Dabur Foods Limited (DFL) a business division of Dabur India Limited (DIL), operates on the naturals platform with a product portfolio consisting mainly of packaged fruit juices, cooking pastes, sauces and items for institutional food purchases. The business' sales grew by 51.2 per cent from Rs.85.8 crore in 2003-04 to Rs.129.7 crore in 2004-05. Overall, the Company recorded a positive PAT of Rs.5.25 crores as compared to Rs.1.5 crores in 2003-04.

The primary growth drivers in this business are its two fruit juice brands - "Real" and "Real Activ". Both the brands combined under the Real equity today contributes to over Rs. 100 crores of turnover. During the year, the Company repositioned its offerings to put in place a well-segmented product strategy. The Company now has three distinct brands across the packaged fruit juice category - Real, Activ and Coolers. Activ's new identity, which has now become distinct from the Real brand, has been brought out in a new contemporary and trendy package. The Activ range now has five flavours including the two new additions - Mixed Fruit Cucumber Spinach Juice and Mixed Fruit Beetroot Carrot Juice.

Expanding it's portfolio, Dabur Foods has launched a new innovative brand under the name "Coolers" to tap an emerging consumer need. These drinks are made from summer fruits that have the properties to cool the body from within. They were launched in 2004-05 in 3 flavours - Watermelon, Pomegranate and Aam-Panna. Coolers have not yet realised their true potential during 2004-05 as the launch happened almost at the end of summer. We intend to aggressively promote this brand and also introduce new flavours in 2005-06.

Dabur Foods' other brand Hommade, grew by 41 per cent in 2004-05. This brand offers a range of cooking pastes, tomato puree, coconut milk and has recently test marketed a soup concentrate, which shall be launched nationally during 2005-06.

Institutional sales contribute over 25 per cent of the Company's turnover. Dabur Foods intends to bring in more products in this distribution system. A separate brand called Nature's Best has been created for institutional sales and it consists of products like ketchup and corn flour powder.

Operations

Dabur Foods' multi-fruit processing facility at Siliguri, West Bengal became fully operational during the year 2004-05. The plant produces pulp and concentrates and has brought the Company a step closer to achieving full backward integration and realising the resultant cost efficiencies. The location of this plant is a major source of its competitive strength. For one, this facility is located at the heart of a major fruit-producing and trading area, thus, giving it access to a variety of fruits including Pineapple, Litchi, Guava and Tomato at competitive prices. Furthermore, it is in close proximity to the Dabur Foods' juice plant located in Nepal, thereby reducing time and cost of transportation.

In 2004-05, Dabur Foods acquired yet another new facility near Jaipur for manufacturing fruit juices. The plant currently has manufacturing facilities for 200 ml packs. This facility will be upgraded to manufacture 1-litre and 200 ml packs of the 'Real' brand of fruit juice and also the 'Coolers' range of products. With this acquisition, the Company will be able to de-risk its business by considerably reducing its reliance on the Nepal plant.

Moving Ahead

The objective for us in the future is to grow the business to a Rs.270 crore business by the FY 2006-07. The above-mentioned target would mean a compounded growth rate of 47 per cent. Future focus areas for DFL are:

• To build Real, Activ and Coolers into Mega brands.
  
  
• Efficiently leverage our sales infrastructure, both in retail & foods services; and
  
  
• Utilize and build our operations with the two new plants - Multi fruit processing facility in Silliguri and the packaging plant in Jaipur.
  
  
• Build exports with both our retail brands and pulp/concentrates.

Overall, our business is on a very strong footing, with further initiatives underway to develop infrastructure and people, thereby enabling the organization to achieve FY 2006-07 goals.

Mr Sunil Duggal
CEO, Dabur India Ltd.