GAURAV BURMAN
New Delhi: Reinvesting dividends from Dabur over 30 years has created a pool of non-core assets for its promoters that are equally valuable, according to the Burman family scion, Gaurav Burman.
The Burman family control Dabur with two-thirds of the company's shares.
"We have been lucky, Dabur achieved excellent growth over the last 30 years, and we used our dividend income to invest in a pool of assets, which means we now have multiple businesses... and if you look at it in its entirety, the value we have created in the last 30 years is probably equivalent to Dabur itself," said Gaurav Burman, head of Burman Family Holdings. Burman is also a director of Dabur International.
Burman did not ascribe a value to the non-core investment portfolio but said the book value of those investments could match Dabur's book value of ₹ 11,000 crore or $1.2 billion. Since some of the investments are unlisted, their value is not comparable with Dabur's market capitalisation.
"Right from the outset we said we would plough back 50% of our net profits via dividends every year and why did we do that? We did that because we wanted every family member to have visibility on the income and you would know within a predictable range how much you will receive in dividend. We never wanted any family member to have to sell Dabur shares for liquidity," Burman said, while speaking to ET via video conference from his office in London.
The family invested the dividend income over the years to create what is now formally a family office.
"We decided that we would invest that money as one group and we set up what now people call a family office; at the time what we called an investment arm and then we took a large proportion of our dividend income and invested that," he said.
He listed several of the families' investments over the years such as its early joint ventures with ABN Amro, Fidelity, Ispirito Santo, Aviva and more recent ones with Yum Brands that run the Taco Bell franchise in India and Universal Sompo Insurance that have helped build economic value through a non-core investment programme that he personally oversees. The Burmans have exited some of the above ventures and are co-owners of IPL team Punjab Kings.
Burman recounted that the decision to have a family constitution way back in the mid 1990's at the time of Dabur's initial public offering meant that no family members could have executive roles in the company. They would appoint a family member as a non-executive chairman of Dabur and that would rotate every five years. He said the family constitution had yielded positive results.
"Our situation was that we were very close as a family, so it worked very well for us. Also, we had a very strong patriarch at the time, and he willed through these changes (family constitution)."
He said multiple members of the Dabur clan now live overseas but they remain keenly invested in India. "I try to spend at least 10 days every month in Delhi," he said.
The Burman family control Dabur with two-thirds of the company's shares.
"We have been lucky, Dabur achieved excellent growth over the last 30 years, and we used our dividend income to invest in a pool of assets, which means we now have multiple businesses... and if you look at it in its entirety, the value we have created in the last 30 years is probably equivalent to Dabur itself," said Gaurav Burman, head of Burman Family Holdings. Burman is also a director of Dabur International.
Burman did not ascribe a value to the non-core investment portfolio but said the book value of those investments could match Dabur's book value of ₹ 11,000 crore or $1.2 billion. Since some of the investments are unlisted, their value is not comparable with Dabur's market capitalisation.
"Right from the outset we said we would plough back 50% of our net profits via dividends every year and why did we do that? We did that because we wanted every family member to have visibility on the income and you would know within a predictable range how much you will receive in dividend. We never wanted any family member to have to sell Dabur shares for liquidity," Burman said, while speaking to ET via video conference from his office in London.
The family invested the dividend income over the years to create what is now formally a family office.
"We decided that we would invest that money as one group and we set up what now people call a family office; at the time what we called an investment arm and then we took a large proportion of our dividend income and invested that," he said.
He listed several of the families' investments over the years such as its early joint ventures with ABN Amro, Fidelity, Ispirito Santo, Aviva and more recent ones with Yum Brands that run the Taco Bell franchise in India and Universal Sompo Insurance that have helped build economic value through a non-core investment programme that he personally oversees. The Burmans have exited some of the above ventures and are co-owners of IPL team Punjab Kings.
Burman recounted that the decision to have a family constitution way back in the mid 1990's at the time of Dabur's initial public offering meant that no family members could have executive roles in the company. They would appoint a family member as a non-executive chairman of Dabur and that would rotate every five years. He said the family constitution had yielded positive results.
"Our situation was that we were very close as a family, so it worked very well for us. Also, we had a very strong patriarch at the time, and he willed through these changes (family constitution)."
He said multiple members of the Dabur clan now live overseas but they remain keenly invested in India. "I try to spend at least 10 days every month in Delhi," he said.
