Homegrown Fast-moving consumer goods (FMCG) maker Dabur India, armed with a cash reserve of Rs 7,000 crore, is scouting for acquisition chances in healthcare and home and individual care segments, according to its CEO Mohit Malhotra.
Besides, Dabur is looking for acquisition chances in the online websites and with several D2C( Direct to Consumer) brands operating in it, it finds the valuation” more reasonable” now it will strive for it. If it finds a worthy one for growth, he said.
The company is stepping up its presence in the online space, which includes e-commerce channels and D2C business, where it plans to introduce more transformation under existing brands and through inorganic chances.
“We were introducing transformation there. Those innovations are coming on the back of existing brands and these innovations will come on the reverse of some new proprietary name that we might launch or we were looking at an acquisition for a new brand,” Malhotra told Press Trust of India Ltd (PTI).
The company would pursue organic growth with new brand launches in skin care and costly skin care, and the rest would be through accession.
“He said, We do not want to do any organic new brand launches except for premium skincare and skincare that we are not present in. That is where we might make an anomaly otherwise we look at it to see acquisitions,”
However, then it might look at an accession for which it has” around Rs 7, 000 crore lying in our balance sheet for that specific purpose, If Dabur gets any” reasonable valuation”.
Malhotra also insisted that besides acquisition, innovation is also very important, which not only attracts juvenile or new-age consumers but also grows the lifecycle of a brand.
He said adding, that it is a necessity if a brand has to evolve or grow, it has to have a newer avatar every 2 to 3 years, and only will the brand grow.” All the 9 power brands of Dabur India would have to evolve and go through a cycle of evolution. That is what we are doing.” Dabur has 9 power brands 8 of them in India and 1 in the overseas markets, which altogether account for 70 per cent of its total sales.
The brands are-
1. Dabur Chyawanprash
2. Dabur Honey
3. Dabur Honitus
4. Dabur PudinHara
5. Dabur Lal Tail
6. Dabur Amla
7. Dabur Red Paste
8. Real and Vatika.
Its juice brand Real’s profit is around Rs 1,700 crore and the company wants to take it Rs 2,000- 2,500 crore in the coming five years.
“The brand should move and trend around 15 per cent Compound annual growth rate (CAGR), which we have, so we should be able to double the company’s turnover in the next 6 years with this brand,” Malhotra said.
Besides, it has 3 brands worth Rs 1,000 crore, The names of the brands are- Dabur Amla, Dabur Red and Vatika, which Malhotra expects to increase to Rs 1,500 crore.
Dabur has 17 brands that are above Rs 100 crore but less than Rs 500 crore in size, said Malhotra while speaking to the investor in the meeting last week.
Earlier this year, Dabur completed the accession of a 51 per cent stake in Badshah Masala to enter in spice brand and seasoning market.
Now, Dabur is multiplying Badshah to multinational markets targeting the international diaspora.
“So we have got a successful channel of brands to have a future fit organisation,” said Malhotra adding,” We will have 17 brands we have to nurture, they will all become power brands in due course of time for us”.
The power brands, which get high allotment of funds and resources, from their manufacturing, and innovations to marketing, will continue to contribute 80 to 85 percent of Dabur’s earnings, he added.
