With Rs 7,000 Crore Cash Reserve, Dabur India Scouting For Acquisition

Homegrown FMCG maker Dabur India, armed with a cash reserve of Rs 7,000 crore, is scouting for acquisition opportunities in healthcare and home & personal care segments, according to its CEO Mohit Malhotra.

Besides, Dabur is looking for acquisition opportunities in the online space, and with several D2C (Direct to Consumer) brands operating in it, it finds the valuation "more reasonable" now and will pursue it if it finds a suitable one for growth, he said.

The company is scaling its presence in the online space, which includes e-commerce channels and D2C business, where it plans to introduce more innovations under existing brands and through inorganic opportunities.

"We are introducing innovations there. Those innovations are coming on the back of existing brands and these innovations will come on the back of some new brands that we might launch or we are looking at an acquisition for a new brand," Malhotra told PTI.

The company would pursue organic growth with new brand launches in skin care and premium skin care, and the rest would be through acquisitions.

"We do not want to do any organic new brand launches with the exception of skincare and premium skincare that we are not present in. That is where we might do an exception otherwise we look at it to see acquisitions," he said.

If Dabur gets any "reasonable valuation", then it might look at an acquisition for which it has "around Rs 7,000 crore lying in our balance sheet for that particular purpose," he said.

Malhotra also insisted that besides acquisition, innovation is also very important, which not only attracts younger or new-age consumers but also grows the lifecycle of a brand.

"It is a necessity," he said adding "if a brand has to evolve or grow, it has to have a newer avatar every two to three years, only then will the brand grow."

All the nine power brands of Dabur India, would "have to evolve and go through a cycle of evolution. That is what we are doing."

Dabur has nine power brands, eight in India and one in the overseas markets, which together account for 70 per cent of its total sales.

The brands are - Dabur Chyawanprash, Dabur Honey, Dabur Honitus, Dabur PudinHara, Dabur Lal Tail, Dabur Amla, Dabur Red Paste, Real and Vatika.

Its juice brand Real's revenue is around Rs 1,700 crore and the company wants to take it Rs 2,000-2,500 crore in the next five years.

"The brand should trend around 15 per cent CAGR, which we have, so we should be able to double the turnover in six years time with this brand," he said.

Besides, it has three Rs 1,000 crore brands 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 addressing the investor meeting last week.

Earlier this year, Dabur completed the acquisition of 51 per cent stake in Badshah Masala to enter the branded spices and seasoning market.

Now, Dabur is expanding Badshah to international markets targeting the international diaspora.

"So we have got a very rich pipeline of brands to have a very future fit organisation," said Malhotra adding, "we will have the 17 brands actually we have to nurture and they will all become power brands in due course of time for us".

The power brands, which get higher allocation of funds and resources, from their manufacturing, and innovations to marketing, will continue to contribute 80 to 85 per cent of Dabur's revenue, he added.