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Dabur looks at Africa, West Asia for growth to beat slowdown

Dabur, the fast moving consumer goods major, is increasingly turning to markets outside India for growth, as the domestic market continues to be subdued.

A little over a third of revenue comes from abroad and it is investing Rs 500 crore to expand operations in  and Africa. It recently set up a subsidiary and bought a manufacturing plant in South Africa, to cater to the southern part of the continent, a region earlier served through import. The move will bring down cost, Sunil Duggal, chief executive officer, said in a recent investor call. “The objective of localisation is not to improve profitability as much as it is to lower prices and thereby improve our market position.”

According to Lalit Malik, chief financial officer, the move could increase its revenue from South by four times to Rs 250 crore a year. Expanding its operations in  has a rationale, as gets nearly a third of its Rs 2,900-crore international sales from there.

 

Dabur looks at Africa, West Asia for growth to beat slowdown

Another focus area is West Asia, generating 23% of its annual  revenue from overseas operations. It has already started  production in and is setting up a manufacturing unit in  Iran, to be ready by 2017. As consumers keep their purses closed  in Saudi Arabia due to economic turmoil, increasing the sales in  other markets of the region will be helpful, says a JM Morgan  report dated October 3. The market generates a tenth of Dabur’s  sales and nearly a fifth of profit from international operations.

 

 The firm also recently set up shop in Myanmar. According to  Malik, plans to expand its portfolio, apart from launch of  existing products, in newer territories. Local currency fluctuations  are an issue; recent devaluations in Nigeria, Turkey, and Egypt  impacted Dabur’s revenue.

It expects the growth in foreign markets to remain higher than  that in India. Its two product lines continue to grow at 10% a year  by volume. Duggal says they plan to invest another Rs 300 crore in  the next year; they’re also open for acquisitions.

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