Second Quarter - Dabur India Limited

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Sunil Duggal:Dabur India Limited Q2/H1Earnings Conference CallOctober 31 st , 2008I would look at in the region depending upon location of Rs 500-1000/square feet/Month.Percy PanthakiOkay and lastly sir your losses on retail this year, will they be curtailed within 17.5 crores asearlier stated?Sunil Duggal:I think more or less, they would not be very off that mark, couple of crores here and there.Percy PanthakiThanks very much sir.Sunil Duggal:Thanks.Nikhil Vora of IDFC SSKI SecuritiesNikhil Vora:Hi Sunil, just one question. We have literally discontinued Vatika Soap. You have beenoff expansion in the foods portfolio also.Sunil Duggal:We did explore a little bit of ready to eat and other stuff but I think our hands are pretty fullin terms of the beverage portfolio.Nikhil Vora:There has been no major product launches except for Dazzle over the last two, threequarters.Sunil Duggal:No we have spent on our shampoo portfolio. We have introduced new variants intoothpaste.Nikhil Vora:Yes variants but no new product launches per se.Sunil Duggal:Chyawanprash Junior which is in the process of being launched, there is a fair amount ofactivity happening in terms of NPDs, you name any category and we have a whole lot ofactivity happening there, even in hair oils, two new hair oils are going to be launched in thisquarter.Nikhil Vora:What I was coming from was you know in earlier sessions, which I was drawing towardswas that we have moved away from NPD or not necessarily extensions so NPDs we movedaway from, we obviously not had success in soap and extensions outside beverage in tofoods business, is the appetite to now take incremental risks on the decline specificallyleading to may be the retail expansion which may get curtailed as we move forward.Sunil Duggal:We treat retail as a very separate part of the business and management is very different, sowe do not confuse the two. We do not see retail at the expense of our core business. Thecore business is something, which we will always be in. Retail is more of a new initiative,so in terms of growth in the core business there is a substantial amount of investmentshappening and that will continue. There is no lack of activity in the NPD front, may be in
Dabur India Limited Q2/H1Earnings Conference CallOctober 31 st , 2008the last year or two there have been no big wins and visibility is not there but even in termsof product renovation in terms of extension, there has been an immense amount of work.The entire OTC portfolio was revamped recently. We have launched new almond oil. Welaunched a skin purifier, we have completely ramped up the honitus portfolio, and we aregetting a lot of growth from there and I think some of the initiatives which we are seeing onthe ground in personal care particularly would revive growth there, which has been perhapsa little sluggish in the last three or four quarters.Nikhil Vora:Okay. You do not really see any departure from the earlier stated retail expansion that oneis looking at.Sunil Duggal:Retail will be very calibrated. There is a certain amount of burn and bleed which we canaccommodate in the retail business and we begin from that point of view and how tocalibrate the business model so that we can have maximum amount of business with theleast amount of bleed, so I think that is the philosophy behind the retail business. Wecertainly are not going to take out substantial investments from our core business and put into retail and stop the core business of investments, there is no way that will happen becausethe wins which we get from our core business are actually substantially higher, so the retailpart will get fairly calibrated investment. We will have to produce results, which arecommensurate with that.Nikhil Vora:What does it take to pull out from a category itself like soaps, what are the issues youlooked at before you pulled out completely?Sunil Duggal:I think we looked at margins and we looked at the competitive environment and both weresomething which we did not find attractive, but the key drivers of this pull out was themargins which were contracting to as low as 20% levels. We are simply not comfortablebleeding with margins as low as that, so we set our benchmark at around 45 and so whenwe began the soap business it was at the mid 40s, it slipped because of cost pressures to themid 20s and then we kind of lost interest because we did not see any near term upside interms of the whole margin profile.Nikhil Vora:Just lastly Sunil, on the entire growth that one is looking at not just for this quarter but overthe last few quarters as also going forward would you presume that a momentum for theoverall business for Dabur could sustain at around 8-9% volume terms or do you think thatis slightly under threat.Sunil Duggal:No I think close to double digit volume growth is what we have been achieving consistentlyand in fact we have been doing a little bit better than that and something which we cancontinue to do., now there may be some changes perhaps the international business will notgo at the same velocity as what we have seen and there is every possibility that there wouldbe some slowdown happening there, but I see definitely the domestic business going a little
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Second Quarter - Dabur India Limited

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