Homegrown FMCG giant Dabur India, backed by a formidable cash reserve of INR 7,000 crore, is currently on the lookout for acquisition opportunities in the healthcare and home & personal care segments, as disclosed by CEO Mohit Malhotra.
Besides, Dabur is looking for acquisition opportunities in the online space, and with several D2C (Direct to Consumer) brands operating in it, it finds the valuation “more reasonable” now and will pursue it if it finds a suitable one for growth, he said.
The company is scaling its presence in the online space, which includes e-commerce channels and D2C business, where it plans to introduce more innovations under existing brands and through inorganic opportunities.
“We are introducing innovations there. Those innovations are coming on the back of existing brands and these innovations will come on the back of some new brands that we might launch or we are looking at an acquisition for a new brand,” shared Malhotra.
The company aims for organic expansion by introducing new brands in both skincare and premium skincare segments, with the remaining growth to be achieved through strategic acquisitions.
“We do not want to do any organic new brand launches with the exception of skincare and premium skincare that we are not present in. That is where we might do an exception otherwise we look at it to see acquisitions,” he said.
Should Dabur come across a “reasonable valuation,” it is open to considering an acquisition, utilizing the approximately INR 7,000 crore earmarked specifically for that purpose in its balance sheet, as mentioned by the CEO.
Malhotra emphasized the significance of innovation, stating that, in addition to acquisitions, it plays a crucial role in attracting younger or new-age consumers and extending the lifecycle of a brand.
“It is a necessity,” he said adding ” if a brand has to evolve or grow, it has to have a newer avatar every two to three years, only then will the brand grow.”
All the nine power brands of Dabur India, would “have to evolve and go through a cycle of evolution. That is what we are doing.”
Dabur boasts nine powerhouse brands—eight in the Indian market and one in international markets—collectively contributing to 70 percent of its overall sales.
The roster includes Dabur Chyawanprash, Dabur Honey, Dabur Honitus, Dabur PudinHara, Dabur Lal Tail, Dabur Amla, Dabur Red Paste, Real, and Vatika.
Its juice brand Real’s revenue is around INR 1,700 crore and the company wants to take it INR 2,000-2,500 crore in the next five years.
“The brand should trend around 15 per cent CAGR, which we have, so we should be able to double the turnover in six years time with this brand,” he said.
Besides, it has three INR 1,000 crore brands Dabur Amla, Dabur Red and Vatika, which Malhotra expects to increase to INR 1,500 crore.
Dabur has 17 brands that are above INR 100 crore but less than INR 500 crore in size, said Malhotra while addressing the investor meeting last week.
Earlier this year, Dabur completed the acquisition of 51 per cent stake in Badshah Masala to enter the branded spices and seasoning market.
Now, Dabur is expanding Badshah to international markets targeting the international diaspora.
“So we have got a very rich pipeline of brands to have a very future fit organisation,” said Malhotra adding, “we will have the 17 brands actually we have to nurture and they will all become power brands in due course of time for us”.
The power brands, which get higher allocation of funds and resources, from their manufacturing, and innovations to marketing, will continue to contribute 80 to 85 per cent of Dabur’s revenue, he added.