‘We expect rural recovery to be more enduring in future’

livemint.com:

Dabur India Ltd will continue to expand its portfolio across price points and build on its power brands, said chief executive Mohit Malhotra in an interview. The maker of Vatika shampoo and Hajmola candy reported an 8% rise in rural volumes in the June quarter, far more than the market’s 4% growth. Rural demand has been growing for Dabur, driven by the launch of bridge packs, an expanding distribution network and an overall demand uptick, Malhotra said.

Edited excerpts. We talk about rural so much because the contribution of Dabur’s business coming out of rural India is relatively higher compared to peers—they will be at 30-35%, we are in the 45-50% range. Rural is good for us.

We have put up a lot of infrastructure—sub-stockists and rural yoddhas, etc. In the last two quarters, we’ve seen rural growth picking up. Volume is the barometer of our assessment of rural business, and volume has now turned from red to black.

As India’s inflation goes down—last year, around the same time, inflation in Dabur’s raw material basket was in double-digits, now, we see inflation in the range of 2-2.5%. As inflation is ebbing, the cost of products is coming down for the consumer, and there is more money in the hands of the consumer. Therefore, spending is going up.

Some macro factors behind a good rural performance were a good crop (rabi), but the harvest was impacted by unseasonal rains. Going forward, even the sowing of rice, which requires a lot of rain, has been good. MSP, or minimum support price, has gone up since it is an election year.

Wage rates under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) have gone up. However, one sign that is not so great is MNREGS enrolment is up. Ideally, infrastructure