Dabur CFO hopes to keep FY11 margin at 19-19.5%

Dabur CFO hopes to keep FY11 margin at 19-19.5%

New Delhi: Personal care and food products maker Dabur India Ltd expects to maintain a margin of about 19-19.5% and achieve a sales growth of 15-17% in 2010/11, a top official said on Wednesday.

“Monsoon has been good. The demand has been reasonably robust. Only challenge is inflation," chief financial officer S. Raghunathan told Reuters over the telephone.

In July-Sept, Dabur increased prices of a few products - mainly hair oil by 3-4%. It may resort to further price increases this quarter, in its bid to maintain margin at last year’s level of around 19-19.5%.

“Our objective is to hold our EBITDA margin.... We have to watch inflation cautiously and do it in a calibrated way but immediately we are not looking at any big price increases," Raghunathan said.

India’s wholesale price index rose 8.62% annually in September with food price inflation accelerating to 15.71%.

Dabur plans to launch two variants of flavoured Chyavanprash immediately and two over-the-counter health products for cold and vitality in the next few weeks, Raghunathan said.

Net up on volume growth

Dabur on Wednesday said its July-September consolidated profit rose 15.4% to 1.6 billion rupees on strong volume and cost cutting measures. Sales rose 14.7% to Rs972 crore.

“Despite a significant rise in input costs, Dabur contained its material inflation through higher buying efficiencies and stringent cost savings programmes, and expanded its EBIDTA by 16.2%," chief executive officer Sunil Duggal said in a statement. International business, which contributes about 20-22% of total revenue, grew 19%, while the healthcare segment grew 19%, but growth moderated in shampoos, Raghunathan said.

Dabur plans to almost double its retail presence to about 40-50 stores in 12-18 months from 25 stores now, Raghunathan said.

“We have reworked our strategy on that. We have moved into much smaller size stores to make it more viable," he said, adding there was no plan to sell off the retail business.

Shares in Dabur, valued at about $4 billion, ended 1.2% down on Wednesday in a weak Mumbai market.