Fourth Quarter/Full Year - Dabur India Limited

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Sameer Deshmukh (Capital Market): Hello sir and congratulations for the excellent numbers.My question relates to the Real juice. Sir congratulations for crossing the turnover of 100crore in that respect. Where do you see the top line growth of this segment in the nextcouple of years?Sunil Duggal : I wont be surprised if brand Real crosses 150 crores in the next fiscal. Thegrowth rates are very fast, the momentum in the business is high, and we see no reasonswhy growth should slow down.Sameer : Okay, and one more question sir, with respect to Dabur Lal Dant manjan, thevolumes have come down by around 7.1%, whereas in case of Dabur Red toothpaste theturnover has increased to around 50 crores. So is this a general trend that this dantmanjansegment is decreasing or is it specific to Dabur India?Sunil Duggal : I think the tooth powder segment is not increasing as fast as toothpastesegment. Now whether it is declining is a moot point because it need not decline in nextyear, but certainly we don’t expect the pace of growth to be commensurate with toothpaste,that is where the growth comes from. We would seek to maintain our LDM volume, I think itwill be unrealistic to expect it to grow sharply, and strongly build the toothpaste franchise.And the acquisition was strategically very important for us because the trend is towards thisspace.Sameer : And sir one last question is relating to the international business. Is the productportfolio in the international business more or less similar to the domestic business ?Sunil Duggal : Yes, in a sense it is substantially similar. It is similar even though it will followthe same architecture but there would be, let us say, more emphasis on health supplementsand nutraceuticals for the developed market as compared to the others markets. So let ussay for the semi-developed markets there is greater emphasis on personal care portfolio.For the developed markets health care is the focus.Sameer :Okay. Thank you very much sir and congratulations for the numbers again.Hemant Patel (Enam Securities) :Hi Sunil, I just had one particular question pertaining to, a.)the VAT issue, and in that Dabur India Limited actually showed a slowed pace in growth forthis particular quarter, was it predominantly because the trade actually took up less stock atthe last quarter?Sunil Duggal : Yes, I think so. I think the growth in quarter four would have been higher hadit not been for VAT. Trade was not inclined to buy. They were pretty skittish and theywanted to scale down investment consequent to the uncertainties. Now, we could have gotsales by extending credits and by giving them terms, which were not acceptable. We did notwant to do that, so we said we would rather take some hit on the top line.Hemant Patel : But is it supposed to, I mean, looking at the inventory levels at which theindustry is functioning at, would we see this like evening out going ahead in the nextquarter?Sunil Duggal : Absolutely, it would even out. Because even if trade down stocks, that is aone-time hit, ultimately everything depends upon the consumer off take. Consumer off takeremaining pretty aggressive, I do not think this is something, which we need to worry about.Hemant Patel : What would be the average inventory level at the stockist level?Page 4 of 4
Sunil Duggal : Currently we carry inventories of around 30 days with the stockists. I think itcame down to a level of around 22 days by end of March. In April, we are seeing furthershrinkage happening with regard to wholesale even though retail is normal. So overall thestock pressure in the trade channels has substantially reduced in the last two months, butwe are seeing now revival happening in the last week of April because the down stockinghas happened to replenishment levels. But I think next month onwards we should see goodsales happening once again.Hemant Patel : Could you give me an overall view of this particular trend which we areseeing in terms of rural demand or urban demand and up-grading which has been talkedabout quite widely?Sunil Duggal : We saw definitely stronger urban demand happening last year. Ruraldemand was weak because of the monsoon, and hopefully the trend should reverse now.We should see, I think, the whole sector would expect strong revival in rural demand now toreally take up growth to the next level. If that does not happen consequent to a poormonsoon, yes, then the growths would be modest once again.Hemant Patel : Okay. Thanks a lot Sunil.Sunil Duggal : You are welcome.Princy (Citi Group) : Hi Sunil. Actually this is Princy. Congrats on very good set of numbers.Just one question was on your margins, essentially for FY05. We have seen that excisesavings have primarily been the lever for margin expansion. Going forward do you see anyadditional levers, which could drive up margins, especially for 06 and probably Balsara couldbe a potential drag on margins, that is my first question. And my second question is on yournew product pipeline, you have done fairly well in terms of introducing new products over thelast few quarters and scaling them up as well. Could you throw some light on what could be,you know, future product pipeline for 06, which would drive your growth? Thanks very much.Sunil Duggal : Yeah, now to answer your question, we would certainly see a marginexpansion happening next year over what we have achieved in current year. Q4 issubstantially ahead of the average for the year. But the pace of growth of the expansion inmargins would perhaps slow down little bit because the excise benefits have been by andlarge captured. But definitely we see margin expansion happening. Balsara is small ascompared to the Dabur business, so even if the margin is lower, it would not impact overallmargins to that extent. Also at consolidated level, we are looking at margin expansionhappening in foods and international business, so overall we would look at margin growth tocontinue. On the second part of your question on new products, yes, a very aggressive newproduct introduction program as usual. We are looking at a new nutritional supplement, veryinteresting product, which we will test launch next month. We have test-launched soap inthe fag end of the last year in Bengal, and we would hope to extend it nationally. We arelooking at new variants of Vatika shampoo, at least one variant of Vatika Shampoo. Veryinterestingly, we are looking at now fragmenting chywanparash, we are looking at variantsfor different consuming segments and multiple number of OTC products under our consumerhealth division’s umbrella. So, yes, lot of new product activity. We are budgeting itsubstantially both in terms of revenues and advertising investment. So, the pace ofintroduction of new products would continue at very aggressive levels.Princy :Sunil, just a follow up, if you could give me the absolute excise number for full year05, FY05?Page 5 of 5
Page 1 and 2: Dabur India LimitedFY04-05 Earnings
Page 3: so. The profitability of Balsara bu
Page 7 and 8: core portfolio, two brands, Lal Dan
Page 9 and 10: Yasmin :Okay, sir the last question
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Fourth Quarter/Full Year - Dabur India Limited

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