Second Quarter - Dabur India Limited

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