Second Quarter - Dabur India Limited

Hozefa Topiwalla:Dabur India Limited Q2/H1Earnings Conference CallOctober 31 st , 2008In terms of competitive ad spends and competitive share of voice, how do you think thatwould typically span out over the next two years given the outlook and environment.Sunil Duggal:Which context are you speaking from?Hozefa Topiwalla:There are two contexts. One is will the advertising rates fall in your view and two is thatwill you actually see a fall in ad cost to sales ratio for the sectors as a whole and includingDabur.Sunil Duggal:Right on both counts. Very clearly we are seeing softening of ad rates. We are seeingchannels to come forward and doing deals far more actively than there was six months ago,so consequently if there is a very sharp reduction in the ad rates, and even if there is sometapering of consumer demand the ad to sale ratio should work in our favor. We do notexpect A&P ratios to actually go down at least, it will probably remain constant at this 13-14% level, but perhaps you can get more value out of Re.1.Hozefa Topiwalla:The reason I asked this question is that if you look at the cycle in the last three or four yearsbecause of ad spends hardening and general share of voice for consumer company isdropping because there is so much of clutter, the ad spent to sales ratio for the whole sectorwent up by about 300 to 400 basis points. You think that whole trend can reverse at all?Sunil Duggal:No I don’t think so. I think the cost of launches is not reducing so you still need to spend, Ican’t speak about others but I don’t see our A to S ratio shrinking anyway below 13%, it ismore like 14 today that is almost hard wired into our business model. It will take a lot ofchange to alter these ratios.Hozefa Topiwalla:So, if you actually witness dramatic slow down in your revenue growth, what are you goingto do in terms of managing the overall business. What is going to be the priority to managethe business?Sunil Duggal:I would seek to manage costs but if I see a slowdown in terms of top line it does notnecessarily have to have an impact on my margins. My margins could remain intact even inscenario of low top line growth because I would still take the ratios pretty similarly. Whatwill happen if there is margin erosion, which I don’t see any possibility off, then I willreduce perhaps A&P and other costs to some extent if it is absolutely necessary.Hozefa Topiwalla:Thanks a ton Sunil. Happy Diwali to the team as well.Vivek Maheshwari of CLSAVivek Maheshwari:Hi Sunil.Sunil Duggal:Hi Vivek.