UK's Stricter Scrutiny Of Spices Disrupting Supply Chains, Says Dabur Chief Executive

Heightened scrutiny of spice imports in UK markets is causing significant supply chain disruptions hitting sales, according to Dabur Chief Executive Officer Mohit Malhotra.

"As far as the international business for Badshah is concerned, we faced a pushback from regulators, especially in the UK," he told analysts in a post-earnings conference call. "While our products have not got picked up, there has been very tight scrutiny and screening of all dispatches from India due to the controversies around spices causing supply chain delays."

Dabur's spice brand Badshah, which operates in ground spices, blended spices and seasonings, has seen a decline in the international markets due to the longer processing time, which Malhotra said the company hopes to "correct going forward in the next quarter and growth should pick up".

Badshah is sold in overseas markets like the UK, US and the Middle East.

These remarks come as several countries, including the UK, have been stepping up scrutiny on all spice imports from India, after contamination allegations against two brands—MDH and Everest—sparked concerns among global food regulators. Earlier this year, Hong Kong and Singapore suspended sales of spice blends produced by MDH and Everest, saying they contained high levels of a cancer-causing substance, ethylene oxide. These brands, however, have said their products are safe for consumption.

In India, however, the brand continues to register growth, Malhotra said.

Badshah's volume growth stood at 16%, while value growth was at 15% during the June quarter. Gross margin improved by 500 basis points.

The company has also taken some price cuts in this category in response to benign commodity prices, Malhotra said.