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Bidding for Fortis, we are putting our money where our mouth is: Mohit Burman, Dabur

In an interview with ET Now, Mohit Burman, Director, Dabur, says once the Munjal-Barman combine puts in the first round of funding, they want two board seats after which they will have an eye in the company. The only difference will be that we would have already put our money where our mouth is.

Edited excerpts:

Given that it is an election year, pro-growth stance and sops from the government are a sure shot recipe for strong consumer rural demand. Do you see rural demand outpace the urban demand in the years to come?

Yes, I believe that this year will be a good year for all the FMCG companies. We have had a few hiccups last year with demonetisation and GST but rural demand is already showing an uptick and with expectations of a good monsoon, I believe it is going to be a good year for all the FMCG companies.

Do you think that rural demand can continue to outperform urban demand as in the last few quarters?

Yes. As I said, last year was a tough year for all of us but it was across the whole sector and the coming quarter will see an uptrend in all FMCG companies.

Do you think that your interest in Fortis is also an extension of the consumption story? Is that where you have thought of getting into, taking advantage of how the consumption side of this business is likely to play out?

Historically, this is a sector that we have been inclined towards. We had the largest oncology company in India which we sold a few years ago called Dabur Pharma and we have a number of ventures in the healthcare space. It is more than just a consumption story. We believe that this sector has a lot of potential and therefore we are making this bid with the Munjals.

At this juncture, the board has accepted the bid and is right now mulling with the help of an advisory panel the right suitor for this asset. What is your own assessment of how your bid has been structured and how confident are you that you will get this business?

If you look at our bid, it is a very clear structure. We have said that we are willing to put money into the company as we believe that the business needs money as soon as possible. Ours is a very clear and a clean structure, where we have said that we will put in Rs 750 crores on day one without due diligence, as soon as we get shareholder approval and the rest will come in as soon as we have the warrant. The rest will be on a warrant structure which will come in within the next 18 months as and when needed. So, it will be a 750 plus another 750.

Do not you think that other suitors have an edge over your bid, in terms of the technical know-how that they come to the table with, for example TPG Manipal?

The structure of the TPG Manipal bid is convoluted which will mean that the hospital business will have to be demerged from Fortis and they will acquire that, which could take anything from 6 to 12 months. Is the business going to survive within that time? At the end of the day, it is a service oriented business, so whether they have a technical expertise or not, the business will have difficulty in surviving with the structure they proposed. We are proposing a structure where we will put in money straight away into the business and in terms of the management of the company, we will remain intact. The business has been doing well so far. I do not believe that someone who has hospitals already can actually add more value than anyone else.

Why have not you tied up the private equity player? Why is that the Munjals and you have come together for this bid but have not knocked at private equity house to partner with you here because while provide financial expertise, maybe they can come in with more strategic angle to the deal?

These are still early stages. We have not tied up with a PE because at the moment, we do not need the money. Both of us have enough capital to make good a bid. If and when our bid is accepted, then we will look at tying with up operators as well as PE in case they add value to the whole business.

You said that you have not done due diligence as yet and that you have just put a biding offer. When would the due diligence happen and are you not concerned about there being some skeletons in the closet?

This is a public asset, it is a listed company and there is enough information that has come out on business already. Ideally, we would have liked to do as much due diligence as is possible for us to make our bid certain but the point is that the business does not have the time, bidders do not have the time to do it. The business needs money straight away. So, once we put in our first round of funding when we put in the money, we will want two board seats after which we will have eye in the company. The only difference will be that we would have already put our money where our mouth is.

Original Article

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