Were looking for buys in SE Asia,West Asia & Africa

Written by Lalitha Srinivasan | Updated: Sep 29 2012, 09:28am hrs
Sunil Duggal, chief executive officer of Dabur India, is optimistic about the company's performance in the financial year 2012-13. To sustain its growth momentum in the FMCG industry, the company is putting in place an action plan that includes new acquisitions, organic growth, rural initiatives and cost-cutting measures. Dabur India had posted a 21% jump in consolidated net sales to R1,461.97 in the first quarter of the current fiscal. In an interview to FE's Lalitha Srinivasan, Duggal talks about the company's future plansv. Edited excerpts:

What are your inorganic growth plans for Dabur India Are you scouting for acquisitions in domestic as well as global markets

For Dabur, inorganic expansion is one of the key pillars of growth. We are continuously in talks with companies across geographies. We are looking at markets like South East Asia, the Middle East and Africa for potential targets. We are looking at acquisitions only in the areas that Dabur is operating in, like personal care and healthcare specifically. As in our previous acquisitions like Balsara, Fem, Hobi and Namast, Dabur seeks companies that can be accretive very quickly and we have some very stringent measures to filter out the prospects.

Have you completed the integration process of your recent global acquisitions Are you looking at cross-selling opportunities

The acquired entities -- Namast LLC and Hobi Kozmetik -- have been integrated completely and their portfolio is being extended across geographies. These are now an integral part of Dabur International. In fact, manufacturing for Namast products has already commenced at Dabur's Ras Al Khaimah facility. The intent behind these acquisitions particularly Namast was to cater to the huge demand from developing markets like Africa. We have seeded some of the products from Hobis skin-care and body care range in India and the response has been encouraging.

What are your organic growth plans for Dabur India

We have set up a new manufacturing unit in Baddi recently and are in the process of setting up new units in Sri Lanka, Bangladesh and Egypt. The last fiscal alone saw Dabur introduce over 40 new products and variants across categories and geographies. We will continue to invest in our R&D projects.

Tell us about your rural initiatives. How do you plan to accelerate Dabur's rural penetration

We have undertaken a major initiative to expand our rural footprint this fiscal. Under this initiative, we plan to double our rural reach and have direct access to villages of 3,000 population. This initiative is being rolled out across 10 states that account for 72% of the rural FMCG potential. It is also aimed at doubling the direct distribution reach in rural markets, customise trade promotions and provide focused servicing through a dedicated sales team in these markets. Field resources are being deployed in deep hinterland in the high-potential districts of these states to establish networks for doubling rural coverage.

What are the cost-cutting measures that Dabur has taken to tide over the economic slowdown

Dabur has put in place a slew of initiatives to manage costs. At an operational front, we have undertaken vendor optimisation, which does not mean reducing the number of vendors. Optimisation is being undertaken on a case-to-case basis. In some cases, we have increased competition among vendors by increasing their numbers and in some other cases, consolidation was achieved by reducing their numbers. This optimization exercise has helped us fight inflation and protect margins. In addition, we have a robust sourcing mechanism in place and also undertake revere auctioning and hedging in a number of items permitted under Indian regulations. These measures have helped us to cut costs.

Is there a definite slowdown in consumption, first rural but urban as well Is the consumer downtrading

The demand -- both from rural and urban India -- continues to remain robust. With the monsoons having revived very strongly, the demand growth from rural India particularly is fairly steady now. While these are still early days, we are not seeing any evidence of downtrading or slowdown in consumption.