Financial Daily from THE HINDU group of publications
Wednesday, Mar 23, 2005
Corporate - Outlook
Dabur evaluates private label business for toothpastes
Sindhu J. Bhattacharya
New Delhi , March 22
BARELY two months after acquiring Balsara's oral care brands, Dabur India Ltd is scouting for opportunities in the private label business for toothpastes.
Private label business will allow Dabur India (DIL) to manufacture toothpastes for global retail chains and institutions at its facilities in India, with brand ownership of the final product lying with the buyer.
The Chief Executive Officer, Mr Sunil Duggal, told Business Line, "We are evaluating the private label business for toothpaste. This business will be done only for overseas markets, mainly North America and Europe."
He said DIL was keen to get into this business to use the synergies provided by the Balsara acquisition, since Balsara was also into private labels for toothpaste. Also, such a venture needs little investment and is "scalable"; DIL has idle capacity used earlier by Balsara.
Balsara was a member of the International Private Label Manufacturers' Association and was planning to augment its production capacities and international customer service infrastructure in anticipation of large volume increase from international private label business at the time of its acquisition by DIL.
Balsara's oral care portfolio included Babool, Promise and Meswak toothpaste; DIL has Dabur Red toothpowder and toothpaste, Dabur Red Gel paste and Dabur Herbal Toothpaste, besides Binaca toothbrushes.
Although the main thrust of Balsara was on private label manufacturing of toothpaste, the company was also supplying insect repellents, air fresheners, toilet cleaners, scourers, cosmetics and toiletries for buyers in the North American and European markets. Colgate-Palmolive and Reckitt were among its customers.
Industry experts said global retail chains such as Wal Mart and K-Mart are looking at India for sourcing a host of products due to cost competitiveness. But adherence to quality norms is still a big deterrent.
Meanwhile, Mr Duggal also indicated DIL's willingness to go in for further acquisitions in the domestic market. "The Balsara acquisition provides us scale and a whole range of new products, but we are open to more acquisitions.
"We will consider acquisition targets that help us deepen the home care business (which DIL entered through Balsara brands) and those in wellness categories such as pain balms and laxatives."
He said the company was also scouting for distribution alliances in the North American market for its ayurvedic healthcare products manufactured in India. DIL is targeting a Rs 2,000-crore turnover by the next fiscal.
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