Dabur plans to open manufacturing unit in South India; portfolio expansion in the offing

New Delhi: Leading FMCG and ayurvedic products maker Dabur is planning to set up a new factory in South India in less than a year's time, as its business scales in the region, according to company's CEO Mohit Malhotra.

Dabur, which now gets 20 per cent of its domestic sales from South India with its business there doubling in the last 5-6 years, is identifying gaps and usages to launch products customised to the markets, he told PTI in an interview.

The company, having 13 manufacturing units across the country, is augmenting its capacity further to meet the demand and is diversifying its manufacturing activities by adding new lines, he added.

Dabur India, which has an annual capex of around Rs 350-450 crore, also plans to expand its manufacturing activities in the international markets catering to regions such as the Middle East and Europe.

Besides, the company is consolidating its manufacturing operations and has shut down some units where tax sunsets are coming in, and opening new units where GST regime is coming in, Malhotra added.

On Dabur’s business in South India, Malhotra said,“We have made substantial progress in South India… it now contributes 19 to 20 per cent of Dabur's domestic business. This was not even 10 per cent around seven to eight years back and thus contribution from the Southern region has doubled.”

When asked about the new plant in South India, Malhotra said,“I do not think it's a few years away. Maybe it is a year away .Within a year, we might plan something for South of India as business scales up.” Dabur's last investment to open a new unit was at Indore, where it had invested around Rs 350 crore.

In the southern market, several FMCG makers, including Wipro have jumped into the food segment with relevant regional offerings. Dabur is identifying gaps there to launch customised products.

"We are creating a framework in the company where we can create products which are exclusively meant for the South of India for which we have got this framework called RISE, which is regional insights, speed and execution," said Malhotra.

Some brands such as Dabur Red, contribute 40 per cent of its business in South India and Dabur Honey and Odonil are very salient there, he added.

"So we are looking at a lot of pollination of products in South of India to increase our saliency," he said.

However, Malhotra also added that in comparison with other FMCG makers having a saliency of 30 per cent, Dabur's salience is in the range of 20 per cent.

"So there is a huge gap of 10 to 15 per cent to be covered in the South. That is an area that will be our focus for geographical growth," he added.

Talking on international markets, he said MENA (Middle East & North Africa) is the largest market and a “growth frontier”. It has a manufacturing facility in the UAE and uses the Greater Arab Free Trade Area Agreement (GAFTA) to cater to Saudi Arabia.

“If Saudi Arabia opens up and scales up, we might look at a manufacturing unit even in Saudi Arabia. We have another second unit in Egypt, which is the second largest market after Saudi Arabia,” he said.

Dabur uses Common Market for Eastern and Southern Africa (COMESA) while manufacturing in Egypt and supplying to East Africa.

Dabur also has a factory in Turkiye, which ships to European markets. It also has a factory in South Africa which caters to SADC (Country / Southern African Development Community) markets of 12 countries.

While in the US, it has a contract manufacturer, which also caters to the Canadian market.

“Business is doing well in international markets. There is a recovery after Covid but geopolitical issues are always there,” said Malhotra while referring to trouble brewing in the Middle East, and the Russia-Ukraine War.