On Wednesday, Dabur India disclosed that its subsidiaries are facing lawsuits from customers in the United States and Canada who claim that the usage of Dabur India’s hair relaxer products has resulted in health problems, including ovarian cancer and uterine cancer.
Among the subsidiaries facing these lawsuits are Namaste Laboratories LLC (“Namaste”), Dermoviva Skin Essentials Inc. (“Dermoviva”), and Dabur International Ltd. (“DINTL”), all of which operate under the umbrella of Dabur India Limited.
According to a filing made with the stock exchange, the lawsuits are currently in the initial stages of litigation, specifically within the pleadings and early discovery phases. Approximately 5,400 cases have been consolidated into a multidistrict litigation (MDL), with Namaste, Dermoviva, and DINTL named as defendants, alongside some other companies in the same industry.
Nevertheless, these subsidiaries firmly reject any responsibility and have engaged legal representation to protect their interests in these legal proceedings. The filing asserts that the allegations stem from an inadequately supported and incomplete study.
Drop in Dabur stocks as lawsuit continues
Dabur India Ltd is facing a decline in its stock value due to the receipt of communication from the Goods and Services Tax (GST) Intelligence regarding a tax amount that is deemed payable by the company.
Dabur is currently required to pay Rs 320.6 crore, as per a regulatory disclosure made by the company on BSE. The filing specified that Dabur is currently evaluating the claim and intends to contest it.
In its notification to Indian stock market exchanges about this tax-related communication, Dabur India stated that it is currently assessing the intimation and considering the subsequent actions required in this regard.
As of 1:55 pm, Dabur’s shares had declined by 2.34 percent to reach Rs 521.50, marking a year-to-date decrease of 7.13 percent.
Dabur has clarified its position, emphasizing that these cases are presently in their initial stages of legal proceedings, primarily during the pleading and early discovery phases.
Allegations of Health Issues Lead to Massive Litigation-
According to the lawsuit, a group of consumers within the hair relaxer product industry has made allegations against specific industry players or defendants. These allegations revolve around the sale and manufacturing of hair relaxer products containing certain chemicals, which, according to these consumers, have led to health issues such as ovarian cancer, uterine cancer, and other related conditions.
These cases have been brought before both federal and state courts in the United States and Canada. The federal cases have been consolidated into what is known as a Multi-District Litigation (MDL) proceeding.
The Multi-District Litigation (MDL) is presently under the jurisdiction of the United States District Court for the Northern District of Illinois. It encompasses roughly 5,400 cases in which Namaste, Dermoviva, and DINTL, in addition to a select group of other industry entities, are named as defendants.
Dabur India, known for its products like Vatika Shampoo and Honitus cough syrup, has stated that it is currently unable to estimate the financial consequences stemming from the potential settlement or verdict outcomes. However, it anticipates that the defense expenses will soon surpass a significant threshold.
