DABUR FEMCARE MERGER

BY:
HEMALATHA GM
MADHU BC
Acquisition of Controlling Stake in Fem Care Pharma Ltd
By
Dabur India Ltd (DIL)
DABUR INDIA LIMITED
Dabur India Ltd. (DIL) is the fourth largest FMCG company in India with a turnover
of Rs. 2834.11 Crore (FY09) and has a significant presence in the consumer
segments of health care, personal care, home care and food products. Its master
brands include Dabur for natural health care, Vatika for personal care, Hajmola for
digestives and Real for fruit beverages. They have a reach extending beyond India
to over 60 countries across the globe.DIL, through its wholly owned subsidiary H&B
Stores Ltd., has recently forayed into organized retail with a concept of selling
health,
beauty and wellness products under the brand name new u. The company currently
operates 7 stores with a target of 16-18 new u stores by FY10. DIL has built strong
brand equity by superior management of its ever-expanding product portfolio
through
innovative launches, systematic relaunches and rewarding acquisitions. However
considering the current economic slowdown, growth expectations could get
strained.
COMPANY BACKGROUND
DIL, founded in 1884 by Dr. S. K. Burman, has emerged as one of the leading
FMCG companies in India. It has a strong presence in the ayurvedic space with a
focus in the health care, personal care, home care and food segments.The company
has 17 manufacturing units spread across the globe.
In FY05, DIL acquired Balsara's Hygiene and Home products businesses, a provider
of Oral Care and Household Care products in the Indian market for the consideration
of Rs1.43bn. The company also acquired 72.15% stake in Fem Care Pharma Ltd.
(FCPL) inNov'08 for Rs2.04bn.
BUSINESS SEGMENTS
DIL's operations are segmented into the
Consumer Care Division (CCD), Consumer
Health Division (CHD), International Business
Division (IBD) and the recently started
retail division.
CHD & CCD : CHD provides the foundation
for smaller brands to develop into future
growth drivers for the CCD, the largest
segment for the company comprising the
consumer products business.CCD is the
largest revenue and earnings contributor for the consolidated group. It houses a vast
range of products from health care and personal care to homecare along with the
latest inclusion of foods.
IBD : DIL's products are available in more than 50 countries spread across the
markets of Middle East, S.E. Asia, Russia, Africa, Australia, the EU and America. In
the early stages of international business, the approach was to primarily tap the
Indian diaspora across the globe. However, the strategy has presently evolved to a
more zone centric approach.
RETAIL : The company’s new u stores boast of branded personal care products,
fashion accessories & jewellery products. Apart from housing its own products, it
also sells products of other companies like P&G, Hindustan Unilever and Johnson &
Johnson. In addition, they offer high end products like Lancome, Clinique and MAC.
 Amalgamation

ACQUISITION Merger

Large A ltd B ltd

company

C ltd
Small
company
Acquiror/Transfree- Dabur

Acquiree/Transferor-Fem Care

Date of acquisition-1st April 20099(as per companies act 1956)

Date recorded by company-30th June

 Deal Structure
 Dabur India Ltd acquire 72.15% Fem Care Ltd Rs. 203.7 cr

 Dabur additional 20% stake Fem Care Ltd. Rs.56 cr

 The transaction values FCPL at an equity value of Rs 282.4 cr

 Dabur Ltd. Fem Care 2009 Rs. 270 cr

 Allotment of shares 5:1(5 shares Dabur for every 1 share held in Fem Care)
 The Share capital of Fem as on March 31, 2009

SHARE CAPITAL
The share capital of Fem as on March 31, 2009 is as under:

Particulars Amount
(Rs. in Lacs)
Authorized Capital
7,000,000 Equity Shares of Rs. 10 each 700.00
700.00
Issued, Subscribed and Paid-up 3,529,400
Equity Shares of Rs. 10 each 352.94
Add: amount paid-up on forfeited shares 0.15
353.09
 The share capital of Dabur as on March 31, 2009

Particulars Amount
(Rs. in Lacs)
Authorized Capital
1,450,000,000 Equity Shares of Rs. 1 each 14,500.00
14,500.00
Issued, Subscribed and Paid-up
865,076, 249 Equity Shares of Rs. 1 each 8,650.76
8,650.76
 Object of the Offer
• To Exercise Control Over The Target Company & Right To Appoint Directors
Or Through Control Over Management Or Policy Decisions.

• To Strengthen The Target Company’s Position In The Industry .

• Result In Improved Shareholder Value For Both The Companies.

• Result In Enhancing The Scale Of Operations And Reduction In Overheads

 Reason for acquisition of fem care
• Lack of adequate advertising budget to match the same.

• Perceived to be a small family run enterprise.

• No structured & professional approach towards

communications.

• Lack of building the brands in cost effective manner.

• Lack of social and corporate image building.

 Does this dealing between
both the Companies was right?
Fem Care Pvt Ltd
2008-2009 ---
93.7 cr

2009-2010---
119.2 cr
Dabur Pvt Ltd
2008-2009---
3.91bn

2009-2010---
5.03 bn
Consolidated Net Sales
2008-2009---
28.34 bn

2009-2010---
34.16 bn
 ACCOUNTING TREATMENT
• Equity Shares
• The investments held by Transferee Company
• Record of assets and liabilities
• Inter-company balances
• Difference between the book value of net
assets
• Authorized share capital
 STAFF, WORKMEN & EMPLOYEES

• Employees of the Transferor Company shall be

deemed to have employees of the Transferee
Company

• Terms and conditions of their employment

• Provident Fund, Gratuity Fund, Superannuation

Fund
Conclusion