Board approves an enabling resolution for this fund-raising.
When it comes to acquisitions, Dabur’s peers in the domestic industry have been more active. But, that may change now that the company is focusing more on inorganic growth.
Dabur India, which announced the acquisition of Turkish firm Hobi Kozmetik on July 26, is hungry for more. The company plans to raise Rs 2,000 crore for acquisitions, said Sunil Duggal, the company’s chief executive officer. The amount is in addition to the funding for the Hobi Kozmetik deal.
The company’s board approved an enabling resolution for this fund-raising two weeks ago. It would be put to vote before the shareholders at the upcoming annual general meeting scheduled for the end of next month.
“In the current scenario, organic growth is becoming very difficult, creating and building new brands is turning costly. Moreover, now valuations abroad are very lucrative,” Duggal reasoned for his sudden appetite for acquisitions.
Earlier Duggal had said the company would like to buy one mid-sized or two small-sized companies every year. But the size of acquisitions will not be too large. It is looking at companies with an annual turnover between $50-100 million (Rs 230-460 crore) as these are easier to assimilate.
In the past, Dabur had acquired Fem Care Pharma in 2008 and Balsara Hygiene and Home Products in 2005. The company after a gap of three years is actively looking for acquisitions in healthcare and personal care. It is in talks with a number of companies, both in India and abroad. Refusing to share the names, Duggal said the talks are at the preliminary stage. Duggal said while valuations are better abroad, choice is more in personal care.
For healthcare, the Indian pool offers a better choice. The company is looking at West Asia, Africa and East Asia markets for future acquisitions, but is open to other countries depending on the strategic fit. Hobi, which Dabur acquired for Rs 324 crore, was its first acquisition abroad. It plans to complete the Hobi transaction by the third quarter of 2010-11. It will be funded partly by internal accruals and majorly by raising debt from Dabur International.
