Burmans To Wind Up Dabur Finance

The Burmans are determined to wind up Dabur Finance Ltd (DFL), a subsidiary of Dabur India Ltd (DIL), as they want to get out of the financial services business owing to `bad market conditions'.

In DFL, started during the early 90s, Dabur India holds about 76 per cent equity stake, while the balance is held by the Burmans.

The Burmans, in a related development, have also communicated to Boston-based Liberty Mutual group _ with whom Dabur India Ltd has signed an MoU for a joint venture in insurance sector _ that the investment in the joint venture would not be made by Dabur India, but by another Dabur group company.

 

Though DFL's executive director Mohit Burman was not available for comments, sources in Dabur admitted that the decision to bring the curtain down on DFL has been taken by the Burmans.

"As part of the restructuring of the Dabur group, the Burmans are committed to get out of the NBFC business and hence the decision to wind up Dabur Finance," the sources said, pointing out bad market conditions too contributed in the decision to wind up DFL.

The Burmans have also put in motion the process of surrendering the licence (like the category one merchant banking) needed for NBFC activities. "The other details like returning of money taken leading up to winding up are being finalised," Dabur sources said, pointing out DFL, despite recession, had shown profits during the last financial year.

DFL business activities included retail business of financing automobiles and some portfolio management apart from other non-banking finance company activities.

Mohit Burman, who joined Dabur Finance Ltd in 1994, last year had told a business magazine that the financial services business will grow in the next 10-12 years and, though, there is likely to be a shake-out, the conservative Burmans were looking for an alliance which would keep them in the `reckoning'.

Meanwhile, the sources said that the Burmans have informed Liberty Mutual group, that Dabur India Ltd would not be able to make the investments in the joint venture with the American company to make forays in the insurance sector as and when rules permit it.

Due to the restructuring, instead of Dabur India, some other group company would be making the investment.

Last month, at Dabur India's annual general meeting, the shareholders who okayed the restructuring plan were told that Dabur India will be forming a 100 per cent subsidiary, Dabur Foods Ltd, to look after its foods division as also the plans to get out of non-core businesses.

As part of the changing profile, Dabur has decided to go in for outright sale of its natural gum business, Level and Dentacare brands. The company is also scouting round for a strategic partner for its non-oncological pharmaceutical business.

Meanwhile, Dabur has roped in Ninu Khanna as the chief executive of the company. According to company sources, Khanna would be joining DIL next month. He is, at present, with Colgate-Palmolive as executive vice-president (Indian operations).

McKinsey had recommended the appointment of a CEO to look after the day-to-day activities of the Dabur group.he CEO will run the company on a day-to-day basis with all the functional and business heads reporting to him. The chief executive, in turn, will be answerable to the vice chairman and managing director G C Burman and the deputy managing director.

DIL, which accounts for about 80 per cent of the group's turnover, has grown steadily from a comparatively small Rs 260-crore company to a Rs 706-crore organisation.