Dabur subsidiaries sued in US, Canada over alleged cancer-causing products
What's the story
Numerous lawsuits have been filed in the United States (US) and Canada against three Dabur subsidiaries, with consumers claiming that the company's hair products caused uterine and ovarian cancer.
These companies include Dermoviva Skin Essentials Inc. ("Dermoviva"), Namaste Laboratories LLC ("Namaste"), and Dabur International Ltd. ("DINTL"), all of which are subsidiaries of Dabur India Limited.
Details
Over 5,000 cases filed: Report
Reuters reported that nearly 5,400 cases have been filed against Dermoviva, DINTL, Namaste, and other industry players.
However, the lawsuits are currently in the pleadings and early discovery stages of litigation.
"Since we're in the initial stage of litigation, any final quantum of claim amount is neither probable nor estimable," Dabur said.
"However, [Dabur] is disclosing the details...since the cumulative value of impact on account of legal defense cost is expected to breach the materiality threshold under the Listing Regulations."
Subsidiaries
Subsidiaries deny liability
Nonetheless, the subsidiaries have reportedly denied liability and have retained counsel to defend themselves in these lawsuits, claiming the allegations are based on an "unsubstantiated and incomplete" study.
Since the lawsuit, shares of the company have seen a decline. On Thursday morning, the shares fell as much as 2.5%. They were down 1.7% at Rs. 525 as of 12:06pm IST, bringing their year-to-date loss to 6.5%.
What Next?
FDA reportedly planning to ban products with formaldehyde
On Tuesday, Fox Business reported that the US Food and Drug Administration (FDA) suggested banning some hair straightening products containing formaldehyde over their links to hormone-related cancers.
In a statement, the US drug regulatory agency also said it's considering banning formaldehyde and other formaldehyde-releasing chemicals like methylene glycol.
It also highlighted that frequent breathing in formaldehyde can lead to short-term and long-term health issues.
Insights
Dabur received GST demand notice of over Rs. 320 crore
Separately, Dabur India received a Goods and Services Tax (GST) demand notice of Rs. 320.6 crore along with the applicable interest and penalty on Tuesday.
"The Company has received intimation of tax ascertained as being payable under Section 74(5) of CGST Act, 2017, wherein GST short paid/not paid amounting to Rs. 320.60 crore has been advised to be paid by the company," the exchange filing read.
Know more
Recent controversy involving India-made cough syrups
This development comes just months after India-made cough syrups were held responsible for the alleged deaths of more than 140 children in Cameroon, Uzbekistan, and Gambia since the middle of last year.
The World Health Organization (WHO) had previously flagged concerns regarding contaminated cold syrups manufactured by an Indian company after discovering diethylene and ethylene glycol levels over the permitted limit.