Open to acquisitions in health, personal care categories: Dabur Chairman

Indian fast-moving consumer goods (FMCG) major Dabur India has a “war chest” of Rs 7,000 crore ready for any future acquisitions in categories the company currently operates in.

“We are open to acquisitions in categories where we operate, like healthcare and personal care. We are also scouting for targets in the direct-to-consumer (D2C) space. If we come across a company, which is synergistic to us, we will evaluate them and if it seems financially worthwhile, we will acquire the company,” Mohit Burman, chairman of Dabur India, told Business Standard.

Dabur India is the maker of Hajmola and Fem beauty bleach.

A top official at the company, who did not wish to be named, however, said that the company is looking at nutraceutical brands to acquire. “These brands are a good fit for both the healthcare and personal care businesses,” said the official.

“We look at investing in brands and companies that will shore up our margins and not be dilutive. Our intent is to look for targets which will also help us expand our addressable market,” Burman added.

Talking about lagging rural demand affecting sales, Burman said that the FMCG major is seeing green shoots of revival in the rural sector with the onset of the festival season.

“While it may take a few quarters, we feel that rural demand will bounce back and be in line with the urban demand growth. We have invested ahead of the curve and enhanced our distribution footprint in the hinterland, taking our total coverage to over 107,000 villages now,” Burman said.

The company’s urban demand, meanwhile, is driven by new-age channels like modern trade and e-commerce. In the second quarter, the company’s e-commerce business grew by 20 per cent, while modern trade grew by 15 per cent, cash and carry by 9.5 per cent, and FS+HORECA business by 21 per cent.

The festival season is also expected to have a positive impact on the Quick Service Restaurant (QSR) business, said Burman, who is on the board of the Burman Hospitality Group that has the master franchise for the Mexican food chain Taco Bell in India.

“This year, the QSR category is facing inflationary headwinds due to global macroeconomic and geopolitical factors. This pressure should ease out over the next few quarters. That said, we will see a spurt in demand during the festival season starting now till mid-January,” he said.

The group has been expanding the QSR business at a fast pace to reach its goal of 600 outlets by the end of the decade.

“We have opened stores at a rapid pace over the last 12 months to increase our current footprint to 136 stores across 35 cities. Our 600-outlet plan by the end of the decade remains intact, but we would be pacing it out in a manner that the growth is profitable and sustainable,” Burman said.