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    Mohit Burman on running Dabur, game plan for Eveready; what to do with Religare & more

    Synopsis

    “My tenure won’t change the way business is run at Dabur; focus will be on newer categories. The business has not really grown in the last 10 years but we are going to be at least doing double digit growth from next year onwards. Dabur will continue innovating, launching new products and focussing on growing our distribution but not owning it.”

    ET Now
    “In Eveready, we have made some senior management changes and we are now focussing on the business over the next few years. Unfortunately, the business has not really grown in the last 10 years but we are going to be at least doing double digit growth from next year onwards,” says Mohit Burman, Chairman, Dabur India


    What is going to change in Dabur under your tenure?
    We are concentrating a lot on our power brands; we are expecting business to be coming back to normalcy. We have had inflationary pressures recently but I do not think my tenure will change the way the business is being run.

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    What would you want to do differently at Dabur? Is there something you do not want to do differently?
    We have a very strong management team at the top and we believe that some of the new sort of sectors or product categories we are going into have a lot of potential and I do not see anything really changing except we want to be now focussing a lot on some newer product categories.

    What had kept Mohit Burman busy a lot in the past was the world of finance and the rumour mills say that the Eveready acquisition, being the single largest stakeholder in Religare are your brain child. What is the game plan when it comes to Eveready?
    We have recently concluded an open offer and we are now on the board. The Chairman is Dr Anand Burman and I am on the board and he has hired external consultants to do a five-year strategic plan. We have made some senior management changes and we are going to be now focussing on the business over the next few years. Unfortunately, the business has not really grown in the last 10 years but we are going to be at least doing double digit growth from next year onwards.

    Is double digit growth the target for the new financial year?
    At the moment, we are market leaders in zinc batteries. We are going to be spending some money on growing our alkaline business which is going to go ahead with Duracell. We are going to be spending money on growing our lighting business and we will evaluate one or two new product categories to get into next year.

    Will all of this be within the battery segment, lighting segment or is there a plan to make Eveready a consumer durable company?
    We have to first put the house in order to get back all the market share which we have not got in the alkaline business. In zinc, we are market leaders and our focus is going to be growing the alkaline and the lighting business and of course, focus a little bit more on businesses which have synergy. For the next 2-3 years, we are going to grow those businesses.

    What would be the obvious synergies because those could be the product entries?
    At this point of time, we do have a portfolio of torches, rechargeable torches, lighting, bulbs. Those are the businesses we are going to be focussing on for the next two years.

    A lot of people were speculating when Eveready happened and Dabur was also reclassified as promoters. Is this going to be a new consumer durable company that is going to be built up, like Havells?
    Yes, there will be some products that will compete with maybe Havells or some of the other consumer durables companies. But at this point of time. We want to really focus on the existing product categories that we are in but we do have a plan and we have hired Bain but we do have a plan to get into some of the other consumer durable categories.

    Which will be the new categories?
    That is difficult for me to say at the moment because we have hired Bain to work out a strategy for us and we will know that only at the end of this financial year. So, I am happy to tell you later.

    Can you tell us more about what Bain Capital said? What about Religare? What is the game plan there because now you guys are the single largest shareholder?
    At this point of time I think the Religare management are still concluding their OTS settlement with the banks. Unless that happens, we do not have a way forward. Once the settlement is done with the banks, then being the largest shareholders, we will evaluate what to do going forward.

    That could take a long time. There are more than 10 banks…
    Yes, there are more than 10 banks but the senior management at Religare are close to doing the OTS.

    Okay that could be…
    Next few months.

    Would we see an open offer the way we saw for Eveready?
    Probably, it is too early for us to answer that question.

    So is it on the table or not?
    Well it is not on the table.

    At the moment?
    Yes.

    When the issues are sorted out, what is the larger vision as far as Religare goes?
    Mohit Burman: It is really difficult for me to give you a vision on that business as yet because we do not see a way forward until the OTS happens and what businesses Religare still has on its table and what can be grown. The health insurance business is of course the flagship but some of the others have been suffering over the last few years. I can’t really answer that question on the vision until we really get to the nitty-gritty on evaluating each and every business.

    But this will be obvious? Dabur has ambitions of financial services?
    No historically we have been in financial services but it has only been not through Dabur.

    We have a life insurance company, a general insurance company and most of these have been joint ventures with foreign partners. I do not think we are the right people to be running financial services businesses but we see a lot of potential in those and if there is an opportunity to tie up or team up with a strategic player who knows how to run the businesses, then we will.

    Is that something that you are evaluating?
    We are not evaluating anything.

    You are not going to give me headlines of any kind at the moment?
    No because at this point of time there is not any.

    Now coming to the core business, for the consumer facing FMCG business, Dabur had a great quarter and increased market share in almost all products. How has the company managed to do that and at a time when there is so many headwinds globally as well as inflationary pressures?
    We see inflation in the 6-10% range over the next few quarters and, of course, FMCG has faced a lot of pressure especially as the cost of production is higher due to raw material prices going up and a lot of our products are very price sensitive.

    It is not possible for us to pass on the price increases totally but in some of the product categories, where we have strong market share and basically can face the price pressure, we have taken price increases also in our healthcare range, which basically caters to the upper middle class. But for the rural areas and especially in products which are very price sensitive like hair oils, it is not possible to pass on the full price increases. We will continue trying to manage our costs to make sure that the margins are not hurt but we are still going to face a little bit of pressure over the next two quarters.

    Historically, whenever there is inflation we see prices go up and when prices cool down we do not see the prices of shampoos, hair oils, etc, come down. Do you think that could change this time around?
    I do not think that is entirely true because especially in commodity products, the prices do change. Like in coconut oil, there are many companies that sell coconut oil. We have a brand called Anmol. Those prices go up and down depending on the actual raw material price but a lot of the branded products do not see prices drop because we generally do not take the price increase in relation with the actual increase in the raw material and packing material prices.

    The other part is that while prices do not come down, what happens after shrinkflation? With shrinkflation, will you revert to old packaging when things are normal?
    In a lot of our products we actually do lower pack size and this is more to grow the product market and not really as an incentive, not to make the consumer down trade. It is more to grow the market and we have seen in the last few years a lot of value packs coming out in the Rs 10 price bracket and one has to have products or pack sizes in those price range because there is no way one can expand the market in the rural areas without having products in that price bracket.

    We are seeing two very large conglomerates make very big moves when it comes to FMCG. The Adanis have already done it and now Reliance Industries is also interested in the FMCG business. You are up for the challenge?
    I think theirs is a different moto. They have the last mile distribution. They want to add products under their own brand or private label endorsement. We historically have been a strong branded FMCG player which is more focussed on product innovation as well as selling products through the advertising route. We are not in the distribution game in the sense that we do not have our own distribution although we are now focussing a lot of modern trade on e-commerce. 10% of our business is coming from e-commerce and we are launching products specifically for the e-commerce market.

    I think Dabur will continue innovating, launching new products and focussing on growing our distribution but not owning it.

    So that is the asset light model I guess as far as FMCG companies go but the buzz is that we will see brands coming out from both of these conglomerates. How will the incumbents protect themselves? You will have to increase you marketing spends, advertising spends..
    I think we have always faced challenges. Competition makes you nimble. A lot of the competition that has come in recently has grown the ayurvedic market and we have benefited from that as well. A lot of non-ayurvedic users are now using ayurvedic products.

    Are you talking about Patanjali?
    Well I am just giving you examples. Even in the toothpaste market, our Dabur Red Toothpaste now because of the competition has now become the third largest. Dabur Red Toothpaste is the market leader in some places in the south and in Odisha. So, competition is good as to a certain extent it grows the categories as well as makes them more nimble.

    How will the competition work whether it is Adani Wilmar, Patanjali or Reliance Industries?
    We have to innovate and have different product categories or different product launches. Like we are the market leaders in honey but we now have six different variants Tulsi Honey, etc. We have to keep on innovating the product range.

    Do you anticipate a price war because in the past we have seen that when large conglomerates enter?
    Yes in this business price wars do not happen very often but yes there is a situation where we have seen price wars before because competition has come in at lower prices. But the idea is that in the FMCG category people do not buy the products only because it is cheaper, there is a brand, there is a quality and all that plays an important part.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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