Rabin Ghosh

Mumbai: Dabur India is reworking its strategy in soaps category, where it has a marginal presence, which could potentially see it exiting the category, a senior company executive said Thursday.

In other consumer care and consumer health categories, the company is planning a slew of brand launches and relaunches this fiscal, as it aims for a 15% topline growth this fiscal.

“The soaps category has become unattractive and our idea is to cut losses and deploy resources somewhere else. But we haven’t given up on the category. We are thinking of having products with differentiators like medicated soaps, which have better margins. If we don’t have differentiators, then we might as well exit the category.

Our overall portfolio is diverse enough,” chief executive Sunil Duggal told analysts.

The soap category is highly competitive and in spite of rising input costs, companies are finding it difficult to pass on price hikes.

“There are only two ways to increase your market share in this business. One is to spend huge amounts in AMP (advertising, marketing, and promotion) and another is downtrading, which means offering same quality at lower price points,” said a marketing executive of a rival soap manufacturer.

Dabur has only one brand —- Vatika —- in soap, which contributes less than a percentage to its overall revenues. The category is part of baby and skin care group, which is 6% of its consumer care division’s revenues, which in turn is 76% of Dabur India’s topline.

Duggal said going forward, owning to competitive pressures and rise in inputs costs margin expansion would be difficult, but the company was confident of robust topline and corresponding bottomline growth.

Duggal said the company was circumspect in rising prices and of the 14.5% revenue growth this fiscal, only 3% came from price hike.

The company has recently opened six health and beauty stores - Newu-and Duggal said it would open 10-16 stores this fiscal and another 45 next year. The venture is expected to breakeven by 2010-11, during which period it has budgeted for a Rs 40 crore loss on the venture.

The company is going slow on rollouts since it is experimenting with store sizes, product mix etc.

Dabur India has merged its food business with consumer care division and plans to launch new food products in health and beauty next year.

The food business grew 19% for the year and Duggal said it could grow at excess at 35% this year.

Source : DNAIndia