Second Quarter - Dabur India Limited

Sunil Duggal:Dabur India Limited Q2/H1Earnings Conference CallOctober 31 st , 2008I am seeing a range of Rs. 500-1000 depending upon the space.Hozefa Topiwalla:But if I recall correctly its about 12 to 18 months ago, before you began your retail businessin terms of the B plan you put out you are basically targeting between Rs.20 and 25000 sqfeet per year.Sunil Duggal:That was a steady state, not the start up. What I am talking about is the initial velocity notthe terminal velocity, which would be much higher than this. Even in our original plan, ourinitial velocity was more in the region of 1250 of course we never reached 1250.Hozefa Topiwalla:Of course environment is bad and real estate cost is high etc., but in terms of the key matrixthat you would typically want to measure whether the business is going in the rightdirection or not. If you were to take a mid year review, where do you think you stand in theretail business in terms of what your objectives were and viability of the business model.Sunil Duggal:I think the business model is viable if it is totally re-engineered. That means lower realestate cost, sustenance of current margins and little bit higher velocity but I think the key isreal estate cost and managing our overheads much better so the matrix which I looked whenI see the retail piece is how close are we to store break even, the moment we reach storebreak even I think our problems are solved to a very substantial extent, but to get to storebreak even is a long and a hard road and that is what we are presently engaged in to managethe business model to reach the store break even in as quick a time as possible.Hozefa Topiwalla:Should we expect more roll out or should we expect that you would actually make themodel more viable before you actually expand in to it.Sunil Duggal:See what I will ask the guys who have done this business is, before you open any store, giveme a business plan for store break even and I will dissect that plan. If I am satisfied, thatthe store will break even in a very short period of time, weeks rather than months, then Iwill give the green signal for store opening.Hozefa Topiwalla:People have been asking this question of slow down in consumer demand what ishappening globally etc. In the previous cycles that you have seen where the economyslowed down what has been your experience of how Dabur managed or how yourbusinesses demonstrated revenue growth.Sunil Duggal:You all know, you have been in this business for long, we see almost an inverse correlationbetween business cycles and FMCG demand, so there is no pattern and only a very braveperson would stick his neck out and predict. Now which way it will pan out, it is very hardto predict. I think, we just keep eye on where are the categories heading.