Consumer products major Dabur is eyeing acquisitions in the healthcare segment to beef its international business. In foreign markets, so far, the company has primarily focused on the personal care segment, acquiring Hobi Kozmetik in Turkey and Namaste Laboratories in the US.
The company is present in markets across West Asia, North Africa and Asia, and these operations account for international revenue of about Rs 1,600 crore, about 30 per cent of its Rs 5,305-crore turnover.
The move to acquire healthcare companies abroad is important, considering Dabur’s need to tide over regulatory issues in foreign healthcare markets, where government intervention is high, says P D Narang, group director, Dabur India. Currently, Dabur exports its healthcare products from India. “A local acquisition would give us a better foothold in the healthcare space abroad, since that is a category we are eyeing for the long term,” he adds.
Narang, however, declined to specify the likely targets abroad.
He admits the personal care segment was easier to crack, owing to few regulatory hurdles. However, unlike other mid-tier fast-moving consumer goods companies, Dabur hasn’t made a flurry of acquisitions, choosing to move cautiously instead.
Narang says the acquisition of Hobi Kozmetik two years earlier was necessary, as Dabur felt a foray into Turkey was best possible through a local buy. Similarly, its acquisition of Namaste in 2010 was intended to facilitate its entry into the African market, as Namaste’s ethnic hair products were popular in markets such as Nigeria and South Africa.
Both acquisitions were sub-Rs 500-crore deals. Company executives say acquisitions in healthcare or personal care segments abroad are unlikely to exceed Rs 500-600 crore.
Dabur’s international business has been growing at a healthy clip of 24-25 per cent annually. Narang says this is sustainable, given the competition abroad is not as high as in India, where the company has recorded 16-17 per cent growth annually.
Dabur is also considering expanding its footprint in the African market, primarily by pushing Namaste’s products beyond its strongholds of Nigeria and South Africa. Experts estimate the ethnic hair care market in Africa at Rs 5,000-6,000 crore. Companies such as Marico and Godrej Consumer Products have also made strong inroads into that market, primarily through acquisitions.
