Dabur shares fall as foreign arms face cases in U.S., Canada over cancer allegations

Shares of Dabur India extended losing streak for the second straight session on Thursday, falling as much as 3.6% during the same period amid a couple of negative developments. On Monday, the FMCG major received a GST demand notice of ₹320.6 crore from the Directorate General of Good and Services Tax Intelligence, Gurugram Zonal Unit. Besides, litigation cases have been filed against its three foreign subsidiaries in federal and state courts in the U.S. and Canada.

The complaints have been filed against three Dabur India subsidiaries -- Namaste Laboratories LLC, Dermoviva Skin Essentials Inc., and Dabur International Ltd -- alleging that the use of certain hair relaxer products has caused ovarian cancer, uterine cancer, and other health issues. Currently, the cases are in the pleadings and early discovery phases of litigation, so final quantum of claim amount due to settlement or verdict outcome cannot be ascertained.

Weighed down by the development, Dabur India shares declined as much as 2.56% to hit an intraday low of ₹520.45. The FMCG heavyweight opened lower at ₹524.70, down 1.76% against ₹524.70 on the BSE.

At the time of reporting, shares of Dabur were trading 1.2% lower at ₹527.85, while the market capitalisation stood at ₹93,537 crore. On the volume front, 0.65 lakh shares changed hands over the counter as compared to the two-week average of 0.34 lakh stocks.

Dabur India shares touched a 52-week high of ₹610.40 on December 17, 2022, and a 52-week low of ₹504 on May 5, 2023. The stock has given flat returns in the last one year, while it lost over 6% in the calendar year 2023. The counter rose over 1% in six months, whereas it lost nearly 6% in a month.

In a late night exchange filing on Wednesday, Dabur, which sells Vatika Health Shampoo in India, said cases have been filed against its three foreign subsidiaries in both federal and state courts in the United States and in Canada. Around 5,400 cases have been filed against several companies including its subsidiaries, consolidating as a Multi-District Litigation (MDL), before the United States District Court for the Northern District of Illinois by Plaintiffs- mass-tort litigation in the U.S. consisting of multiple parties.

“Certain consumers in the hair relaxer product industry have alleged that some industry players / defendants sold and/or manufactured hair relaxer products that contain certain chemicals and that the use of these hair relaxer product has caused ovarian cancer, uterine cancer and other health issues in the users,” Dabur says in the exchange filing.

As per the company, Namaste, Dermoviva and DINTL have denied liability and retained counsel to defend them in these lawsuits, saying that these “allegations are based on unsubstantiated and incomplete study”.

“Currently, the cases are in the pleadings and early discovery phases of litigation, which means the parties are challenging the adequacy of the plaintiffs’ complaints and, in some cases, exchanging requests for information and documents. There are various motions pending as well,” it adds.

The company further states that financial implication due to settlement or verdict outcome cannot be determined at this stage of the litigation. However, the defense costs for the litigation are expected to breach the materiality threshold, in the near future.

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