Dabur can see a mid-to-high single digit growth in FY20: Lalit Malik, CFO
Lalit Malik, CFO, Dabur India Limited, spoke about the performance of his company, Dabur in Financial Year 2019 (FY19), slowdown, an outlook for FY20 and competition in the sector during an interview with Zee Business.
Lalit Malik, CFO, Dabur India Limited, spoke about the performance of his company, Dabur in Financial Year 2019 (FY19), slowdown, an outlook for FY20 and competition in the sector during an interview with Pooja Tripathi, Zee Business. Edited excerpts:
Q: How was the financial year 2018-19 for Dabur?
A: The financial year 2018-19 was the first full year, post-GST, and a lot of stability was seen in the initial quarters and a good growth was visible. But, a slowdown was seen in the fourth quarter and this slowdown would have been a result of extended winter’s in the North as well as unemployment. Thus, we have seen a slowdown in the fourth quarter but if we talk about the first three quarters then stability was seen in the post-GST market.
Q: What would have been a reason for the slowdown in the fourth quarter?
A: It seems that unemployment is on a rise and this increase has limited the disposable income with the consumers. Apart from this, the declining consumer sentiments and restricted liquidity have decreased the purchasing power of the consumers.
Q: Has Dabur seen a pre-election buying rally that has been seen in almost every sector? And, what is your demand related expectations in the next financial year, FY20?
A: Stimulus that is provided before the elections leads to demand spurge in the market, but we haven’t seen such signs this time. Probably, disposable income hasn’t reached to consumers or it will take some more time to reach them and that is why we have not seen any increase in demand. On the contrary, demand has squeezed, and I have explained it earlier.
Q: Provide your outlook on volumes and margins for FY20?
A: As far as volume is concerned, we will have a mid-to-high single digit volume growth in FY20 as we may face normal post-election stability conditions in the market and it can lead to limited growth in the first quarter. But, things will return to normal in the second quarter. Keeping these in mind, we will be posting a mid-to-high single digit growth in the next quarter.
Besides, inflation may have an impact on our cost floor margin and this can have an impact on our margins. But we will make efforts to keep investing in promotional activities to reach the consumers. In addition, we will be launching new products. So overall, we will try to maintain our margins, but it will depend on the kind of impact that inflation can have on us as well as the extent to which we can raise our prices. So, we will try to maintain as mid-to-high single digit volume growth and will try to maintain the margin.
Q: Talk about the factors that will support this mid-to-high single digit volume growth.
A: Currently, we can’t be specific on it but will have a special focus on healthcare products. We will also have an eye on other categories like oral care, personal care and food category products. In the process, we will keep launching new products in all segments at regular intervals.
Q: What is your outlook on the sector? Also, tell about the competition from Patanjali?
A: There is an increase in the market size of the Ayurvedic products. Interestingly, there is a new trend in which people are getting attracted towards Ayurvedic products. This trend has led to an increase in demand and consumption of these products.
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When it comes to Dabur, then it is benefitted from its presence of more than 135 years in Ayurvedic market and get an edge when it comes to Ayurvedic, natural and herbal products. If we talk about our competition with Patanjali then we have seen a growth in products like Honey, Chyawanprash and oral care products.