Date:12/07/2007 URL: http://www.thehindubusinessline.com/2007/07/12/stories/2007071252470100.htm

Dabur Foods merged with Dabur India

Expanding presence in wellness space

Twin effect
“Through this merger, we will be able to invest and expand more effectively due to our combined scale, profitability and global reach.”

Our Bureau

New Delhi, July 11 In an attempt to quantify its position in the domestic FMCG industry, Dabur India Ltd (DIL) on Wednesday said that it has merged its wholly-owned subsidiary Dabur Foods Ltd (DFL) with itself. Dabur India will now be an over Rs 2,200-crore entity including the Rs 200-crore from Dabur Foods Ltd.

The merger, the company said, will reflect in its first quarter results. Dabur Foods will now become one of the business divisions of Dabur India, alongside Consumer Care Division (CCD) that encompasses all the personal care and home care products, and Consumer Health Division (CHD) that includes the OTC drugs and ayurvedic medicine products.

Mr Sunil Duggal, CEO, Dabur India, told Business Line, “Dabur Foods is an intrinsic part of Dabur India’s growth strategy and has been one of the fastest growing businesses, reporting a 35 per cent CAGR for the past five years. As part of our business strategy, whenever a new business is started we let it grow on its own steam and merge it with the parent organisation once the fledgling company has attained a certain level. This is exactly what we have done with Dabur Foods.”.

“We believe this merger is a unique opportunity to combine the strength of a foods company with those of a growing and profitable FMCG business to create an extraordinarily strong and rapidly growing global competitor in the health and wellness space,” said Mr Duggal. The company is considering foraying into the health drinks and ready-to-cook foods segment under the health and wellness space.

Extracting synergy

“Through this merger, we will be able to invest and expand more effectively due to our combined scale, profitability and global reach,” added Mr Duggal. The merger will also be used to extract synergies and unlock operational efficiencies, since back-end operations and supply chain will become common.

Since DIL owns 100 per cent of the outstanding shares of Dabur Foods, no new shares will be issued as a result of the merger. “Dabur Foods was floated as a subsidiary over 10 years ago and has since gained unquestioned leadership and market dominance in the fruit beverage space. With Dabur Foods now deciding to expand its presence in the health and wellness sphere, a merger with the parent company is the logical step forward,” said Mr Amit Burman, who was CEO of DFL. Mr Burman will now be a full-time member of the DIL board of directors.