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Dabur sets demerger ball rolling

New Delhi, May 16: Dabur India, the Rs 1,371-crore foods-to-medicines conglomerate, today approved the plan to demerge its pharmaceutical and FMCG businesses and sweetened the offer to shareholders with a 140 per cent dividend for 2002-03 — its highest payout till date.

The 10-member board headed by chairman V. C. Burman decided on a 1:2 swap ratio for the demerger of the pharmaceuticals and FMCG businesses. The swap ratio means that shareholders will get one equity share of Rs 1 in Dabur Pharma every two shares held in Dabur India Ltd. Shareholders will now hold shares in Dabur Pharma, in addition to their existing shares in Dabur India.

The company will file an application before the Delhi high court on Monday for a formal clearance of the hiveoff plan. Post-demerger, the issued share capital of Dabur India will remain at Rs 28.58 crore, while that of Dabur Pharma Limited will be Rs 14.29 crore.

The board decided to issue additional shares primarily because Dabur has a small equity base compared with its net worth, and a further cut would affect its liquidity on bourses.

“We will list the demerged pharmaceutical company. The additional shares will provide enough liquidity to shareholders who have interest in Dabur’s pharmaceutical business,” said Dabur India group director (corporate affairs) P. D. Narang.

The board decided to pay a 90 per cent final dividend, taking the total pay-out this year to 140 per cent. The final dividend will be subject to the approval of shareholders. A 50 per cent dividend was announced in November 2002. The total outgo on dividend this year increased 51 per cent to Rs 43 crore from Rs 16 crore last year. The reward failed to lift the firm’s share, which closed at Rs 41.15 on Dalal Street, down from Rs 42.50 on Thursday.

The board, which met today to consider the audited financial results of the company for 2002-03, announced that Dabur India (consolidated), which includes results of the FMCG business, pharmaceutical business and relevant subsidiaries, has posted a growth of 37 per cent in net profit to Rs 91 crore on a turnover of Rs 1371 crore, up 7 per cent over last year.

Dabur India has recorded a growth of 6 per cent in sales turnover from Rs 1163 crore to Rs 1232 crore in 2002-03. Net profit increased 32 per cent from Rs 64 crore to Rs 85 crore.

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