25% in FY11 in local currency terms.
Indian consumer firms have been looking overseas to boost their topline as well as offsetting margin pressures due to rising costs and competition at home.
Shares in Dabur India rose 1.18% to Rs180, while the broader benchmark index fell 1.76% on Wednesday.