The Board of Directors of Dabur India, in principle, approved the demerger of the Rs 162.9 crore Pharmaceuticals business from the FMCG business into a separate company yesterday.
This restructuring move by Dabur India is aimed at providing greater focus to its Pharmaceuticals and FMCG businesses. With this, Dabur India would now largely comprise of the FMCG business that would include personal care products; healthcare products and Ayurvedic specialities. Whereas the pharmaceuticals business would include allopathic, Oncology formulations and bulk drugs. Dabur Oncology Plc, a subsidiary of Dabur India, would also be part of the Pharmaceutical business.
The company has appointed Ernst & Young for implementing the demerger. Dr Anand Burman, vice-chairman, Dabur India, would continue to head the Pharmaceuticals business. The number of additional shares that would be allotted to existing Dabur shareholders and the name of the new pharmaceutical entity would be finalized soon. The new Pharmaceuticals company will also seek listing in Stock exchanges after getting necessary regulatory approvals
"This move would help create a global presence for Dabur's Pharmaceuticals business and provide focus to maximize penetration in global markets. The FMCG business would also benefit from this move as it will lead to better and more efficient management of its resources and facilitate more accurate benchmarking with industry", said P D Narang, group director (commercial and corporate affairs), DIL.
The Board also accepted the resignation of Uday Kotak, an independent director on Dabur Board, and approved induction of Stuart Purdy as a additional director in the company. Kotak resigned from the company due to statutory restrictions. Stuart Purdy is the chief executive of Aviva Life Insurance India and has held a number of positions within the UK, Europe and International business units of Aviva plc, the largest insurance company in UK.
The board of directors also adopted the un-audited financial results for third quarter ended December 31, 2002. The company posted a net profit of Rs 26.72 crore, up 19.6 per cent from Rs 22.33 crore recorded during the corresponding period last year. The turnover, during the same period increased to Rs 351.35 crore, up 9.9 per cent from Rs 319.75 crore.
The FMCG business, during the third quarter, posted a net profit of Rs 21.58 crore, up 19.96 per cent from Rs 17.99 crore, on a turnover of Rs 294.14 crore, up 8.52 per cent from Rs 271.04 crore. The Pharmaceuticals business, during the same period, registered a net profit of Rs 4.70 crore, up 29.83 per cent from Rs 3.62 crore, on a turnover of Rs 49.84 crore, up 38.17 per cent from Rs 36.07 crore recorded in the corresponding period last year
During the nine-month period, from April to December 2002, the company posted a net profit of Rs 68.54 crore (which is higher than the profit posted during the entire last year), up 23.3 per cent from Rs 55.6 crore, while the turnover surged to Rs 937.1 crore from Rs 882.03 crore. Dabur India had reported a turnover of Rs 1163.03 crore with a net profit of Rs 64.44 crore during the fiscal 2001-02.
The FMCG business, during the nine-month period, posted a net profit of Rs 51.85 crore, up 21.71 per cent from Rs 42.6 crore, on a turnover of Rs 769.08 crore, up 7.81 per cent from Rs 713.35 crore. On a like-to-like basis i.e. excluding businesses that are being discontinued/re-structured, the growth in overall sales was 8.6 per cent and the growth in the FMCG business was 7.8 per cent during the period under review.
The Pharmaceutical business, during the same period, recorded a net profit of Rs 14.67 crore, up 25.5 per cent from Rs 11.69 crore, on a turnover of Rs 142.75 crore, up 15.5 per cent from Rs 123.58 crore.
The capital employed in the FMCG business and the Pharmaceuticals business on December 31, 2002 was Rs 447.95 crore and Rs 200.26 crore respectively.
"The company maintained strong sales performance across product categories despite adverse monsoon, slowdown in the FMCG sector and heightened competitor activity. The demerger would provide the FMCG business with greater focus, flexibility and resources for sustained growth in the consumer sector ", said Sunil Duggal, CEO, Dabur India.
Dabur India Limited had operationally separated its Pharmaceuticals business from the FMCG business in July last year. This move was part of the restructuring exercise based on the recommendations and strategy plan proposed by Accenture.