Second Quarter - Dabur India Limited

Dabur India Limited Q2/H1Earnings Conference CallOctober 31 st , 2008perfection. If the plant has not been there we would have perhaps been able to grow at 20%or even less than that but the businesses are scalable. We did not expect the plant to operateat 110% capacity. The plant was designed for a two-shift operation. We are running threeshifts. We have already kind of exhausted current capacities and we are quickly puttingnew capacities literally four, five months after the plant was commissioned, but all thesethings are something, which we can do at short notice because they do not involve hightechnology or high capexes.Hozefa Topiwalla:What would you say are the key drivers for growth in MENA at the moment?Sunil Duggal:It is basically very high investments. A&P there is around 21% in our brands which arepropelling a lot of consumer demand from the entire Arabic world and also now from sub-Saharan, Nigeria etc., so we are investing in our brands particularly in the Vatika franchiseand going forward towards oral care and toothpaste, Meswak particularly and that iscreating a huge amount of consumer pull, so this is basically a pull strategy because it isvery hard to penetrate market likes Morocco or Algeria through distribution expansion.They are fairly primitive in terms of their distribution infrastructure there. So what we havediscovered is to establish media platforms, which are Arabic in nature, which are panArabic in terms of spread. It creates awareness and pull for our products and then thedistribution begins to build itself.Hozefa Topiwalla:So these are largely to wholesalers.Sunil Duggal:We have very little direct retailing there apart from the GCC countries, Singapore.Hozefa Topiwalla:How much of growth do you think is coming from adding just new distributors or howmuch of growth is coming from the same distributors, if retail shows no growth?Sunil Duggal:We have appointed a huge number of new distributors. Let us say we have always adistributor in Morocco and it was a market which rarely got say 2-3 crores of sales, last twoyears we begin to advertise heavily, not to Morocco but in the pan Arabic channels andsuddenly we are seeing the market grow to 10-15 crores, so this is basically what ishappening that investments are yielding results and as and when we get in to higher scale ofbusiness we will further reinforce our distribution and build more quality in to it, but it isnot that distribution is driving our business there, especially in the more remote areas ofMENA.Hozefa Topiwalla:How much credit do you typically give to your distributors in the MENA region.Sunil Duggal:It is pretty high. In GCC, it is 90 days, in the more risky areas it is 30 days, but SaudiArabia and all these very established geographies we are locked in to fairly high credits, sotherefore the working capital requirements in MENA are much higher than the domestic