Homegrown FMCG major Dabur India is looking for an acquisition in direct-to-consumer (D2C) space, particularly in healthcare and personal care, its Chief Executive Officer Mohit Malhotra said on Thursday.
The acquisition will help Dabur to increase its play in the fast-growing premium segment and also to strengthen our urban play, Malhotra said in a post-results Investors’ Conference Call.
Besides, the company, which owns iconic brands such as Dabur Amla, Dabur Vatika, and juice brand Real, is increasing investments in branding and promotion as its margins are improving quarter on quarter amidst softening commodity prices.
When asked about any D2C acquisition, Malhotra replied: “We continue to scouting on targets in the D2C space also, particularly in healthcare and personal care… We are looking for a brand that will shore up margin and not be dilutive.”
“If we come across a company which is synergistic with the healthcare space and personal care space, skincare Ayurvedic play, we will evaluate them and its financially worthwhile, we will acquire the company,” he added.
He further said that there is money in the balance sheet to acquire a D2C brand, which could be a premium play for Dabur’s urban business.
Earlier this year, Dabur completed the acquisition of a 51 per cent stake in Badshah Masala to enter into the branded spices and seasoning market.
Several FMCG companies such as HUL, Marico, ITC, and Tata Consumers Products Ltd etc are quite aggressive and had done several acquisitions in the D2C food space.
Over consumer sentiments, he said Dabur is witnessing a recovery in demand.
“During Q1, most commodities witnessed a moderation in inflation; in India, too inflation showed signs of easing, as witnessed in both CPI and WPI data. With this moderation in inflation there has been an uptick in volumes in both urban and rural markets, indicating promising signs of recovery in demand,” he said.
However, he added that the beverage portfolio of the company which includes juice brand Real got impacted by unseasonal rains in North and West India.
Its consolidated net profit increased 5 per cent to Rs 464 crore in the June quarter on the back of robust sales.
The company had reported a net profit of Rs 440 crore in the April-June period of the last fiscal.
The company’s revenue from operation during the June quarter rose 10.91 per cent to Rs 3,130.47 crore as against Rs 2,822.43 crore in the year-ago period, Dabur India said in a regulatory filing on Thursday.
“We remain committed to our strategy of superior go-to-market execution by enhancing our distribution footprint while focusing on driving growth for our power brands and building an agile organisation culture in our pursuit of sustainable, balanced growth and value creation,” Malhotra said.
The company has taken several measures to pursue greater efficiency and the gains were ploughed back in the form of higher investments to drive demand, he added.
“Our media spends grew 30 per cent in the consolidated business and 28 per cent in the India business,” Malhotra said.
He noted that with inflation softening, the company has seen its rural growth bounce back to high single digits after three quarters.
While rural growth continues to lag urban demand, the gap has reduced significantly, Malhotra said.
“We continue to strengthen our long-term competitiveness through investments in developing consumer-centric innovations and technology, as we deliver on our purpose of health and well-being for every household,” he added.