FMCG major Dabur India has set its eyes on two iconic brands -- Kolkata-based G.D. Pharmaceuticals controlled Boroline's Eleen and Dey's Medical owned Keo Karpin -- as part of its strategy to acquire niche regional brands to boost presence in the domestic personal care market, especially in the hair care segment.
A source with knowledge claimed that Dabur may have already approached the two companies which own the brands, without revealing further details.
When asked whether it would be interested in buying out Boroline's Eleen or Keo Karpin Sunil Duggal CEO of Dabur India Ltd said: “We are looking for niche, heritage home-grown brands with strong recall in the personal care segment, especially hair care, and healthcare segment mainly in eastern and southern part of India.” He did not want to name any target.
Both GD Pharmaceuticals, the owners on Boroline and Eleen, and Dey’s Medical that owns Keo Karpin did not respond to e-mails sent by Business Standard on October 31 seeking comments on the issue. Repeated phones calls to both the companies seeking comments also remained unfruitful.
According to Duggal, Dabur India could spend up to Rs 500 crore in domestic acquisitions. “There are not enough good targets. Besides, valuation is an issue. Such companies should not be valued based on the EBIDTA, and could be valued based on the sales multiples,” he added. However, the minimum size of an acquisition would be more than Rs 50 crore.
“We desire to close a domestic deal early next year,” said Duggal.
There’s a lot of scope yet to be tapped in India, Duggal said, adding that the company would focus on strengthening presence in the southern and eastern markets over the next few years. “We have just scratched the surface,” he said. Dabur India plans to boost presence in the over-the-counter (OTC) category, which could happen both organically or through acquisitions in the domestic market, said the CEO. Healthcare would be one of the main areas of interest, but Dabur would not look at entering into the soap category, he added.
G.D. whose flagship brand is its famous Boroline cream has spun the same brand for its hair oil Boroline's Eleen which has been a hot seller across the country especially in the east and north. It also owns other brands like Suthol an antiseptic and Penorub a pain reliever could also easily fit into Dabur’s growing OTC portfolio, said an investment banker who tracks the sector. Keo Karpin, on the other hand, comes with products in haircare and skincare segment and the portfolio could be extended successfully, he added. “A fair valuation would be 2-3 times sales,” pointed out the banker, adding that both Emami and Marico had looked at Keo karpin in the past.
G. D. Pharmaceuticals Private Limited reported income at Rs 76.33 crore in fiscal year 2010-11. Its networth stood at Rs 70 crore, according to the company’s balance sheet.
Dey’s Medical Stores (Manufacturing) Limited reported revenue from operations at Rs 72 crore during fiscal year 2011-12, according to its balance sheet.
Many brands in east India have been up for sale. Jabakusum, owned by C. K. Sen & Company, is a popular hair oil brand in rural Bengal. Emami has reportedly tried to acquire Jabakusum in 2009. Similarly, Chesmi another local brand came under Emami's radar in 2009. However, the Kolkata-based FMCG company Emami succeeded in acquiring Lakshmi Bilas hair oil.
Dabur India, which has availed acquisition route to expand in the international markets, would not be interested in any acquisition in the near term. “In 2010, we had acquired Namaste in US and Hobi Group in Turkey. We intend to consolidate our positions in the existing markets overseas, and would not be looking at venturing into any new market over the next five years,” said Duggal. It would expand in existing international markets, by extending categories and geographically.
“Geographies located in the west of India would remain focus, especially, in the west Asian markets, Africa, Turkey, US and eastern Europe,” he said. Africa has emerged as the ‘Epi-centre’ for Dabur’s growth in the overseas market. The company has lined up about Rs 120 crore in expanding capacities and setting up new production units in countries like Sri Lanka, Bangladesh, Egypt, the US, Turkey and Dubai. About Rs 50 crore would be spent in domestic expansion.
In the next 3-5 years, Dabur expects non-haircare business to contribute atleast 50% of its international pie. Currently, most of its overseas revenue comes from haircare.
Overseas market is growing at a faster rate, and is expected to contribute about 45% of Dabur’s total revenue in next three years, Duggal said. At present, international business contributes a little more than 30% to Dabur India’s over all revenue.