New Delhi: Consumer products company Dabur India Ltd is looking to expand its international presence and is shopping for companies in Africa, apart from trying to build a distribution network in the US.
“Some of our products such as Chayawanprash have a reach in the US through some indirect channels. But now we are working on a plan to make our brands available through a proper distribution channel,” Rajan Varma, chief financial officer, Dabur, said.
Aiming high: Dabur’s headquarters in Ghaziabad, Uttar Pradesh.
Dabur makes and sells products in the personal, home care and healthcare space under brands such as Vatika, Gulabari, Hajmola, Real and Fem.
Some of these products will need to be cleared by the US Food and Drugs Administration before they can be sold in the US.
In Africa, Dabur, which already has a presence in the continent, is looking to expand into South Africa and other countries where it currently isn’t present, according to Varma, and it is also considering acquisitions.
He declined to comment on a timeline for these buys.
Dabur already sells its products in North Africa, has a toothpaste manufacturing unit in Nigeria and a personal care products unit in Egypt. “One more unit in Egypt is being set up,” Varma added.
Dabur recently consolidated with itself the operations of Fem Care Pharma Ltd, which it acquired last year. In 2005, the company had bought Balsara’s hygiene and home products businesses.
According to analysts, the company has enough money on its balance sheet to fund another acquisition.
“Every year, the company generates around Rs400 crore as operating cash which can be used for an acquisition,” Sameer Deshmukh, an analyst with Mumbai-based brokerage Tata Securities Ltd said.
“Dabur is equipped to buy a company in the range of Rs500-1,000 crore,” said Anand Shah, analyst, Angel Broking Ltd.
Shah added that Dabur should do well in Africa but was doubtful about its ability to do well in the US.
“The profile and preferences of African consumers is similar to those in India and it is also an emerging market. But in the case of the US, it is a very tough market to break into, because of the laws of the country and also the choice of (before) the consumers,” said Shah.
The company could need to rework its products before launching them in the US, he added.
Dabur’s rivals such as Godrej Consumer Products Ltd (GCPL) and Marico Ltd have a presence in Africa. Marico acquired Fiancee, a haircare brand, in 2006 from the Egypt-based Ready Group. In 2007, it acquired Hair Code, a hair cream and gel brand from Cairo-based Pyramids Group. GCPL acquired Rapidol Pty Ltd, a hair colour maker in South Africa, in 2006 and wig and hairpiece maker Kinky Group (Proprietary) Ltd in 2008. Even Wipro Ltd has a presence in Africa through brands of Unza, a Singapore-based consumer goods company it bought in 2007.
Dabur’s international division has been growing by at least 50% and contributes around 20% to the total turnover.
According to a 27 July investors presentation on the company website, the overseas business grew 52.9% in the quarter ended June.
“The division’s topline growth was boosted by robust performances in key geographies like GCC (Gulf Cooperation Council) Egypt and North African markets,” the presentation said. The company also said new markets such as Uzbekistan, Guinea and Belarus were opened during the quarter.
For the first quarter ended June, Dabur’s total sales increased 22.1% to Rs748 crore from Rs612.4 crore in the same period last year. And its consolidated net profit rose 29.4% to Rs91.4 crore.
On Tuesday, shares of Dabur India fell 1.53% to Rs128.45 each on the Bombay Stock Exchange on a day when the exchange’s benchmark index rose 64.82 points to 1,5074.59. In the past year, the shares have touched a high of Rs141.35 each on 4 August and a low of Rs60 on 27 October 2008.