Dabur India is investing Rs 70 crore on a new unit in Sri Lanka to produce its Real brand of fruit-based beverages.
Taking advantage of the Free Trade Agreement between the two countries, the company will use the new unit in Gampaha to service southern Indian markets.
To also add to its base of plants making consumer goods spread in different geographies, it is also now exploring the feasibility of setting up a new manufacturing facility in South Africa for a range of personal care products.
Elaborating on the plans for the Sri Lankan market, Mr Sunil Duggal, Chief Executive Officer, Dabur India, termed the decision as “strategic” and one which gave the company a “competitive advantage”. “With a plant in Sri Lanka, the freight costs for shipping juices to South India would be much cheaper and would give the company greater penetration and presence in this market,” he said. There would be tax advantages as well.
Currently, the bulk of Daburs Real juices sales happen in North, East and Western India. Penetration in the South is barely 10 per cent. For the Rs 4,110-crore healthcare-to-personal care FMCG firm, its beverages contribute 15 per cent of its revenues. And with the foods division (under which Real and Activ brands come) growing at 28-30 per cent year-on-year — despite supply constraints — an expansion was in order, say company officials.
The new Sri Lankan plant, spread over 50 acres, will have the capacity to produce 2.8 lakh cases of fruit-based beverages and is expected to be commissioned by September 2012.
Dabur already has a plant in Nepal that produces about 6 lakh cases per month of Real juices, as well as a unit in Newai, Rajasthan that makes 3-4 lakh cases of India specific variants. About 80 per cent of the Real juices supplied in India come from the Nepal unit.
Having export-oriented units in neighbouring geographies like Sri Lanka and Nepal works to Daburs advantage as most of the content – fruit pulp, oranges and so on are imported and incur lot of duties.
Going forward the Sri Lankan unit could also be manufacturing personal care products. Besides Sri Lanka and Nepal, Dabur already has manufacturing facilities in Bangladesh, Dubai, Ras-al-Khaimah, Nigeria, Egypt and Turkey. The Hindu