First Quarter - Dabur India Limited

“Dabur India Limited Q1 FY-11 Earnings 

Conference Call” 

July 27, 2010 

Dabur India Ltd.’s Participants 

Mr. Sunil Duggal - Chief Executive Officer 

Mr. S. Raghunathan - Chief Financial Officer 

Mr. Ashok Jain - GM-Finance & Company Secretary 

Mr. Saibal Sengupta - GM-Finance 

Ms. Gagan Ahluwalia - GM - Corporate Affairs 

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Dabur India Limited 

July 27, 2010 

Gagan Ahluwalia 

Good afternoon ladies and gentlemen, on behalf of the Dabur management, I welcome you all 

this conference call for the Q1 results for FY 2010-11. Present here are Mr. Sunil Duggal, 

CEO, Dabur India Ltd., Mr. S. Raghunathan, CFO, Mr. Ashok Jain, General Manager Finance 

& Company Secretary and Mr. Saibal Sengupta, General Manager Finance. I would now 

request Mr. Duggal to give a brief introduction after which we will invite your questions, over 

to Mr. Duggal. 

Sunil Duggal 

Thank you Gagan. Good afternoon ladies and gentlemen. I welcome you to the Dabur India 

Conference call regarding the results for quarter ended June 30, 2010. 

Before we discuss the Q1 results, I am pleased you inform you that we have signed an 

agreement to acquire the business of Hobi Kozmetik in Turkey for a total consideration of 

US$69 million. This would be Dabur’s first acquisition in the overseas market and is in line 

with the company’s strategy to strengthen its presence in the MENA and adjacent regions. 

Hobi Kozmetik is a leading personal care company in Turkey and manufactures market’s hair, 

skin, and body care products under the brand name Hobby' and 'New Era'. Hobi Kozmetik had 

revenues of US$27 million and EBITDA margins of around 17% during the year ended 31 st 

December, 2009. The product range of the company is complementary to us and we see good 

potential for these brands across our international businesses as well as in the home market of 

Turkey. This acquisition provides us an entry into another attractive emerging market and 

provides a good platform to leverage this across the region. The company has significant 

distribution footprint Turkey along with a strong backend in terms of integrated manufacturing 

facility, captive packaging, research and development and a management team having 

experience in MNCs operating in the FMCG space in Turkey. 

Coming to the first quarter results, Dabur India Limited has recorded growth of 19.5% in 

consolidated sales and 19.4% in profit after tax during the period. This is post consolidation of 

the Fem business in both these periods. 

The consumer care division, CCD has recorded 18.9% growth, of which 16.8% was through 

volumes. Also some price increases have been put into effect during the quarter, although the 

quantum of these was not very significant. The division witnessed strong momentum in hair 

oils, toothpastes, home care, health supplements, and foods. 

Hair oils grew 16.5% during the quarter. Dabur’s largest domestic brand Dabur Amla Hair Oil 

reported growth of 18.9% in spite of high competitive activity. Vatika Hair Oil grew at 22% 

during the quarter. The newly launched light hair oil Amla Flower Magic and Vatika enriched 

almond hair oil received good consumer response and will be scaled up further during the 

fiscal. 

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July 27, 2010 

The Shampoo category contracted by 17.1% on account of both slowdown in the category 

growth and aggressive promotional activity witnessed. Plans are underway for restaging and 

providing new communicational and marketing inputs to Vatika Shampoo brand in the next 

few months., With this growth in the brand is expected to revive. 

Health supplements recorded growth of 42.8% during the quarter. Dabur Chyawanprash grew 

by 93.9%, Dabur Glucose by 53.6% and Dabur Honey by 17.7%, driven by introduction of 

new SKUs and sustained marketing activities. 

The oral care portfolio recorded exceptional growth of 20.2% during the quarter. This was 

driven by strong growth in toothpaste which grew by 28.1%. Dabur Red Toothpaste recorded a 

growth of 31.2% backed by its differentiated product proposition of being an Ayurvedic 

toothpaste. The Babool brand also posted good performance growth of 29.1%. The new gel 

variant Babool Mint Fresh continues to receive positive response from consumers. Meswak, 

the premium herbal toothpaste recorded growth of 14.4% during the quarter. 

The Skin care category posted growth of 12.4% during the quarter. The Gulabari brand 

performed well, growing by 22.9%. The Fem portfolio grew by 8%. While Fem bleaches 

reported 14% growth, the hair removal creams witnessed lower growth due to intense 

competitive activity. Fem liquid soaps are undergoing the change over in formulation which 

will be on stream in the next quarter. Uveda brand continues to be in test market phase in 

select markets and is planned to be launched in other markets during the year. 

The Digestive category grew by 14.7%. The Hajmola brand reported steady growth driven by 

new variants and innovative consumer activations. 

Home care reported a growth of 31.5% during the quarter. Odonil grew by 68.4%; post its relaunch 

last quarter. Electrical air fresheners have been launched under the name Odonil Pluggy 

to target this emerging subcategory in the air freshener space. Odomos Oil the, first mosquito 

repellant of its kind has been launched to enter the rural markets. 

The Foods category reported good growth of 21.2% during the quarter; led by strong 

performance by Real and Activ juices portfolio. Dabur’s culinary brand Hommade continues 

its good performance posting 37% growth. 

The Consumer Health Division, CHD witnessed a growth of 10.2% during the quarter led by 

ethical portfolio which grew by 14.5%. In OTC, Pudin Hara grew by 12.8%. The Pudin Hara 

portfolio has been extended by launching Pudin Hara Lemon Fizz in the acidity segment. 

Dabur’s international business continues to grow at a fast pace posting a growth of 28.7% 

during the quarter. In local currency terms, growth in the businesswas 37%. Egypt, Nigeria, the 

Levant and North Africa performed exceedingly well with increasing customer acceptance of 

Dabur and Vatika brands in these markets. 

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July 27, 2010 

The core GCC area also recorded steady performance despite the economic downturn. The 

business is showing good momentum and we are deepening presence in existing markets of 

Middle East, North and West Africa, and South Asia as well as exploring new markets in these 

regions. This expansion will be further strengthened to the acquisition of Hobi. 

On the profitability side, Dabur saw a growth of 19.4% in profit after tax during the quarter in 

spite of increase in tax rate by 230 basis points. The consolidated EBITDA margins remain 

stable at around 16% during the quarter. This was despite pressure on gross margins due to 

inflation and increased investment in Adpro which went up from 15.9% to 16.3%. 

Overall the business has performed well with strong upsurge in volumes in domestic as well 

overseas business. Consumer demand appears to be robust and augurs well for the continued 

growth in the markets and our segments in particular. The company has announced a bonus 

issue of 1:1 to commemorate 125 years of its establishment. With this I now open the Q&A 

and invite your questions. Thank you. 

Abneesh Roy from Edelweiss Securities 

Abneesh Roy 

Sir, very good set of numbers. On the shampoo front, we see a decline, is it one off because of 

higher competitive intensity or do you think that this is a big change which has happened in the 

competitive landscape ? 

Sunil Duggal 

No I think this change which has happened is only a few months old and we have seen 

heightened competitive activity driven both by above the line inputs as well as very substantial 

consumer promotion and trade promotion activities on the part of Unilever, etc. and that has 

led to some losses in terms of volumes. Also the category doesn’t seem to be doing that well as 

a whole; the growth was hardly 8% odd as per Nielsen. So it's a combination of both of these. 

Thirdly, we are restaging our shampoo brand by having a completely new packaging which is 

supposed to go into the market in this month, so we didn’t want to put a lot of products in the 

market of the old packaging, when the new packaging was about to surface. A combination of 

these three reasons. I don’t think there is any structural issue here or anything which is gamechanging. 

We expect growths to be back on track, probably we will not record the same 

growth as we have done in the previous years, but things should be much better in the next 

three quarters. 

Abneesh Roy 

So will it be fair to assume that we can get back to positive territory in the next quarter? 

Sunil Duggal 

Well certainly during the year, we should be back in positive territory. It might take longer 

than one quarter to do so. 

Abneesh Roy 

And any change in the consumer preference in favor of MNCs because we were a company 

always having a niche space with Ayurvedic, herbal kind of positioning, so why is the shift 

happening back to the MNCs because just ad spends cannot propel that right? 

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July 27, 2010 

Sunil Duggal 

Well it's not just ad spends, it is very substantial lubrication of trade and you know the whole 

game is dominated by sachets and the trade margins play a very important role because the end 

price is limited to 1 rupee. So if you do a lot of below-the-line activity then I think it's not 

difficult to gain share which is short term. But having said that, there is a limit to how much 

activity this can support because the shampoo margins at 1 rupee level are shrinking; now they 

are in the low 40s and they will be pretty much the same for everybody. So I think these are 

basically games to get back loss in share and I don’t think they are sustainable. So this is 

disruptive competition, but which perhaps will not last for very long. 

Abneesh Roy 

If I compare the three major segments, CHD continues to have slower growth rate. As you 

mentioned that you are planning some new initiatives and some new strategy and there are also 

some supply issues etc, so if you could elaborate on that part? 

Sunil Duggal 

CHD levels had supply dislocations in the fag end of June. We are looking at 15% growth for 

the year and I see no reason to change that estimate. So it is a steady growth portfolio, this will 

not include some of new introductions which we put into play in the third and fourth quarters, 

but the portfolio as it exists should grow at around 15%. So there is nothing structurally an 

issue here, it was just little bit of lost sales in the last week of June. 

Abneesh Roy 

And what was that problem, can you elaborate that supply chain issue? 

Sunil Duggal 

There were some delayed shipments from one of the plants because of some retooling in the 

plant, so nothing very significant. It's not a big business, so even 3 or 4 Crores lost sales can 

result in some erosion in term of growth. 

Abneesh Roy 

And lastly, you have done this acquisition in Turkey, to understand from the Middle East 

perspective, it's quite clear. From the Indian perspective, what kinds of synergy you see in 

terms of say product introductions happening in India? 

Sunil Duggal 

They have product lines which I think are pretty compatible with the modern trade, you know 

think like wet wipes, etc., etc., so there is an interesting set of products which we can put into 

play. Having said that, we still have to work out the duty structure etc., which will see what 

kind of pricing they will command in India. So we have not built any India numbers into our 

valuation model because we do not really have the visibility as to what prices they will have 

here.. But I think there is a very interesting prospect of Indo-Turkish FTA coming into play 

and that’s something which I wouldn’t say likely to happen but it is certainly possible that will 

happen. And if that does happen, then I think it will facilitate free entry of those products into 

the India market at reduced or free of duties and that should facilitate rapid growth of the Hobi 

business in India. At the moment we are looking at extending the presence substantially in 

Middle Eastern and particularly the North African markets in addition to growing the business 

in Turkey. 

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July 27, 2010 

Abneesh Roy 

And lastly on the ad spend, it's up 40 bps this YoY to 16.3%, slightly on the higher side in the 

FMCG pack, so what would be the outlook on that? 

Sunil Duggal 

I think it would be in the region of 15% for the year. It will taper off a little bit, but having said 

that it's not impossible that it will hit 16% too, it will lot depend upon again how competitors 

react, but 15% is the way I would see it at this point in time. 

Abneesh Roy 

Okay sir all the best, thanks for… 

Margaret Kalvar from Harding Loevner 

Margaret Kalvar 

Good afternoon, you mentioned on skin care a 12% growth and I noted in the presentation that 

Fem care looks a little bit light at 8%, could you talk about the prospects there and then could 

you also discuss of the working capital issues and whether they are structural or whether they 

are temporary increases in stocking? 

Sunil Duggal 

Yeah on the Fem piece, there have been some reductions in sales in this quarter, because we 

have completely restaged the bleach offerings as well the depilatory offering. Even though the 

bleach volumes are not bad at 14%, it could be much higher had we not done this restaging and 

dried up the market of the product. The new products will come into place this month and we 

believe that this quarter and the next two quarters would be very good for the Fem portfolio as 

whole, bleach in particular. The Gulabari sales really peak in the winter, so they have been 

pretty decent during the first quarter but real action begins in the end of quarter two and the 

third quarter. I still think that we will be able to grow skin care well ahead of what we have 

done in the first quarter. And on the working capital, yes you would see increase of 

approximately 90-100 Crores in working capital, the reasons are not structural, they are 

entirely strategic. We have bought our full year requirements of mango because we do 

anticipate substantial climb up in the prices, so a lot of money has gone into that investment. 

We have also bought the substantial quantities of commodities like honey anticipating a 

shortfall and taking advantage of the soft prices. Most of this working capital is blocked up 

either in loans and advances or in the form of inventory. And this will progressively go down 

as we speak and perhaps reach zero or close to that level by the year end. 


What about the increase in loans and advances, is this because our customers are having 

difficulty paying promptly? 

Sunil Duggal 

No, we typically used to buy just one or two months, not the full year requirements of mango, 

just to give you one example, and the people whom we buy from, they don’t have the financial 

wherewithal to stock up one year’s requirement, so we have to finance them in a sense, so 

that’s really where… 


There has also been a higher advance payment of tax, so both these factors have gone into the 

higher level of loans and advances. 

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July 27, 2010 

Sunil Duggal 

So once again we don’t believe that this increase in working capital is structural in nature, it's 

likely to come down. 


Okay. And then finally again on the skin care, does the intense competition in the whitening 

creams with Fair & Lovely and P&G, affecting Fem care or your other skin care lines at all? 

Sunil Duggal 

No, fortunately Fem care does not complete head-on with fairness creams, it's a product which 

is completely different and our task is really to grow the franchise for bleach in a way which 

does not conflict with that of fairness creams. In fact heightened competitive activity in skin 

whitening only, enhances the need for differentiated product like ours, so there is no impact 

really. I think the task which we have in front of us is to convince people about the efficacy 

and superior delivery of bleach vis-à-vis other fairness offerings and we believe we will be 

able to do that. 


Okay. What about your other line of skin care offerings? 

Sunil Duggal 

Well Gulabari is a pretty steady growth, lot of sales come in winters and the rose water is 

steady around the year product, but that with moisturizers and the cold creams, you will really 

see action in the third quarter. It's too early to say how that will perform. And with that in 

Uveda, we are still testing it out, fine tuning the mix so that we have the optimal product 

configuration and value proposition and formulation to go to market with a bigger bang 

perhaps later in the year early next year. 


Okay great. Thank you so much. 

Vivek Maheshwari from CLSA 

Vivek Maheshwari 

Hi, Good afternoon sir, my first question is on the input cost environment, how is it looking 

currently, although you partially mentioned about mangoes etc which you have stocked up, but 

what about other inputs in general and any price hike that you would have taken in the first 

quarter? 

Sunil Duggal 

To answer your second question first; we have taken price increases aggregating to a little over 

2% in the first quarter. Most of them were taken towards the latter part of the first quarter, so 

the impact was pretty low in the first, full impact will be there in the second quarter. And going 

back to your first question, we do see a little bit of a softening of raw material prices in 

aggregate terms even though there will be pockets of inflation. The monsoon is likely to be 

near normal, so that we will have a salutary effect of inflation softening and therefore lower 

material prices. We are firstly, not taking long positions in most commodities; we are doing it 

very selectively, so we are going to buy spot as we see prices softening. And secondly, we do 

see the margin expansion happening even if we don’t increase prices in the second quarter 

consequent to the softening of material cost. It may not be very significant over the second 

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July 27, 2010 

quarter, but it's likely to gain momentum as and when inflation weakens to the single digit 

which is slated around October or thereabouts. 


Sure and what would be your guidance or your sense on the full year margin, would it be flat, 

can you expand margin on the full year basis in fiscal 11? 

Sunil Duggal 

I think I would prefer to be conservative and say that we hold the EBITDA margin at the last 

year levels. I would not rule out the possibility of expansion, but I would not bet on it either. 


Sure, the second thing is two segments which stood out in the quarter were health supplements 

and home care, particularly in the case of supplements, it was pretty broad based, so what had 

driven this and what is the outlook for the next few quarters? 

Sunil Duggal 

See I always believed, not just for supplements but for health care in general, there seems to be 

some kind of inflection point which has been reached, and we do believe that growth of those 

would be well ahead of what we have seen in the earlier part of this decade. And it is this 

belief that which has led us to invest considerable amounts in health care. In the case of 

glucose, specifically it's emerging as being a popular energy booster and many people can't 

afford those very high priced energy drinks, so glucose is something which is very popular 

with the masses. And also I think we have done pretty intense marketing activities in the form 

of launches of variants, distribution expansion etc. And it's really on a fast growth track; we 

have got around 25 plus shares. We should end the year with around Rs. 150 Crores in terms of 

sales. So it's really one of the bright spots in our portfolio and we are likely to grow it further 

as the competitive intensity here is comparatively speaking low as is with all or most health 

care categories. In honey, we benefited again by low honey prices after many, many years.The 

honey prices have softened because of a ban of Indian honey in Europe, so the local prices 

have collapsed. And we were able to offer more inputs in terms of marketing etc., because the 

margin suddenly improved. We had starved this brand of promotional inputs in the last couple 

of years because of margin pressures, which we were able to put back into market which grew 

this category. The third, Chyawanprash its still early days, I wouldn’t read too much into the 

first quarter numbers, but we do hope that the plans which we have in Chyawanprash are very 

interesting to share, would enable us to grow this brand also at a very fast clip. So overall, I 

think health supplements has come into its own and the whole health care category, has come 

into its own after many years of perhaps little sub-par performance and we believe this will 

continue. 

Regarding home care, it's been more of a phasing issue, a lot of new initiatives came into play 

like the electric pluggy, new low price offerings in Odonil which have been extremely popular, 

the launch of Odomos variants like the oil for the rural consumer. So it's been innovation 

which has driven growth here. This category as you will be aware is very innovation led, and 

that’s exactly what we did to grow the category. So again like in health care, we believe that 

the future for home care in terms of market expansion and getting new customers is immense. 

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July 27, 2010 

For this category we have just scratched the surface and there is a huge amount of headroom. 

On the other hand, the personal care categories which are likely to perhaps not grow at the 

pace, we have done in the past because they are now off to fairly high base. So things like hair 

care, oral care, and even skin care to some extent are now at a fairly high base. I think we have 

to see growth from health, home, and food and not just from personal care to drive growth, as 

has been the case in the last couple of, that's exactly what the numbers are revealing. 


Sure, and what was your market share in shampoos in the first quarter? 


It's around 5.5% on value terms. 

Vivek Maheshwari Okay. And what would this have been in fourth quarter fiscal 10? 


In fiscal 10 it is around 6% or so. 

Sunil Duggal 

I think we have lost half a percent share in shampoos in this last six months, I don’t think we 

need to worry about it too much; we should be able to regain it. 

Vivek Maheshwari Sure, and lastly on A&Ps, you mentioned that it could be in the range of around 15% to 16%, 

but looking at the numbers, is my understanding correct that for A&Ps, you have made higher 

investment in the international business compared to domestic business? 

Sunil Duggal 

Yeah the A&Ps in international is always higher than domestic and that’s not something which 

is new, but even in domestic business we have increased the Adpro. Well actually they have 

gone up you are right, they have gone up more in the international business. So the domestic 

business has been pretty constant at around 15%. 


Right, so do you anticipate some pressure in the domestic business in the next three quarters 

considering that we were almost flat, do you intend to increase your share of voice or 15% is 

broadly the level for domestic business? 

Sunil Duggal 

Well I think what we did is we held Adpros at around 15% levels in the domestic business. In 

the international business we had taken up prices very steeply last year, so we had two options, 

one was to drop prices and keep the same Ad Pro support as we did last year, and other one 

was to hold the price line but invest more in the brands in term of A&P support which was the 

latter option. So we held the price line and so the entire growth is volume driven in 

international business, but we were forced to spend more. We don’t mind doing that, because 

it's yielded very good results in terms of both sales and profitability. Now going forward 

whether international business would go on the same trajectory of high Ad Pros, we will try to 

trim that down, but domestic, I think 15% is sort of, par for the course. 


Alright, thank you very much sir. 

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July 27, 2010 

Hemant B. Patel from Enam Securities 

Hemant B. Patel 

Yeah hello Sunil, couple of questions, one on the international businesses, there has been a 

tremendous growth in the last couple of years and even this year, the first quarter you have 

shown 37% growth on constant currency terms. I just wanted to understand more, is this 

growth largely linked to its penetration led growth or is this off take happening in purely the 

markets you are present in. Give me some highlight as to how the forecast is going to go ahead 

in this year? 

Sunil Duggal 

Let's put these markets in two buckets, one is the core GCC markets, and I’m talking about the 

MENA region only and not not putting South Asia in this bucket.In the MENA region, we 

have seen this grow by around 25%, it's steady but not that spectacular. The growth in the rest 

of region which is South Africa, Levant, etc. was 45%. The second growth has been led by 

increasing penetration in our new geographies etc. The first has been pretty much market share 

gains and not too much else. And the third South Asia, which is actually done spectacularly 

well with all markets growing in the 40’s. Having said this, both in the case of Pakistan and 

Bangladesh, they are off a low base so we expect that growth to continue. Nepal is a pretty 

large market, so maybe repeating a 40% growth for the year is hard, but still we are confident 

of maintaining a very substantial trajectory in the international business. Another upside as far 

the consolidation is concerned that translation losses are expected to come down because the 

rupee is now comparatively weak vis-a-vis dollars compared to the first quarter. We may not 

see the same humungous translation losses, so you know the top line would look better in 

consolidation next quarter, even if there were some lower top line being driven overseas in 

constant currency. 


Alright, and on Hobi, could you give us an understanding of what the revenue mix looks like 

between hair care and skin care segment and what has been the growth rate in the last two 

years? And another question on that would be what the competitive intensity on those markets 

is? 


On the Product mix, basically about 50% of the sales are in hair care. 


50, is it? 


Yes, hair care contributes to 50%, skin and body contributes to about 40%, and then there are 

few other items like wet wipes, etc. 

Sunil Duggal 

So 50 hair, 40 skin and body, and 10 things like wet wipes, alright. 


Alright I got that. In terms of growth rates and competitive intensity, what's been the growth 

rate for the last two years? 

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July 27, 2010 


Last year on same currency basis the business grew at about 20%, 23% to be exact which is in 

2009. 

Sunil Duggal 

The competitive intensity in Turkey is reasonably high, at the same time it's not very different 

from India, I think, but perhaps a little bit less than India. You have all the multinationals 

there, but it's a modern trade environment much more than India, so getting product placement 

is not that difficult. 


In your opinion given the fact that you have mentioned that you are looking at expanding into 

other geographies and leveraging so called product portfolio of Hobi, what is the kind of 

growth rate that you are actually envisaging over the next two or three years? 

Sunil Duggal 

You know we still have to put the numbers together and formulate the business plan, but I 

think growths in terms of the Hobi portfolio whether including the products which we seed 

into the Turkish market should be in excess of 20%. 


Alright, fair enough Sunil thanks a lot and best of luck. 

Sunil Duggal 

Thanks. 

Percy Panthaki from HSBC 

Percy Panthaki 

Hi sir, congratulations on a set of good numbers. 

Sunil Duggal 

Thanks Percy. 


Sir my first question is on the monsoon impact, I mean last year when the monsoons failed, 

you did not see any adverse impact coming through for Dabur, now assuming that the 

monsoon this time will be good, would it be fair to say that there will be no sort of overly 

positive impact either? 

Sunil Duggal 

Well it’s hard to say, one is often too wrong, logically if we had a bad monsoon last year with 

x% demand growth then with a good monsoon it should be x+, but that may or may not 

happen because I think a lot of last year’s monsoon impact was mitigated by the social security 

schemes which obviously continue but I think if the monsoon remains on the current trajectory 

which is reasonably good, it should by every stretch of logic lead to increased demand. Having 

said that in the first few months of this fiscal, we really haven't seen the same upsurge, maybe 

there is a lag here which will happen in the third quarter or when the crops are planted and 

there is some visibility about output and the harvest and people will be open up the purse 

strings. But Nielsen, does not really show any great upsurge in consumer demand in the 

current fiscal so far, but it's early days. 

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July 27, 2010 


Okay, do you think that the good volume growth that you have seen in the June quarter has got 

anything to do with the fact that the volume growth was a bit subdued in the March quarter, is 

there sort of a shift, or timing difference, or a shift in demand or a pipeline adjustment which 

would cause this effect? 

Sunil Duggal 

If I remember Q1 of fiscal 10 was a pretty decent quarter for us. 

Percy Panthaki No, not Q1 of fiscal 10; what I am talking about is Q4 of fiscal 10. 

Sunil Duggal 

I don’t see any pattern there really, but… 


Because I think the volume growth in March quarter 10 was about 12% if I am not mistaken, it 

is bit lower than your run rate at that point of time? 

Sunil Duggal 

12% this year, this quarter is 16%, now I don’t think we did anything different in fourth 

quarter as compared to what we are doing here, so perhaps in case of Dabur, it does indicate 

that there is higher consumer demand as compared to the fourth quarter which augurs well for 

us. But to your earlier question I was looking at more category data and industry data rather 

than Dabur data. Our first quarter has been, according to me quite spectacular from the volume 

point of view, I have never seen such volume growth. 


Right, my only question was that is any part of this volume growth a result of pipeline 

adjustment between Q1 and Q4? 

Sunil Duggal 

The answer to that is no, we did normal sales in March, we didn’t hold back any sales and we 

haven't dumped anything in the first quarter, it is pretty much normal. 


Okay. On the margins front, one is with 20% sales growth and a similar growth in the gross 

profit, we have not seen any operating leverage come through, is it something that is peculiar 

to this quarter or do you think that operating leverage will not come through? 

Sunil Duggal 

Well let me correct you; the operating leverage has been considerable, look at the tax rate, see 

the way the tax rate has shot up. It's operating leverage which has come to our rescue to protect 

our PAT margins. 


I was talking about the growth in the EBITDA which is around 20% and the sales growth is 

also around 20%. 

Sunil Duggal 

Operating leverage comes below EBITDA. Above EBITDA what is the operating leverage, 

there is very little other than sales and distribution cost. So there is no operating leverage, 

everything is a variable cost. 

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July 27, 2010 


Yes, so I was talking about the addition of your employee cost, advertisement and promotion 

and other expenditures. 

Sunil Duggal 

Okay you have been right on that front. 


See the employee cost has been around 7.9%, last year it was 8.2%, so there is saving in that. 

Then other expenditure is about 13.2% and last year it was 13.4%. 

Sunil Duggal 

But I think below EBITDA is really where we have been able to offset, mitigate the impact of 

the tax by considerably lower interest and depreciation; so overall the EBITDA margins have 

held pretty constant largely on account of the operating leverage. 


Okay. And my last question sir, on the input cost, directionally, are you seeing them inflating 

or deflating? 

Sunil Duggal 

Deflating. I’m not talking about indirect cost, because I do see inflation in salaries to be of 

much higher order of magnitude than last year. 


Yeah I was mainly talking on the overall level, if you can just sort of give a bit more 

granularity, what are the main elements which are attributing to this deflation. 

Sunil Duggal 

The biggest culprit if you take the first quarter was groundnut oil and the light liquid paraffin 

and to some extent dextrose which goes into glucose; these were the three villains. Now on the 

first which is groundnut oil, we do see softening of prices, monsoon in Gujarat has been good, 

so GNO prices should come down pretty sharply. Dextrose already has come down. And the 

third which is little bit more difficult to predict is LLP which goes into hair oils etc. Now that 

to some extent is correlated to oil prices, but there is a basic issue in terms of the refining 

capacity, so we are not very hopeful of this coming down and otherwise sugar and honey are 

our ingredient raw materials which should again come off. So basically a more benign 

environment is what we are seeing. 


Okay, so there is possibly a deflation on a sequential basis, but on a YoY basis, probably not. 

Sunil Duggal 

We look at inflation entirely on YoY basis because the mix has so much impact on the 

margins. But on Q on Q basis we should see a lower material cost to sales ratio in the second 

quarter than we saw in the first. 


Then my question is which comes to the price increases that you have taken in the last one or 

two months. What is reason for those price increases when there is no cost pressure per se? 

Sunil Duggal 

There was, for example, groundnut oil went through the roof, so we were buying GNO at Rs. 

80 a liter, we have never done that in the past. We were buying LLP at Rs. 75 rupees a liter; all 

these had a huge impact in terms of margins of say Amla Hair Oil. And we were getting, 

Page 13 of 25


July 27, 2010 

squeezed on that front, so we had no option, but to increase the prices of Amla which was 

perhaps the biggest single contributor to price increases. Then we had an opportunity in 

glucose because of the huge demand, so we were able to partly mitigate the dextrose prices 

through price increase or reduction in consumer promotions in glucose. So wherever there was 

an opportunity of or wherever we were really faced with the margin pressure, we took up the 

prices. And quite frankly the area we have taken up our prices whether glucose or Amla Hair 

Oil have actually performed exceedingly well, so there has been no adverse consumer reaction. 


Sir, I am taking a slightly more time than I should, but I am a bit confused on this front. You 

are saying that the September quarter, the costs are going to be lower on a Y-o-Year basis, but 

in June quarter, you took on price increases because prices are higher, so has the cost taken a 

complete turnaround in the last two months or so? 

Sunil Duggal 

Sitting in May, we didn’t have a huge amount of visibility about the Q2 costs. The monsoon 

outlook was very cloudy. 


Sir that's my question, have the costs or has your expectation of the cost actually taken a round 

about in the last couple of months? 

Sunil Duggal 

In the last one month yes, it has taken turn for the better. 


Okay. That’s all from my side, sir thanks. 

Naveen Trivedi from Pinc Research 

Naveen Trivedi 

Yeah Good afternoon sir 

Sunil Duggal 

Good afternoon 


My question is on the Turkey acquisition, can I have the asset details for this acquisition? 

Sunil Duggal 

Anything in particular you would like to…? 


Basically; the gross block and the net current assets 

Gagan Ahluwalia The net block is around $12 million and net current assets are about again around $11-$12 

million 


Any tax differences on this acquisition, basically the effective tax rate on this? 

Gagan Ahluwalia Tax rate in Turkey is 23%. 

Page 14 of 25


July 27, 2010 

Naveen Trivedi: 

My next question is on consolidated numbers, what is the guidance for tax rate for the whole 

year, it is 18.7%? 

Sunil Duggal 

The current tax rate which is close to like 20% will not be very dissimilar to the full year tax 

rate. 


Okay so this rate is sustainable for next couple of quarters. 

Sunil Duggal 

Yeah I don’t think it will go up because the slice of pie of international business is likely to 

grow which will bring down the tax rate, so there would be a ceiling of 20% unless there is a 

change in law. It won't be beyond 20% in any circumstances. 


Right, my next question is on IBD, we are regularly expanding our geographies, , IBD is 

contributing around 20% of the total sales. Given the same track record, how much would be 

the contribution would in the FY12? 

Sunil Duggal 

If you just add the Hobi numbers next year it would be in the region of $35 million in that 

ballpark. This will add how much to… 

Gagan Ahluwalia About 4%. 

Sunil Duggal 

Yeah so if we have 21% today, we should see a 25% at the very least next year. 


Okay. In FY12, it would be… 

Sunil Duggal 

That I think it would depend upon… 


Because this segment is growing faster 

Sunil Duggal 

So you know you can say it will grow at around 30%-40% ahead of domestic business, so we 

would like to do the extrapolation. Having said that, I still believe that the slice of overseas 

business would be considerably more, just because the chances of doing any inorganic activity 

overseas is more likely than in India. 


Right, one more question what are the margins of IBD? 

Sunil Duggal 

EBITDA’s are around 17, which are almost same as India. 


Not the Turkish acquisition, I am talking of overall IBD business. 

Sunil Duggal 

That’s what I am talking about, overall IBD we are close to around 17%, if I remember 

correctly last year for the full year was 17.7% and in Q1 was how much, 14-15%, so 15% goes 

Page 15 of 25


July 27, 2010 

up to 17%, so that’s a big jump over YoY and therefore if you again do the extrapolation, they 

should be higher than what we did last year which was, if I remember 17.7%. 


Okay. 17.7% you are saying was last year. 

Sunil Duggal 

Yeah Q1 margins in both international and domestic businesses are always lower, because of 

the mix. 


Okay. Thank you so much sir. 

Sunil Duggal 

You are welcome. 

Vijay Chugh from Ambit Capital 

Vijay Chugh 

Good evening everybody. My first question, Mr. Duggal, was, I just wanted to know from you 

as to how has been the performance of some of the launches that we had which were quite 

significant last year in terms of Uveda, Burrst and all that actually in the market? 

Sunil Duggal 

I think most of them have operated as per our plans, some of them are taking longer to roll out 

nationally, big bang etc., like Uveda, because we still have to do the fine tuning. These are 

very expensive launches, so one shouldn’t rush into it. Burrst is not a major initiative, it is 

modern trade initiative driven by the fact that modern trade wants a complete suite of beverage 

products including drinks, so it is comparatively low key, and there is no advertising behind it. 

Distribution of Burrst is limited only to modern trade and is doing pretty well wherever we 

have launched it. But I won't call it something which is strategic like perhaps Uveda and the 

hair oils have been both doing pretty well, so they are growing at a decent clip. Overall I think 

it's been a pretty good track record, some of them are taking longer to get to the next stage, but 

overall it's been good. 

Vijay Chugh 

And any sort of key ones to look forward over the next three to six months time? 

Sunil Duggal 

I think the hair oil should be important, we have little or no presence in light hair oils and it's 

very important for us to get into the segment big time, so I would watch the performance of 

both the almond as well Amla variants, particularly almond, because that operation is a bigger 

space, very carefully. And lot of new introductions which we are planning now in the home 

care portfolio which perhaps may not be new brands but new formats to grow the home care 

portfolio more aggressively. So I think this year would be more consolidation and getting into 

new themes within existing brands. For example, in Real, you will find an array of new 

variants being launched, which are very different from what we have today in terms of the 

proposition. So these are value added product, so I think the effort is going to be on this 

direction rather than to launch, very many, new products. 

Page 16 of 25


July 27, 2010 

Vijay Chugh 

Okay. Thank you. My second question was on acquisitions, now that you know we have 

completed the acquisition of Hobi, how do your acquisition priorities lie in terms of do you 

still remain very aggressive? 

Sunil Duggal 

Yes we do, I think our aggression is in a sense restricted by the financial discipline which we 

exercise while prospecting and while doing an acquisition is in terms of both the strategic 

nature of the acquisition as well as it's payback in terms of the financial piece. So to meet this 

cut, the number of prospects are whetted pretty quickly, so I won't say that we have 50 

companies on the plate which we are prospecting, but there are certainly at any point in time, 

three or five, three or four companies which look very interesting and we progress the 

dialogue. In most cases, the dialogue never gets down to doing the deal because of whatever 

issues. But I think once a year, acquisition of the size of or bigger than Hobi is something 

which is not just desirable but eminently possible and we probably will do it. 

Vijay Chugh 

Okay. Thank you so much. 

Shirish Pardeshi from Anand Rathi 

Shisrish Pardeshi 

Hi Good evening Sunil. 

Sunil Duggal 

Good evening. 


Hi I have few questions, first is in the shampoo category, I heard in your earlier part that the 

competitive intensity is gone up. Is that the market is coming down to a 50 paisa and 1 rupees 

price point or the have the rigid now vanished? 

Sunil Duggal 

I think the 1 rupee is still the dominant price point, it always has been. There is some thinking 

in terms of some companies opening up, reopening up the 50 paisa price point which I think is 

pretty aggressive because there is very little margin to be made at 50 paisa and there is the 

value in terms of the product which we can offer. But there is, I think because of market share 

losses in the part of certain players, great desire to get back to recapture those and that is 

leading to very disruptive competition on the ground. Now how sustainable it is, whether 

people can sustain the bleed, I suspect that when you take off the oxygen, then you know 

pretty the same situation will remerge. It's easy to lubricate trade and gain some points in 

market share, but the sustainability of these is very suspect. 


I just wanted to know, do we have the 50 paisa offering? 

Sunil Duggal 

We don’t have 50 paisa offering. 


Are we planning to compete there? 

Page 17 of 25


July 27, 2010 

Sunil Duggal 

No, not really because the only place we can compete that 50 paisa at this point in time is to 

change the product formulation and that’s what many companies are doing, but we believe 

that’s very short term. 


Okay I understand that. The other question I have is on the oral care, would you be able to 

share what is the growth in brand Babool, I have seen the number including Fresh Mint, we 

have grown 29.1%, but can you tell us what's the growth on Babool brand? 


25% without the gel 


With the gel 

Gagan Ahluwalia With the gel is 29%. 

Sunil Duggal 

I think one of the strongest part of our growth story this quarter has been oral care and it's 

been an outperforming category by a factor of three and we have gained share, we have been 

far higher in growth than anybody else by a huge margin. I think it shows the strength of our 

brands, the soundness of our strategy, and in a very competitive environment, this has really 

been standout performance. 


Yeah in the presentation I saw the another feature that we have launched introductory offer at 

10 rupees for Dabur Red, what is this offer and what exactly is going to do this..? 

Sunil Duggal 

Presently the consumption of red toothpaste is largely urban so we did our analysis and this is 

the fact which stared us in the face and when we did some more digging, it was unavailability 

of the Rs. 10 price point which was leading to this lack of demand in the rural areas. So I think 

it's important for red toothpaste to have a strong footprint in rural and 10 rupees is the route to 

that market, so that’s the logic there. 


Okay. My next question is on the Consumer Health Division, I have a broader question, how 

big is the category if you split ethical and OTC? 

Sunil Duggal 

Ethical is around 40% of our business. 


What is the total category size in terms of rupees? 

Sunil Duggal 

What do you mean by category size? 


I am saying Consumer Health Division if you look at the OTC plus ethical. 


You are talking of our categories or …? 


No in general, the market size 

Page 18 of 25


July 27, 2010 

Sunil Duggal 

Ethical is probably Rs. 7000 crores that is the size of the market if you include the prescriptive 

part also. So these are huge categories. 


And we have done lot of activities there and we are also planning further inputs, so I just 

wanted to understand what is the margin profile and does this really need the A&P spends push 

or it is more of driven by the distribution? 

Sunil Duggal 

I think the OTC piece would require spend levels which will not be dissimilar to that of 

personal care. The only thing is that the size of the category is small, so the total corpus of 

A&P may be high in percentage terms, but it will not aggregate to a big amount. So perhaps in 

cough cold fever, let's say brand Honitus, which is a 30 crores brand, we spent something like 

5 crores in the A&P which is pretty similar to what we spent in categories like hair oils or 

shampoo or certainly hair oils or toothpaste. But it still aggregates to comparatively small 

number, but in terms of share of voice, it is not bad, 5 crores in cough cold fever is not a bad 

amount, because these categories are obviously much less level of competitive intensity in 

terms of A&P spending and personal care and toiletries. 


Okay. Which are the top 3 segments in the consumer health division Dabur would bet? 

Sunil Duggal 

Well if you look at the OTC piece we would bet on supplements and wellness. We would bet 

on cough cold fever and we would bet on gastrointestinal. 


Okay. You said gastrointestinal? 

Sunil Duggal 

Yeah GI, Pudin Hara is the one brand which we have in that domain. 


Okay. Now my next question is on the retail front, would you be able to help us to understand 

what's happening on the retail initiative? 

Sunil Duggal 

Yeah I think a lot of good things are happening on retail. We are opening up a large number of 

stores, we are today at 19 stores and we are literally opening up one store a month or 

sometimes two stores in a month. We plan to hit 40 stores by the year end and maybe a little 

bit more than that. The business model has been fine tuned to where we are getting to store 

break even very quickly. We are seeing far more traction in terms of sales velocity and 

footfalls. Every parameter is now showing green compared to what it was one year ago. Part of 

it is due to economic revival, lot of if it is due to our own learning curve now having been 

reached, so the business today is on a far stronger footing than what it was even six months 

ago, little on a year ago. And I think there is opportunity for creating value here because of the 

FDI window likely to open and there is a lot we can do in terms of further scaling of this 

business whether in Dabur fold, outside the Dabur fold. So we are now far more optimistic 

about this business than what we were sometime ago. 

Page 19 of 25


July 27, 2010 


So maybe what's the growing rate we are expecting per month for FY12, assuming that you 

have 40 stores? 

Sunil Duggal 

By FY12 we should be more than 40 stores and end of current fiscal, should be at 45 and then 

we will take a call when we cast our budget for next year whether we want to follow a very 

steep trajectory for opening or whether we want to now reach a certain amount of critical mass 

and then perhaps look at options for this business which may not be within Dabur. 


Sir, it is our own store or it is franchisee format? 

Sunil Duggal 

These are own rented stores, and they stock now basically premium toiletries and general 

merchandize. So the earlier model which was more omnibus in terms of health care, etc., has 

been jettisoned. We fine tuned the model to focus on personal care and toiletries. 


What is the planned CAPEX for these 40 stores for FY11? 

Sunil Duggal 

We planned around a CAPEX of around 5 crores here for these stores and there could be 

around 30 fresh stores, so you take around 20 Lakhs per store, so around 6 Crores. 


Okay lastly, I heard that A&P spends you spoke about is really going to be competitive, if you 

can help us to understand this 16.3% Ad to sales ratio. The sector is now inviting lot of 

competition also from the domestic player, now which are the categories we think that we want 

to remain competitive or how this 16.3% is spent, if you can help us. 

Sunil Duggal 

I think 16.3% is almost the peak, lot of this has been fueled by in the past at least by a fairly 

benign environment in terms of raw materials. I think as and when you have inflation which 

has already began to catch up, people start feeling that heat then it should level off. So this is 

probably the highest which we will see in aggregate terms. Within that there would be 

obviously pockets of intense competitive activity like we saw in shampoos this quarter, so that 

will happen in bits and pieces when there would be somebody who is wanting to regain share 

or to enter to have a market entry, so there would be periods of disruptive competition in 

certain pockets. But in aggregate terms, I think this is really where it could end. 


Do you see any competitive activity in oral care? 

Sunil Duggal 

I think there is some visibility of that with both Smith Kline and Procter, showing interest in 

this category, so there is every possibility of heightened competitive activity in this category in 

the next couple of quarters, but we are prepared for that. 


So how much of this 16.3 would be promotion and advertising if you can break up? 

Sunil Duggal 

In our case, I am not too sure about the market, but in our case, around 12% is above the line 

and something like 5% is below the line. 

Page 20 of 25


July 27, 2010 


Yeah thanks a lot Sunil and thanks for taking my question. 

Sunil Duggal 

Thank you. 

Anshhul Mishra from ING Mutual Fund 

Anshul Mishra 

Yeah hi sir, I kind of logged in late, I guess you have already shared all these numbers, the 

financial numbers sales and all for the recent acquisition, please can you repeat it for me? 


Sales of the company were about $27 million in 2009, year ended 31 st December 2009 and the 

EBITDA margins are around 17%. Anything else you want to know? 

Anshul Mishra 

This would be Hobi Kozmetik, right? 

Sunil Duggal 

In January to May because they follow the calendar year, the sales are $14 million that's the 

latest number which we have got. 

Anshul Mishra 

Okay January to May, okay. This would be for Hobi Kozmetik, right? 

Sunil Duggal 

Yes, the others are for those three companies which formed Hobi Kozmetik Group, there is a 

manufacturing company, there is a distribution company and there is third packaging company, 

but then that’s just nomenclature thing, the outcome which is the… 

Anshul Mishra 

There is a consolidated thing. 


These are Consolidated financials for the Hobi Group. 

Anshul Mishra 

Okay. And also one more thing on the market share front, if you can please share on the oral 

care category what's the market share, how it has moved on the hair care also, hair oil front, 

you have already shared the shampoo figures, so If you can please? 

Gagan Ahluwalia In the toothpaste category, our share is 10.6%. 

Anshul Mishra 

Okay. What was it say about a year back 


10.6% in value terms and 14% in volume terms. 

Anshul Mishra 

Okay. And what was in year back? 

Gagan Ahluwalia A year back it was 10.2% in value terms up to March 2010. 

Anshul Mishra 

Okay, and in volume terms? 

Gagan Ahluwalia Volume terms was 13.5. 

Page 21 of 25


July 27, 2010 

Anshul Mishra 

Okay, and similarly if you can please share for the hair oil segment. 


Hair oil segment, we are not accessing the AC Nielsen data. 

Sunil Duggal The hair oils are growing both the Vatika and the Amla numbers, at 22% and 19% 

respectively. I am sure we have gained share. We have stopped taking Nielsen data because it 

was completely out of sync with what we were doing, so that’s the only data which we don’t 

take, but I am sure the share growth would only by positive because not many brands would 

have grown at the pace. 

Anshul Mishra 

Right, and also in the food segment, specific to Real, do you have any market share kind of a 

thing and if you can please share that? 

Sunil Duggal 

For Real again, we have discontinued Nielsen data because of huge inaccuracies, but we get 

data from second resources where we at this point in time have 52% share. 

Anshul Mishra 

Okay sir thanks a lot. 

Abhijeet Kundu from Antique 

Abhijeet Kundu 

Hi, good set of numbers. Sir I want to know this, about the industry as a whole, primarily 

personal products portfolio, rather, skin care, oral care and hair care. We have seen good 

amount of competition coming in the there in case of hair care where there are primarily in 

case of shampoos as well as in case of skin care. When this competition is coming in, we have 

seen that there is a slowdown in shampoos where in the same time, the leader who has 

heightened the competition, even the leader has not really shown great growth. So primarily 

one was, are these categories see a slowdown despite the low penetration level or there is a lot 

of marketing activities to really penetrate the rural markets. What's happening there? 

Sunil Duggal See based on Nielsen’s, shampoos certainly have shown a slowdown, it's down to around 8% 

growth compared to much higher growth which we saw last year, whether that’s because of 

fatigue or whether it's just high base, it's really hard to say. I think shampoo growth should 

revive and it should get back to at least mid teens where they ought to be, this is probably an 

aberration. And you know the problems have been low growth and high competitive intensity, 

so it's not been a good quarter for shampoos. 


Okay. And in case of skin care and oral care what would be the category growth rate? 

Sunil Duggal 

The growth rate in toothpaste we can tell, skin care is pretty heterogeneous category, but for 

toothpaste what are the rates? 

Gagan Ahluwalia In the first quarter i.e. April to June period, it's around 8.3%. 

Page 22 of 25


July 27, 2010 

Sunil Duggal 

It's 8.3, Dabur as per Nielsen is 18%.Actually they are growing at 28%, but that difference 

always is there. So at the very least we have to be 2x of category, we believe we are around 3x. 


Okay. So in such a case despite the 50% penetration levels in toothpaste, do you think that 

there is this kind of growth that we are seeing in toothpaste which should not be, so it should 

be in the region of about 13%-15% at least? 

Sunil Duggal 

Yes definitely as is for most other categories logically it should be at this, I mean if you have 

the GDP growth of 9, then at least basic categories like toothpaste and hair oil should go at 

twice GDP growth, but often that doesn’t happen for reasons which are not very clear. 


Okay sir thanks. 

Abneesh Roy from Edelweiss 

Abneesh Roy 

Sir, retail expansion is as per track, could you also guide on the expected loss numbers for 

FY11? 

Sunil Duggal 

Yeah I think around 10-12 crores is what we will lose this year which is almost exactly the 

same as what we did last, but over a much larger store footprint. 

Abneesh Roy 

Any sense you are getting on the FDI based on your talks with the regulatory people? 

Sunil Duggal 

We do get a sense of it, I don’t think the authorities are being very open about what their intent 

is, but the noises which we get to hear indicate an environment which will be facilitative of 

FDI entry to the space. 

Abneesh Roy 

Sir, regarding Uveda, you said that you will have a very phased and gradual expansion, so any 

problem with the timing of the launch or what exactly, is it going as per track? 

Sunil Duggal 

Yeah let's put it this way, we will go and do a big launch when we are pretty certain that the 

mix which we have put into play is what is going to work, because the moment we are going to 

a launch, we will be putting considerable amount of money on the table and it doesn’t make 

any kind of sense to risk that with the proposition with the marketing mix which is not 

absolutely optimal. And it takes a little bit of time to get there because there are so many issues 

here in terms of consumer understanding in terms of activation on the ground and till 

everything is nailed down, it's pretty imprudent to do something which is very big bang 

because you can lose a lot of money and get very little out of it. 

Abneesh Roy 

And in FMCG we see that there are lots of failures, lot of success in any new launch, so what 

is your timeframe for evaluating a new launch from test phase to the pilot phase to next 

national roll out? 

Page 23 of 25


July 27, 2010 

Sunil Duggal 

See it depends upon the pace at which you roll out, let's put it this way, you can gauge the 

product success or failure once you have backed it with media inputs in a fairly large set of 

geography within six months of its launch. You know whether it's going to work or whether 

it's not going to work, but this is only when you put all the elements of the marketing mix into 

play of the ground. 

Abneesh Roy 

So in the last three years have you phased out any new launch? 

Sunil Duggal 

Yeah I think we have phased out products here and there, you know Vatika soaps was a case 

which never really worked, but there is largely on sort of margin pressures we didn’t believe 

we will be able to make a strong product story out of it. Then we had a couple of other small 

failures which we have had which is again part of the game. 

Abneesh Roy 

It's too early, but do you think that the Vatika soaps story can get repeated in the shampoo… 

Sunil Duggal 

No, I don’t think so, shampoos you see the Vatika is a proven success story and it's been in the 

market now for over 10 years and it's got a strong presence. One quarter of disappointing 

performance I don’t think should, let's put it this way, one year ago everybody thought the 

toothpaste story is over for Dabur and look where we are today so you have to take these ups 

and downs in your stride but the basic proposition which we have for Vatika is very strong. 

Abneesh Roy 

You spoke that rural outperformance in terms of growth in Q1 has not been that great, so I 

wanted to understand in Q1 what has been the rural growth, what has been the urban growth? 

Sunil Duggal 

No, I don’t have the numbers, it's too early, the numbers normally would come around a month 

from now, but I suspect the urban rural growth has been pretty similar in the first quarter 

unlike last year where the rural growths were ahead of urban growths. 

Abneesh Roy 

And lastly, in terms of modern retail in terms of the working capital, in terms of the inventory, 

in terms of the shelf space, any big change in the last two years, initially there were lots of 

problems in terms of…? 

Sunil Duggal 

Actually as and when you fine tune your product offering and you trim your SKUs, the 

inventory levels come down dramatically. Today we are operating at pretty lean inventories 

compared to say two years ago, when inventories were very bloated because we were keeping 

a huge assortment of products not knowing but would sell and what will not. You know retail 

everybody has to learn by actually doing the activity, there is no shortcut here and the last two 

years have given us huge learning in terms of what works and what doesn’t and obviously then 

what inventory to keep and what not to keep. 

Abneesh Roy 

Okay sir all the best. 

Sunil Duggal 

Thank you. 

Page 24 of 25


July 27, 2010 


Thank you everyone for participating in this conference call today. For your reference we will 

be putting the transcript and archived copy of the web cast of this call on our website. Thank 

you once again and have a great evening. 

Page 25 of 25

First Quarter - Dabur India Limited

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