Sunil Duggal, chief executive officer, Dabur expects volume growth to be in the range of 6-10 percent and rules out the likelihood of any price reductions.
The unseasonal rains are likely to have a significant impact on rural demand, says Sunil Duggal, chief executive officer, Dabur . He however, hopes the rising urban demand on warm summers will be able to combat the fall in rural sales.
In an interview to CNBC-TV18, Duggal says he expects volume growth to be in the range of 6-10 percent and rules out the likelihood of any price reductions.
Furthermore, he expects to log in 19 percent operating margins in FY16 and says the company has a lot of launched lined up for the upcoming quarters.
Below is the transcript of Sunil Duggal's interview with Sumaira Abidi and Reema Tendulkar on CNBC-TV18.
Reema: Very recently we had the management of Mahindra and Mahindra (M&M), they held an analyst call and they indicated that the demand for tractors is worse than the most pessimistic scenario they had envisioned and tractors too is an indicator perhaps of the rural demand. In the last quarter Dabur had lower the volume growth outlook to 6-10 percent. How is Q4 shaping up, so far in your sales have you seen some slowdown in rural consumption, in urban consumption and therefore what will it do to your volume growth in Q4?
A: It will be inline with what we had indicated which means that growth will be in the region of 6-10 percent in volume terms. So demand remains depressed. There is a fair amount of pressure in terms of rural demand in particular but even urban demand doesn't seem to be picking up as of now. So we are hoping now for a warm summer which can fuel demand for our summer products and that could perhaps mark the beginning of the change towards better days ahead, but too early to call as of now.
Sumaira: A big pull and push is happening for a lot of companies like yours, so you have benign raw material prices on the one hand but there is agrarian crises which has cropped up. Do you think there could be a downside risk to your assessment of 6-10 percent volume growth?
A: I think the downside risk would happen in the event of a significant failure of the monsoons then of course the volume estimates could go southwards very quickly but unless that event happens or any other event which we cannot visualise, I think 6-10 percent is within reach. We do also expect that of now our low base of last year demand would pick up and we would see some acceleration in terms of growth both urban and rural particularly urban.
Dabur India stock price
On March 19, 2015, at 14:14 hrs Dabur India was quoting at Rs 278.40, down Rs 4.6, or 1.63 percent. The 52-week high of the share was Rs 286.90 and the 52-week low was Rs 173.30.
The company's trailing 12-month (TTM) EPS was at Rs 4.20 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 66.29. The latest book value of the company is Rs 10.84 per share. At current value, the price-to-book value of the company is 25.68.
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