Nepal hit Q3 volumes; expect Q4 to be better: Dabur

FMCG firm Dabur today said it's third quarter volumes were pressured due to disturbances in key market Nepal.Going forward, CFO Lalit Malik said he expects the company's numbers to recover in the fourth quarter.In an interview with CNBC-TV18, Malik said Dabur is trying different alternatives to boost supply to Nepal.Below is the transcript of Lalit Malik’s interview with CNBC-TV18's Reema Tendulkar and Sonia Shenoy.Sonia: What has spooked the street a bit is this volume fall of 2.5 percent that you have seen. What is the expectation going ahead for the rest of the fiscal and where are you seeing the highest amount of pressure come in?A: First of all quarter three we have seen an impact of disruption happening in Nepal where our supplies got impacted and as a result of it we have seen an impact both on the topline as well as on the bottom-line.The second factor is on the healthcare sector due to delayed winter we have some impact arising on topline and also on the bottom-line and we have seen overall slowdown in the economy. So, putting it together we have seen quarter three with a growth of 2.4 percent on a consolidated level but if you look at going forward we have taken a lot of litigation plans in order to get the supplies from our other units in Sri Lanka as well as in India and through third party.So, we do expect to mitigate quarter three impact in a major way going forward in quarter four. Though we do not give the future numbers but we can say that we do expect our quarter four to be somewhere in the high single digit value growth that we expect going forward in quarter four.Reema: High single digit value growth in Q4. Will you be able to quantify what was the impact on account of Nepal because it is seen as a bit of a one off and it won't be there next time and secondly are those border issues that you faced resolved or will it still be there in Q4?A: Number one, the impact in quarter three has been on the top line of around Rs 108-109 crore and on the bottom-line it is around Rs 39-40 crore. So, that is the impact that which we certainly think is a one off but going forward also the Nepal issue has not been completely resolved. It is a more ecopolitical issue.So, what we have done is we have tried different alternatives, different routes to get the supplies and we have also as I said earlier strengthened our other supply and manufacturing plants in Sri Lanka as well as in India and in the short run we are also tying up with third party for the supplies.So, as a result of it we do expect for quarter four to mitigate the impact that we had in quarter three though there may still be some impact left in quarter four but we will have to wait and see how the Nepal position gets normalised going forward.Sonia: There is a lot of competitive intensity in the domestic market with the onset of Patanjali products as well. In your toothpaste segment and in your shampoo portfolio for that matter what kind of pressures are you facing. Is Dabur Red seeing a lot of pressure from Dant Kanti for example and will you be able to maintain this 15.5 percent growth that you have seen in the toothpaste segment?A: As far as our toothpaste segment is concerned it is growing very well on account of our Red toothpaste as well as on account of Meswak and we do expect the growth to continue and we do not see any material impact arising in the toothpaste category on account of the competition as such. Though in Babul there has been some impact that we have seen but we have seen continuous growth happening in the Red toothpaste as well as in Meswak brand. We do expect to continue with the growth continue with the growth going forward in the near term.Reema: What are you likely to end the year with in terms of volume growth and what are the early signs of FY17 volume growth? You started off the year by telling us we should expect a volume growth of 6-10 percent this year but given the issues it is quite likely that you may not be able to meet it. So, could you help us with for FY16 and for FY17 what the volume growth projections are?A: If we consider for FY16 I would say that we will still have to wait and watch for quarter four how it will pan out though our endeavour has always been to be within the range of 6-10 but I agree that we will be short of that when we close for FY16. As far as FY17 is concerned we do expect the demand pressure to continue for quarter one and then going forward it will all depend on the fiscal policies and on the monsoon which will determine the growth on the overall economic parameters. So, it is too early for us to comment with regard for volume growth for FY17.