The Burman family-controlled Dabur India Ltd., a massive producer of consumer products, is scouting for acquisitions not just in India but also in Southeast Asia to expand its presence. The company is focused on paving the way into the foreign market. This is due to the intense competition it faces domestically, particularly from deep-pocketed rivals like Unilever Plc, powerful Indian conglomerates led by Mukesh Ambani and Gautam Adani, and Tata Consumer Products Ltd., which is looking to expand its portfolio through acquisitions. Dabur is evaluating targets in health, food, and personal care in Southeast Asia, according to CEO Mohit Malhotra, who added that there are many opportunities available. He did not mention any brands or firms that are on the company’s radar.
Dabur recently acquired Badshah Masala for $71 million and is currently scouring for other potential purchases. This century-old company offers Ayurvedic medicine and herbal products, such as toothpaste and shampoo, to over 120 countries. It is now looking to enter Southeast Asia where its competitors are already present, according to Malhotra. However, he noted that the immediate environment in Southeast Asia is volatile, with unstable currencies causing havoc. Once this situation stabilizes, the company may pursue inorganic opportunities in the region.
Despite some positive signs in rural demand, inflation has been a major challenge for Dabur, which makes half of its sales in India’s rural hinterland. It has caused the company’s earnings to decline, with net income falling 5.4% in the last quarter, missing analyst estimates. Additionally, the company’s shares have fallen 5.2% so far this year. Malhotra said that inflation above the central bank’s target of 6% for much of the past year has been “pinching the business big time.” Sanjiv Mehta, CEO of Unilever’s Indian branch, recently mentioned that rural India has yet to attain full recovery. His observations echo those voiced by him prior to that.
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Mr. Malhotra highlighted that it has been a difficult period for Indian businesses and that the next quarter doesn’t seem to be getting any easier. He does, however, think that conditions should start improving in the coming year, although he doesn’t anticipate inflation to be under control anytime soon. Despite these challenges, Dabur is continuing to scout for potential acquisitions both in Southeast Asia and at home. The company’s focus on health, food, and personal care aligns with its traditional Ayurvedic medicine and herbal products, which are well-known in India. Dabur’s entry into Southeast Asia will enable it to compete with rivals in the region, who are already established there.
