Dabur India Ltd., the household goods maker controlled by the billionaire Burman family, is willing to spend part of its about $500 million cash reserve to acquire companies and revive sales that grew at the slowest pace in two years.

The company is exploring options in the health care, foods and personal care segment, Chief Executive Officer Mohit Malhotra said in an interview. Dabur has identified potential targets and is looking to buy companies in the 1 billion-to-10-billion rupee price range.

“We have a ready war chest available to acquire companies," Malhotra said, adding that the company has reserves of up to ₹3,500 crore ($490 million). “With slowdown, some targets will become affordable which were earlier very expensive."

The slowest growth in six years has hit companies including Dabur, Maruti Suzuki Ltd., India’s largest carmaker, and biscuit maker Britannia Industries Ltd. as consumers in the world’s second-most populous nation cut back on purchases. Consumer confidence in India, tracked by the central bank, is at its lowest since at least 2014.

The company is fanning out operations to remote parts of the country to access more consumers. It is expanding its rural network to cover 55,000 villages by March next year and 60,000 by March 2021 from 44,000 in April, Malhotra said, adding that rural consumers account for half of sales in the country. Revenue from Indian operations in the quarter ended Sept. 30 grew 4.1%, the slowest pace since the same quarter in 2017.

“We are hoping to acquire the kind of entities which take us to rural India and help us bridge the gap between urban and rural image," Malhotra said.

Smaller Packaging

To keep customers from turning to cheaper brands amid slowing economy, Dabur started selling smaller packets of hair oils, toothpaste and fruit drinks.

The strategy to introduce a 10-rupee packet seems to be helping the maker of Hajmola digestive candy boost sales in villages. Its rural business grew at a faster pace than urban, in contrast with rivals Hindustan Unilever Ltd. and Marico Ltd. “Dabur has outperformed the market," Naveen Trivedi, analyst at HDFC Securities Ltd., wrote in a note.

Dabur’s shares, which have risen 12% in the quarter ended Sept. 30, lost 0.74% to ₹462.65 at 2:55 p.m. in Mumbai. Hindustan Unilever has advanced 11% in the same quarter while the benchmark Sensex fell 1.85%.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.



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