Second Quarter - Dabur India Limited

Sunil Duggal:Good evening Richard.Dabur India Limited Q2/H1Earnings Conference CallOctober 31 st , 2008Richard Liu:Sir, my question pertains to the International Business really. I remember discussing withyou at the time of the first quarter result that we had faced some margin erosion that timewhich we said would largely get corrected under second quarter onwards with the pricehike. As you know that price hike would have come through, but if one looks at the overallsales growth Q1 and Q2 is largely in line at 40% but I presume with larger price hike in theQ2 but that does this imply that volume growth has slowed quarter on quarter.Sunil Duggal:No. Let us say the MENA region which is the driver of our international business whichgrew at 55%, we did a quick check and price part is 16 the volume is 39, let us make it 40,obviously the price increases in the International Business have been considerably higher,that is on the back of substantially higher inflation levels which we have faced. So ourmargin growth has lagged behind topline growth, if I am not mistaken our margin growthwould be around 30% as against topline of around 40-41%. But, I think, like in India, webelieve that definitely from Q4 there would be substantial margin expansion happeningconsequent to the fall in the commodity prices. We may not see too much evidence of thatin the third.\I am not worried about margin in the international business. I think, thechallenge is can we continue to manage the same, very, very high pace of growth. Again, ifyou do a scan of our international business it literally comes in two buckets, there isMENA, which is around 80% of the business and then there is South Asia. MENA hasperformed exceedingly well 55% growth. South Asia has lagged considerably behind. Thegrowth is in double digits and the reason for that, is, one Pakistan has unraveled quite a bit.Nepal had this problem, which happened in September, it affected Nepal. Nepal is a bigmarket for us. Bangladesh has done very well but then it is too small to really make achange. Now if we are able to get South Asia back on track while I am not sure aboutPakistan because the economic situation there remains very grim, but Nepal shouldcertainly improve. Even if we have some slackening of growth in MENA we will go fast.You know business is growing at 40% and it is hard to expect margin growth also to growat 40% so I don’t mind some margin erosion.Richard Liu:But what could be the volume growth like Q1 and Q2 in the international business?Sunil Duggal:Again, it would be around two-thirds volume and one-third price, not very different fromdomestic.Richard Liu:This is across both the quarters.Sunil Duggal:This is across both the quarters. I do not see any significant difference. Is there anydifference between first and second quarter? I do not think so, may be there is a marginaldifference, but nothing significant. Lot of volume growth has happened basically on