Dabur India declines on near term pressure on business from demonetization

Dabur India declined 1.48% to Rs 281.05 at 11:35 IST on BSE after the company foresees some near term pressure on the business on account of scarcity of cash with customers and trade due to demonetization.

The company gave an update on impact of demonetization by the government on the company after market hours yesterday, 5 December 2016.

Meanwhile, the BSE Sensex was up 115.36 points, or 0.44%, to 26,470.30.

On the BSE, 20,113 shares were traded in the counter so far, compared with average daily volume of 95,340 shares in the past one quarter. The stock had hit a high of Rs 284.95 and a low of Rs 280.25 so far during the day.

The large-cap company has equity capital of Rs 176.15 crore. Face value per share is Re 1.

Dabur India said that the impact varies across channels and geographies and stress is highest for wholesalers and small town grocery shops, who are facing a severe liquidity crisis and are destocking. The impact is likely to be positive on modern trade outlets and plastic money enabled retailers who are likely to benefit from this change.

On account of continuity of current uncertain situation it is difficult to quantify the impact on Q3 December 2016 at this point of time, however it is temporary in nature and situation will improve with increase in availability of new currency.

In the meanwhile, the company is focusing more on modern retail, e-commerce and institutional sales and also is encouraging general trade retailers to adopt cashless payment systems. This will help in mitigating the overall impact of demonetization and pave the way for normalization in the next few months, Dabur added.

It may be recalled that government from 9 November 2016 had banned legal tender of higher denomination notes; namely Rs 500 and Rs 1000 notes, dubbed as demonetization in its crackdown on black money.

Dabur India is one of the largest FMCG companies in India. The company operates in key consumer products categories like hair care, oral care, health care, skin care, home care & foods.

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