, October 25
Dabur India has posted a consolidated net profit of ₹425 crore in Q2FY25 down 17.5 per cent compared to ₹515 crore in the year-ago period. Consolidated revenue from operations stood at ₹3029 crore down 5.5 per cent.
With new channels growing ahead of traditional channels, the FMCG major said that it took a “proactive decision” to rationalise inventory in the general trade which resulted in a “temporary dip in sales during the September quarter.”
Acquisition of Sesa Care
The company also said it has entered into an agreement to acquire and merge Ayurvedic hair care company Sesa Care Pvt Ltd. As part of this transaction, Dabur will acquire 51 per cent of the total paid up Cumulative Redeemable Preference Shares (CRPS) of Sesa from True North for ₹12.59 crore at face value of ₹10 each. It added that share swap for the equity shares and the remaining 49 per cent CRPS will be decided at the time of filing scheme on merger basis. The enterprise value is estimated to be in the range of ₹315-325 crore, including debt of ₹289 crore, it added. The transaction is expected to be closed in 15-18 months.
Urban consumption
On an earnings call, Mohit Malhotra, CEO, Dabur India, said, “Heavy rains, floods and high food inflation slowed down urban consumption, especially in the beverage category, in Q2. However, rural consumption remained resilient. We believe that urban consumption slowdown has bottomed out and should see improvement going ahead.”
“If you really look at the intrinsic urban consumption which is also driven by e-commerce, quick commerce, modern trade etc, those channels are definitely showing high growth; they contribute around 24 per cent of the overall salience of the business. That is growing at a very high double digit, and that is 50 per cent of the urban consumption for us and that is showing no telltale signs of diminishing,” he added. Malhotra said rural remains resilient and good harvest, higher crop acreage and higher MSPs augur well for rural demand.
Beverage biz
Malhotra said the beverage business was adversely impacted due to unfavorable season and high competition. “We will be focusing on increasing our value proposition to the consumers. Now Campa Cola is at ₹10 price point and big players like Varun Beverages, and the Hindustan Coca Cola Beverages are also wanting to cut prices. We have a tetra pack, which is available at ₹20; we have introduced ₹10 and ₹20 bottles (PET), we’ve introduced a ₹65 bottle along with one and two liters. So, we are trying to plug all price points within the juice based drinks portfolio,” he added.
Malhotra said the proposed acquisition and merger of Sesa Care will complement the company’s existing portfolio and strengthen its presence in the hair oil segment. “This transaction will bring substantial revenue and cost synergies. Sesa brand will also enable us to premiumise our hair oil portfolio as it is gross margins accretive,” he added.