Indian FMCG and Ayurvedic products maker Dabur said on Wednesday that its subsidiaries were among companies sued in the United States and Canada by customers alleging that using hair relaxer products had caused ovarian, uterine cancer, and other health issues. The company’s subsidiaries Namaste Laboratories LLC, Dermoviva Skin Essentials Inc, and Dabur International Ltd are facing lawsuits, the ayurvedic major said in a late-night exchange filing. “Namaste, Dermoviva, and DINTL deny liability and have retained counsel to defend themselves against these allegations,” the company said in the filing, adding that the cases are currently in the pleadings and early discovery phases of litigation where parties exchange requests for information and documents.
The filing consolidated the cases against the companies into multidistrict litigation before a federal court in Illinois. It added that around 5,400 cases against various companies, including those of the company known for its Vatika shampoo and Honitus cough syrup brands, have been consolidated as part of the MDL. Dabur India, which sells its products in the United States and Canada, said it could not determine the financial implication of any settlement or verdict outcome at this stage. However, the company said its defense costs will surpass the materiality threshold shortly.
Besides the lawsuits, Dabur received a GST demand notice of Rs 320.6 crore from the Directorate General of Goods and Services Tax Intelligence Gurugram Zone Zonal Unit. The company also said that its subsidiaries in the U.S. and Canada are undergoing audits by the regulatory authorities.
In a separate filing, Dabur said the lawsuit filed by plaintiff SLT Foods, a successor in interest to L.T. Overseas, alleges that the defendants breached their contractual agreement by failing to sell and distribute its products in New Jersey as agreed upon under a letter of agreement (LOA) and that the defendants failed to compensate L.T. Overseas for stocking and inventory losses incurred due to alleged shortage of the product. It also claims that the defendants failed to pay for damages and other costs, including those relating to shipping and handling of the product. The complaint seeks unspecified damages for breach of contract and “general equitable relief.” The company, which sells its products in the U.S. under several brand names, has denied all claims. It also argues that it has specific jurisdiction over Dabur International USA and Dabur International Dubai because they conduct business in New Jersey and are incorporated in the state. The case is set for trial on April 9, 2020. The company’s shares fell as much as 3.6% on Thursday. The stock is on its sixth consecutive loss. This is the first time that Dabur’s shares have fallen more than 5% in a single session this year.
