Two Dabur India's subsidiaries get clearance in US litigation, Namaste Labs to face charges

FMCG major Dabur's two foreign subsidiaries, Dabur International and Dermoviva Skin Essentials, have been removed as a defendant in multiple lawsuits filed in a US court over charges that the products caused ovarian cancer, uterine cancer and other related health issues among users. However, its third international entity, Namaste Laboratories LLC, would continue to face charges before the US District Court for the Northern District of Illinois, a filing by the FMCG major on November 15 stated.

The dismissal was based on the lack of personal jurisdiction, as neither Dabur nor Dermoviva had any involvement in manufacturing, marketing, distributing, or selling hair relaxer products in the US.

Whereas, Namaste Laboratories LLC will be facing 5,400 cases in the federal and state courts in the US, alongside other industry players such as L'Oreal, SoftSheen/Carson, Luster Products Inc, Avion Industries, Inc., PDC Brands (Parfums de Coeur, Ltd), and Revlon, among others.

Dabur has clarified that the lawsuit doesn't pertain to any Dabur brand or product, emphasising that Dabur India Ltd is not a party to these suits. The sale of hair relaxer products by Namaste constitutes less than 1 per cent of the total consolidated turnover of Dabur India Ltd.

"We wish to inform that Dabur and Dermoviva have been dismissed as defendants in federal cases, which were consolidated as a Multi-District Litigation, before the US District Court for the Northern District of Illinois, for lack of personal jurisdiction as neither Dabur nor Dermoviva manufactured, marketed, distributed or sold hair relaxer products in the US," said Dabur India on November 15. Hence, now only Namaste remains as a defendant in these cases along with many other industry players such as L'Oreal, SoftSheen/Carson, Luster Products Inc, Avlon Industries, Inc. PDC Brands (Parfums de Coeur, Ltd), Revlon etc," Dabur added.

The allegations are based on an unsubstantiated and incomplete study published in the journal of the National Institute of Health, a study that was already deemed redundant by the Cosmetic, Toiletry & Perfumery Association in the European Union.

Namaste has denied any liability and has retained counsel to defend against the lawsuits. Additionally, Namaste has product liability insurance cover in place to address potential damages, claims, and defense costs arising from the litigation. The company remains steadfast in its position that these lawsuits lack legal merit.

Dabur further said: "We would like to reiterate that Namaste is confident in the safety of its products and believes that these lawsuits have no legal merits hence denies any liability and has retained counsel to defend it in these lawsuits as these allegations are based on unsubstantiated and incomplete study published in the journal of the National Institute of Health, which study has already been held to be redundant by the Cosmetic, Toiletry & Perfumery Association in the European Union."

According to its latest report, Dabur India has 27 subsidiary companies, which contributed to 26.60 per cent of the consolidated revenue from operations in FY 2022-23. Its revenue from international business was at Rs 2,867 crore, recording a growth of 11.1 per cent in constant currency terms in FY23.

Dabur India Q2 results

Dabur India Ltd reported a consolidated net profit of Rs 507.04 crore for Q2 FY24, registering a growth of 3.29 per cent from Rs 490.86 crore in the year-ago quarter.

The company's profit was 11.04 per cent higher from Rs 456.61 crore in the previous quarter.

Revenue came in at Rs 3,203.84 crore, up 7.27 per cent from Rs 2,986.49 crore in the year-ago quarter, on the back of steady performance of both the Home & Personal care and HealthCare businesses. Sequentially, the revenue increased 2.34 percent.

Earnings before interest, tax, depreciation and amortization (EBIDTA) were at Rs 661 crore, growing by 10 per cent. The EBIDTA margin was at 20.6 percent compared to 20.1 per cent in the year ago period.

Shares of Dabur India were trading at Rs 532.95, up by 1.33 per cent at 11.15 AM.

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