Dabur India Promoters Burman Buy Stake In DMI Finance
DSIJ Intelligence / 10 Jan 2013
The Burmans, who are the promoters of one of the leading Fast Moving Consumers Goods (FMCG) companies, Dabur India have bought a strategic stake in DMI Finance, according to media reports. DMI Finance is into the business of secured lending and asset reconstruction. The quantum of the deal is unknown. However, media reports are suggestive of the deal being in the range of Rs 500 to Rs 750 crore. It is necessary to note that it is the promoters of Dabur India that have bought a stake in the Delhi-based firm and not Dabur India. Hence there would be no impact on Dabur India due to this move.
The promoters of Dabur India have been interested in the financial services sector for long, evident from the fact that they have investments in companies including Aviva, Universal Sampo, Banco Espirito Santo and in the private equity space. The latest addition being DMI Finance, which is planning to foray into retail lending for the housing sector for which it has already obtained a license from the National Housing Board. With this stake buy, the Burmans would now step into the NBFC space.
Talking about an interest in financial services, if one broadly recollects, for around 10 years Dabur India too owned subsidiaries which were into this space. However the management decided to focus on its core FMCG business thus resulting in Dabur’s exit from the sector.
Overall it is clear that an acquisition made by the Burmans in DMI Finance would not have any impact on Dabur India’s performance. We continue to hold our expectation of continuing robustness in growth Dabur India’s FMCG business. The company is expected to announce its Q3FY13 results on Jan 29, 2013. We expect the company’s margins to improve due to moderation in input costs. We thus continue to remain bullish over the counter.
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