Strategic Manageme nt

Submitted to: Prof Amar KJR Nayak Submitted by: Sourabh Choudhary (U108109) Shekhar Mandal (U108110) Sujit Kumar Sahoo (U108111) Kar (U108112) Sweta Sah (U108113) (U108114) Thendral I (U108115) Satpathy (U108116) Vibhav Kumar (U108117) Krishnan Mahajan (U108118)

Dabur India Ltd.
Subhranshu Swarup Kumar Tanya Gupta Uday Bhanu Vikrant

Table of Contents

Introduction............................................................................................................3 Phase –I.................................................................................................................. 4 Phase-II (1998-2003)..............................................................................................5 3.1 Phase#2 –IT perspective...............................................................................7 3.2 Phase#2 –Marketing perspective..................................................................7 3.3 Phase#2 –HR perspective.............................................................................8 3.4 Phase#2 – Finance perspective....................................................................8 Phase III (2003 onwards)........................................................................................9 4.1 Phase#3 –Financial Perspective..................................................................10 4.1.1 VISION 2010: ANALYSIS........................................................................13 4.2 Phase#3–Marketing Perspective.................................................................14 4.2.1 Dabur’s Rebranding Exercise................................................................18 4.3 Phase#3 –Information Technology Perspective..........................................19 4.4 Phase#3 –HR Perspective...........................................................................20 Operations Strategy of Dabur India Limited.........................................................26 Manufacturing...................................................................................................26 Supply Chain Initiatives at Dabur India Limited................................................28 Procurement..................................................................................................... 31 Quality.............................................................................................................. 31 Research and Development..............................................................................32 Vendor Management 3......................................................................................33 Corporate Governance.........................................................................................33 Dabur-Sustainability ............................................................................................34 Porter’s Five Forces Model for Dabur...................................................................36 EXHIBITS.............................................................................................................. 38 REFERENCES........................................................................................................ 44 2

Dabur India Limited (DIL) is the fourth largest FMCG Company in India with business interests in Healthcare, Personal care and Food products. It has revenue of about US$600 Million (over Rs 2834 Crore) & Market Capitalization of over US$2.3 Billion. Dabur India is a 126 years old company and is the world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic products. Dabur since its inception has focused on manufacturing and selling Ayurvedic products targeted at the mass consumer segment. There are number of personal care products, Ayurvedic tonics and oral care products which it launched between 1940 and 1970 have become leading brands today. Dabur’s top nine brands had 65% or more market share in their respective product categories. These include the health tonic Chyawanprash, Hajmola digestive tablets and candy, digestive Pudin Hara, Dabur Lal Dant Manjan and Dabur Amla hair oil. Dabur manufactures over 450 products, covering a wide range in health and personal care. Dabur India has 14 manufacturing locations—eight in India and six in contries like Nepal, Nepal Egypt Pvt UK etc.It has three Subsidiary Egypt Group companies - Dabur Care International, Fem Care Pharma and newu and 8 step down subsidiaries: Dabur Ltd (Nepal), Dabur Ltd (Egypt), Asian Consumer (Bangladesh), Asian Consumer Care (Pakistan), African Consumer Care (Nigeria), Naturelle LLC (Ras Al Khaimah-UAE), Weikfield International (UAE) and Jaquline Inc. (USA). It has wide and deep market penetration with 50 C&F agents, more than 5000 distributors and over2.8 million retail outlets all over India. Dabur India limited is divided into three SBU’s. 1) Consumer Care Division: This SBU caters to the consumer needs pertaining to Personal Care, Health Care, Home Care & Foods. The major Brands under this SBU are Dabur, Vatika, Hajmola, Real and Fem. 2) Consumer Health Divison: This SBU pertains to the Ayurvedic medicines and ayurvedic OTC. Major categories in traditional formulations include Asav Arishtas, Ras Rasayanas, Churnas, Medicated Oils. 3) International Business Division: It caters to the health and personal care needs of international consumers in middle east, north and west Africa, EU 3

and US. This division has high level of localization of manufacturing and sales & marketing.

Phase –I
Dabur was set up by in 1884 by Dr. S K Burman in West Bengal as a proprietary firm for manufacturing of ayurvedic drugs .Dabur is an acronym of the name DAktar BURrman, its founder. In the year 1896 a small manufacturing plant was set up near Calcutta for mass production of Ayurvedic Drugs and Chemicals. Dabur started its operations in 1896 with the manufacture of drug called Plagin to counter the wide spread plague at that time. In the 1900’s next generation of Burman’s took the firm further and they believed that Ayurveda was the mantra which can be sustainable and can meet the needs of low income countrymen. As a result a research laboratory was formed in 1919, followed by manufacturing units at Kolkata (then Calcutta) and Bihar. In 1936, Dabur India Pvt Ltd. was incorporated which took over the business from the proprietary firm. Dabur expanded its distribution network in the next two decades. It launched Dabur Amla Hair Oil in 1940 and Dabur Chyawanprash in 1949. In 1969 there was unrest and business uncertainity in calcutta which led the family to expand its manufacturing operations in Delhi. The next product came out in 1970 in the form of Dabur Lal Dant Manjan followed by the Hajmola Tablet in 1976. Through the 80s and 90s Dabur performed well but was established as a brand for the elderly because of its image of an Ayurvedic Company Although later in 1989 it launched Hajmola candy which was targeted towards the children segment. In 1986, Dabur became a public limited company through a reverse merger with Vidogum Ltd. and was renamed as Dabur India Limited. A reverse merger is acquisition of a public company by a private company which allows the private company to bypass the lengthy and complex process of going public. In the following year to cater to the global market’s needs it set up a facility at Noida Export processing Zone. In 1991,Dabur Overseas Ltd. was set up in Cayman Islands to cater to the needs of overseas investment and this later funded the set up of Dabur Egypt Ltd., in Cairo, which was set to manufacture personal care and food products. In 1992, Dabur entered into 49:51 joint venture with the 4

3 Million. Dabur hired the leading management consulting firm McKinsey & Co. at five per cent.e. In 1997. The reasons for tapping the equity markets were: • Additional funds were required to expand production and set up new factories • Launch diversified range of products and compete against FMCG MNC’s In 1994. Dabur launched Vatika and hoped to change the perception in the consumers. Post-liberalization. The issue was oversubscribed 21 times and total amount raised was Rs 541. for mapping out a comprehensive restructuring plan for its varied businesses and strengthen its competitive position.5 million. In April 1997.were slipping due to product life cycle issues. Dabur realized that competition will be picking up very soon. Also Dabur entered into a biscuit joint venture named Excelcia Foods with Nestle. with the Indian economy opening up and foreign players entering Indian markets. Foods division was carved out which consisted of Real Fruit Juice and Homemade cooking pastas. McKinsey primarily offered the following advices: 1) To improve profitability. ayurveda and health care products 5 . (GCI) by investing an amount of INR 92. Phase-II (1998-2003) In 1997. Also in the same year the company launched a unique initiative called STARS (Strive to Achieve Record Success) to achieve accelerated growth in the future years. and was successful to a certain extent too. Dabur reorganised its business in three separate divisions of Sales. Another of its flagship brand ‘Dabur Amla Hair Oil’ was also growing at a lessthan-satisfactory rate.In 1995. Marketing and Operations. stay focused on core competencies i.Spanish confectionery major Agrolimen group under the name General De Confeteria India Ltd. In 1993 Dabur decided to go to public and came up with an initial public offer in 1994 with Rs 10 face value share at a premium of Rs 85. Dabur had started facing issues as two out of its four flagship brands Chyawanprash and Hajmola .

and started following its advice religiously. It off loaded its entire 49 per cent stake in the confectionery joint venture General De Confiterria to its Spanish partner Agrolimen for Rs 35 crore. the joint venture has not worked out according to the plan as only a handful of products saw the light of the day.Boomer bubble gum and soft-filled candies. However. where it held 90 per cent stake. Dabur roped in Accenture to define clear roles and responsibilities of its board of directors and the chief executive officer to prevent any overlap. As per its 6 . handing over control to in favour of Nestle SA to become a minority partner. The finance arm sold its retail business to Birla Global Finance in 1999. Family Council was constituted for formalizing the promoter family’s role in managing the business interests encompassing all group companies. The decision was taken in response to the changing dynamics of business and to inculcate a spirit of corporate governance within Dabur India. It also discontinued its Samara line of herbal cosmetics that it introduced in early 1997. In 2001. Board of Directors and Family Council were defined and formalized. Dabur again roped in Accenture to study its sales and distribution system. Bonkers and Donaldo. The company also reduced its exposure to Dabur Finance. The Rs 100 crore GCI product portfolio comprised of two categories -. The Spanish partner was roped in considering the highly intensive technology nature of the confectionery market. While setting up the confectionary jointventure GCI in 1994. the Burman family has receded from the day-to-day operations of the Company and has strength of 4 members in Board of Directors. The roles of Management Committee. Dabur paid a fee of Rs 10 crore to McKinsey & Co. DIL had estimated that the booming candy and bubble gum market would provide it with ample opportunity to turn the venture into a profit maker. Dabur sold its 20 per cent stake in Excelcia Foods Ltd for Rs 10. Dabur India limited also scaled down its stake in Excelsia Foods to 40 per cent. In 2002. In 1999.6 crores. Post-1998.2) Advised Burman family to lay off from the day-to-day operations and leave the company in the hands of professionals. The Burman family handed over management of the company to a professional CEO and limited their role to strategic inputs at the Board level in 1998.

recommendations. The company concentrated on differentiating the brand in all aspects. Confining itself to the ayurvedic platform would have been restrictive as the domain could only be stretched to a certain level and not beyond. This was a good move to cut down the operational costs. Dabur – a 114 year old firm .showed a new path to the industry by successfully outsourcing the complete IT infrastructure. Dabur started to utilize IT. Dabur leveraged information technology to drive supply chain efficiencies and had invested to the tune of Rs.1 Phase#2 –IT perspective In Dabur knowledge and technology were the key resources which had helped the company to achieve higher levels of excellence and efficiency. Anmol. during this phase Dabur wanted to reposition its image of an Ayurvedic company to a major FMCG player with diversified product categories. reduce redundancies and errors and increase efficiency.Baan and Mfg Pro in 2001. 12 crores by 2004 for the IT backbone of the organisation. all contributing to increase in the bottom-line. Not only would it have helped Dabur to focus but also it would help it to aggregate its media spend. Dabur tried to reposition itself as a ‘herbal specialist’ rather than flogging its ayurvedic lineage alone. DIL also decided to have five main brands — Dabur. Vatika. Dabur restructured its Pharmaceutical business and separated it from its FMCG business. Many other companies followed the suit thereafter. and every product was to be migrated to one of these. right from positioning to packaging. The company started to work on two ERP systems . Real and Hajmola. 3. Dabur concentrated n differentiated product offering and meticulous brand building initiatives. Towards this overall goal of technology-driven performance. in production and distribution respectively. This helped in integrating a vast distribution system spread all over India and across the world. 3.2 Phase#2 –Marketing perspective As discussed earlier. It also helped to cut down the costs and improve profitability. The biggest example is Dabur Vatika which it positioned as value-added hair oil that contained pure coconut oil 7 .

4 Phase#2 – Finance perspective Dabur India Limited has benefitted from the advice of Mckinsey in the long run. but also on the importance of the assignment of the employee.) In the year 2001 the company began to feel the need to put its HR systems in place to ensure that organizational and individual goals were aligned. The operating margin has also approximately doubled from 9.74% in Mar-09. For example.83% in 1999 to 18. In 1998. purchase. Dabur has an ESOP scheme that is democratic by industry standards in the sense that it is not based only on seniority. Employee Referral Programme: Existing employees could refer candidates they thought to be suitable. But instead of abandoning its experiment.enriched with natural ingredients such as Henna. It sought to put a cap on business practices that were out of character with Dabur‘s values.33% in 2009. has since followed a hands-off policy.This is primarily due to implementation of ERP in 1999 which allowed it to integrate the internal functions such as supply chain. Ninu Khanna left by 2001. The prime impact of this was on the cost incurred as this reduced the working capital 8 . However.64% in Mar-99 to 14. 3. an old Dabur hand.3 Phase#2 –HR perspective DABUR’S willingness to persevere with professionals. • Employee empowerment: The idea was to make employees feel like stakeholders. six of the 10 board members do not belong to the promoter family. the board plumped for Sunil Duggal. in 2002 and the family. The Profitability of Dabur India Limited increased in the long run with Net profit margin rising from 4. as had been widely expected. That year a whole host of professionals had also been inducted at senior positions. Incentives would be provided to such employees that not only provides employee with monetary benefits but also builds a relationship based on trust and reliability. • • 3. which still controls 75 per cent of the company’s equity. (Currently. Ninu Khanna who had been recruited from P&G to lead the company. is quite unique in itself. Preserving the Dabur values: A whistleblower policy introduced. Amla and lemon against the market leader Marico’s Coconut Oil. It began institutionalizing empowerment in the workplace. the promoters (the Burman family) first experimented with a non-family CEO. stores and manufacturing. and not family members.

while outsourcing non-core functions to trusted third-party providers. Accenture advised Dabur to focus on the following key areas:  Competing on core competencies. there has been a consistent growth in both operating margin and net profit margin.  Streamlining processes wherever possible Dabur implemented Accenture’s advice and went ahead with the following strategies in each of the following functions. Dabur collaborated with Accenture so as to keep itself competitive. Phase III (2003 onwards) In 2003. except for a small dip in FY02. The need of the hour was to work smarter and faster so as to improve profitability and revenue growth.  Viewing information technology (IT) as a strategic asset that creates real values—not simply a cost to be managed. The growth has trend has stagnated since FY06.requirement by1/3rd of its usual level. As can be seen in the graph below. 9 .

10 . the savings visible on the raw material cost front was also due to the higher inventory base that the company used when the material costs were low. The firm registered an operating profit margin of around 19% compared with around 17% a year ago.1 Phase#3 –Financial Perspective Cost Cutting Measure In 2003-04 Dabur India procured Rs. As a result of which Dabur considerably controlled raw material costs which were on a rise.210 crore of raw materials through esourcing which was almost 50 per cent of total raw material expenditure that it incurred. As a result of these savings it was able to spend more on advertisements and new launches. Dabur’s net profit during the quarter was up 30% from the year-ago period. Due to e-procurement it was able to save considerably in raw material costs which in turn. But. translated into higher operating profit margins for DIL.4.

It mopped up Rs. In 2007. The acquisition was part of its inorganic growth strategy which it had planned well in advance and was in line with its plan to 11 . Europe and the US. Acquisition of Balsara In Jan 2005. Dabur India Ltd (DIL) acquired three Balsara group companies for Rs143 crore in an all-cash deal.Dabur Pharma Demerger In May 2003. the Burman family. 23 crores through borrowings.4 per cent stake in Balsara Hygiene Products. At that point of time pharmaceuticals contributed around 15% of total sales. Oncology (Anticancer) is a lucrative segment & requires high-level research and development (R&D) but the parent company DIL long term strategy is to buy brands and aggressively expand its FMCG business.Hence it made economical sense for them not to continue with that and sell it off to a Big Pharma player like Fresenius Kabi as Dabur Pharma also holds a substantial number of drug registrations in Asia. 100 per cent in Balsara Home Products and 97. the promoters of the company and holding 65% stake got around Rs 775 crore and exited the pharmaceutical business so as to focus on its core competence and come out as a pure FMCG player. 120 crores through internal accruals and financed the remaining Rs. the board of Dabur India demerged the pharmaceuticals business and created a separate entity Dabur Pharma Ltd.9 per cent in Besta Cosmetics. One of the reason they sold the company could be that its unit in Baddi completed its 10year tax exemption benefit during the quarter ended December 2007. the company sold its non-oncology business to Alembic for Rs 159 crore to focus on its oncology segment. With this. In 2008 German major Fresenius Kabi acquired 73% stake in India’s largest anti-cancer drug maker Dabur Pharma for around Rs 872 crore. As per the deal it had acquired 99.

8% to 8% which substantially covered the acquisition amount it paid for Balsara. Balsara had sales of Rs 199. streamlining of distribution and reduction in the wage bill helped Dabur India turn Balsara Home Products around.expand the company's scale of operations and strengthen its presence in the FMCG sector. 14. . The Balsara acquisition boosted its revenues and savings in excise duty (due to shifting of manufacturing to tax-free zones) which also enhanced its profit margins as seen in the following tables. As 44 per cent of Balsara's revenue came from home care products and the oral care segment accounted for nearly 56 per cent which had witnessed growth in excess of 15 per cent. 3 .6 crore & losses of about Rs 8 crore in the period.8 crores during the year. Dabur payed 1/5th of what Balsara used to pay for advertisements. Reduction in no of employee reduced the wage bill by 60% along with substantial reduction in other overheads. Figures in Crores FY FY 00 01 Sales 982 110 0 Other 34 19 Income EBITDA 128 137 FY 02 120 0 12 144 FY 03 128 5 7 162 FY 04 123 6 9 164 12 FY 05 141 7 9 217 FY 06 175 7 13 300 FY 07 208 0 26 376 FY 08 239 6 34 443 FY 09 283 4 47 517. In six months of its take over Balsara added about 11% to total revenue and showed great potential in terms of revenue growth and profitability posting 35% growth in sales and a net profit of Rs. also Balsara deal was a strategic fit in both oral and home care market as it acquired the 2nd largest selling toilet cleaner Sanifresh in 2000 Cr. It reduced the distributors of Balsara from 500 to a few dozens while giving business to its own distributor. Also. Also its market share in tooth paste Industry grew by 6% from 1. This put more bargaining power in Dabur’s hands in negotiating a reduction in distributors’ margins as well as in making its purchases. hence. Home care Mkt. But with readjustment in focus. increasing its visibility and revenues.

Further due to SEBI’s guideline (substantial acquisition of shares and takeovers) Regulation. Doubling of Sales Figure from 2006. The deal has been done at more than a 21% premium to the prevailing share price of Rs 656 of Fem Care at Rs 800/share.15% of Fem for Rs203. Dabur had launched another vision for 2010. Fem Care Pharma is now a 100% subsidiary of Dabur India.2007. The market share in the skin segment increased from 1% to 6. Hence Dabur’s acquisition of Balsara not only strengthened its position in FMCG but also its turnaround within six months made Balsara one its profitable subsidiary. With the completion of this transaction.7 crore in an allcash deal. making DIL the second biggest skincare company in the country behind HUL. Marico Industries and Godrej were also reported to be in race for Fem Care Pharma but it was eventually won by Dabur which shows its seriousness towards FEM Acquisition. From the exhibits.Growth in Sales 12 % 9% 7% -4% 15 % 24 % 18 % 15 % 18% We can see that the financial year ending 2005 had shown an increase of 15% in sales which was immediately after the acquisition of Balsara. Dabur acquired additional 20% stake for Rs54 crore through an open offer. The Fem Care brand accounts for half of the skincare segment within the Dabur portfolio and 4. After the successful implementation of 4-year business plan from 2002 to 2006.1 VISION 2010: ANALYSIS 1.2 per cent of Dabur’s total revenue.6% within 5 months of this deal. The deal fetched a very attractive valuation for Fem Care Pharma. 1757 crores 13 . One of the plans for 2010 was to double the sales figure from what it had been in the year 2006. First Dabur India had acquired 72. we can see that the sales figure at the end of the year 2006 was Rs. 4. DABUR FEMCARE DEAL Dabur acquired Fem care in June 2009 and the result has been phenomenal.1.

that it made radical changes in its strategy. The market share increased after the acquisition of Balsara as Balsara had strong presence in the south and western region.g.1% 3. launching herbal toothpaste in Kerala and Tamilnadu and launching Dabur Lal Dant Manjan as Dabur Sivappu Pal Podi etc. 2. healthcare and foods The division wise revenue is: • • • • Consumer Care Division (CCD) – 69% Consumer Health Division (CHD) – 7.9% International Business Division (IBD) – 18. Accenture. Though it has not yet reached the double figure. homecare. The other factors were POS promotion. Southern markets will remain as a focus area to increase its revenue share to 15 per cent The south India market share has increased from 6% in 2002 to 12% in 2009. 2834 crores which shows an increase of 61% in the sales. o o o CCD grows by 16. Growth to be achieved through international business.2 Phase#3–Marketing Perspective It was only after its association with its partner. A company which was considerably inept to changes. it seems close to achieving the figure in 2-3 years. 4.1% Others – 5% Dabur delivers revenue growth of 20. it was Rs. customised packaging and commercials & customised product launch.8% IBD grows by 31.9% in the 9 months ended 31st December 2009.and by the end of year 2009. 14 .1% CHD grows by 15. This is the result of the initiatives taken by Dabur to suit the south Indian market e.

Rise of the regional players. Hair Oil. Rise of the Rural India.both organically and inorganically. Balsara . Zandu.HAIR OIL 54% --- . Products like Chyawanprash. With disposable incomes rising in Rural India. now started planning acquisitions and detailed 5 year plans for its existing segments.3%) --. Dabur has invested hugely in the advertisement of its products and differentiated its product offerings too. The marketing strategy was the key behind these changes as FMCG business runs on the brand value created over the years. The CCD division or the Consumer Care division has evolved considerably over the last decade and so has its marketing strategy. Hajmola retained the umbrella branding while acquired products and new products like Odomos. CCD now comprises of FPD and HCPD in addition to the Fem and Balsara.South East Asia. The present structure of Dabur’s strategic units is: DABUR CCD (72. Low penetration levels in certain categories. 4. The acquisition of Balsara and Fem were mostly due to this reason.South India). The reasons behind these initiatives are as follows: 1. Expanding in the new markets. especially the international markets. while retaining the older segment. The initiatives required strategic changes across all functions. Dabur could use its distribution channel to meet the demand in Rural India with differentiated products in newer segments at affordable prices. With a diversified kitty and acquisition of established players (Fem . 2.OTC 57% 15 IB (18. Emami were fast emerging highly competitive with more or less similar products. The marketing strategy changed to a mix of product branding and umbrella branding from being only umbrella branding in the past. but the demography was changing in the country. Real.5%) --. 5.8%) HEALTH CARE 44% CHD (07. Dabur could reach out to new markets. Vatika adopted product branding. Its existing products were considered to be targeting the mid aged and above aged segments. 3. The market share of Dabur was suddenly shrinking in some of the categories. India was emerging to be a young nation and Dabur recognized the need to have products for the younger generation. Players like Balsara.

PERSONAL CARE 37% FOOD --. Mickey Mouse) which included hotels and airlines to increase its market share.43% HAIR CREAM 23% ORAL CARE 12% --------- --- FOOD 06% OTHERS 05% Post 2000. Amitabh bachchan was replaced by Dhoni for Dabur Chyawanprash as Dabur started to concentrate on the younger generation by launching new variants of Dabur Chyawanprash (Chyawan Junior & Chyawanshakti). Dabur targeted the institutional markets by partnering with institutional clients (Discovery Channel. right from positioning to packaging. company concentrated differentiating the brand in all aspects. 16 . Brand ambassadors were also changed according to the re-branding of the products. It launched new packaging in several products to address the needs of the customers in a much more efficient manner. The frequency of the advertisements and the modes of advertisements increased significantly. Dabur brand concentrated building and differentiated The product offering and on meticulous initiatives. The reason behind this rebranding was the market stagnation in the Chyawanprash category.ETHICAL --. It started with an increase in Advertisement spent by bringing in leading filmstars (Amitabh Bachchan & Preity Zinta) and sport-stars (Dhoni & Sehwag) in its campaigns. Amla and lemon against the market leader Marico’s Coconut Oil. Not only it increased the top-line through higher volumes (low priced products are a hit among price-sensitive rural consumers) but it also increased the bottom-line through higher margins in these smaller SKUs. The biggest example is Dabur Vatika which it positioned as value-added hair oil that contained pure coconut oil enriched with natural ingredients such as Henna.13% HOME CARE 06% --.

4% 13. At present there are 11 stores functional and there are plans of 12 stores to be opened in the future.9% DABUR DABUR : : : : HEALTH Dabur Amla.With a diversified kitty. Fem Skin Hajmola.3% 6. Modern trade also allows more space and provides an established route to launch new products. Dabur Total Dabur Lal. Candy Chyawanprash.0 6. Initiatives like "Banke Dikhao Rani Pratiyogita" and “Dabur Vatika Koyal Punjab Di" were launched to tap the existing users and convert them into loyal customers of its brand. For Dabur. Meswak. Penetrati on 96% 62% 79% 30% NA 14% Growth 20. Modern trade accounts for about 5-10 per cent of urban sales for FMCG companies and this can go up to 25 per cent for southern markets.5% 17 .0 60. It emphasized on Direct Interaction with consumers.2% 9.0% HUL 45.1% NA NA 2.7% HUL 58.3 Marico 36. In the modern trade segment.Babool Gulabari. Dabur required different campaigns for different segments.0% NA NA 8. a lot of BTL activations were done so that it can reach directly to the consumers and also solve the issue pertaining to the segment.6 55. giving information about the benefits of Chyawanprash in their everyday life and was backed by media coverage.4% Colgate 48. Dabur initiated a programme christened DARE (Driving Achievement of Retail Excellence) to improve its effectiveness in organised retail in 2009. Vatika Vatika.5 per cent in 2010.8 6. about 3 per cent in 2008 of sales come from modern trade and it was expected to grow up to 7. Some of such activations are as follows: HAIR OIL  Dabur Launched beauty and talent shows in Rural areas of Northern India where it has considerable presence. in NCR and South India. Dabur has opened its retail subsdiary called H&B Stores Ltd.75% PERSONA L CARE Hair Oil Sham poo Oral care Skin care Diges tive 16.3% 8. CHYAWANPRASH Dabur organized Mobile road shows in association with JAGRAN SOLUTIONS in 200 remote villages of UP.2 12. To resolve the issue. CATEGORIES Mark et Shar e Market Leader Major brands of Dabur URBAN INDIA RURAL INDIA Penetrati on 93% 46% 45% 19% NA 5% Growt h 19.

the broad trunk symbolized stability. twin colors reflecting perfect combination of stability and freshness. the trunk represented three people raising their hands in joy. 4. Saini Fresh 10% 20% NA NA 30% 58% NA NA Dabur’s acquisition of Balsara and Fem are largely to the fact that the products they deal have low penetration levels.2. However the health supplement category is more of a worry than opportunity. fresh Banyan tree. Odomos. multiple branches were chosen to convey growth.0 20.0 DABUR Premium 31% : Glucose-D. Real Burrst Odonil. Honey Real. disposable income of the people living in rural India. given the rise in education. The leaves suggesting growth. The food industry too is window of opportunity. As a result. The skin care segment stands at 19% and 30% penetration levels for the rural and urban levels respectively. Dabur can cash in the displaced consumers to its juice business. where there is a penetration level of 10% in Rural India. Real Active. Dabur has still not able to increase the penetration levels. The logo was changed to a tree with a younger look. market is stagnant for years. though there are signs of recovery in the past few years. which an attractive market is. and warmth and energy were displayed through the soft orange 18 . The old Banyan tree was replaced with a new.SUPPLEMENTS FOOD HOME CARE 45. Inspite of its presence in rural India and the category for over 50 years.1 Dabur’s Rebranding Exercise In the year 2004-05 a whole new brand identity of Dabur was born. energy and rejuvenation. With signs of slowing down of aerated drinks.

Considerable amount of rework was necessary in just data format conversion between the two systems. 3.3 Phase#3 –Information Technology Perspective By 2005 Dabur started to feel the pinch of maintaining two independent ERP systems. Maintenance costs climbed up because of the above stated points.Baan and Mfg to centralized SAP ERP system from 1st April. There were still data redundancies and inconsistencies at times. With Accenture’s help. 4. ‘Celebrating Life’ was chosen as a new tag that completely summarized the whole essence. 4. Migrated from standalone ERP systems . the idea of a single organization wide ERP implementation was proposed in Dabur. So. It still did not provide a holistic picture and thus posed problems in formulating a strategy or taking business critical decisions. to realize not just the operational excellence but also decision support infrastructure. Setting up of new data center at KCO head office in Ghaziabad. 3. They were facing following issues: 1. 2006 for all business units (BUs). 1 19 .color. Dabur implemented strategic and operational changes – by implementation of organization wide SAP core modules. Major IT initiatives: 1. Therefore. 2. Increase in annual sales by 17% whereas increase in profits by over 40% showing more operational efficiency and cutting down of costs. Benefits from these initiatives: 1. 5. Implemented a country wide new WAN infrastructure for running centralized ERP system. 2. 4. Roll out of IT services to new plants. Extension of Reach system to distributors for capturing Secondary Sales Data to collect near real-time pipeline information was done by 20041.

by themselves. Prayas. Implementation of new Point of Sale (POS) system at stockist point and integration with SAP ERP. The distribution network expanded by 19% bringing the total to about 630.2.000 sales outlets. Campus to Corpora and a Balanced Scorecard approach to performance evaluation. Dabur estimated about 6% of its total of 14% growth from the new strategy alone. and also rewarding individual initiative. have been implemented to help employees realize their potential. So. They need to be accompanied by ambition and a sense of daring. SAP roll out to Dabur Nepal Pvt. The company believes that good HR policies. 3. Leading and Facilitating Performance. 5. Accenture provided help in merging the systems of the entities after the Balsara merger.4 Phase#3 –HR Perspective Dabur rears a culture that gives full autonomy to its employees. Future Challenges: 1. Ltd. these new HR policies have also gone hand-in-hand with plenty of action on the business front. 2. It has implemented various training and development programs like Young Manager Development Program. Dabur believes in nurturing a familial bond with its people by creating a harmonious and value based work environment that encourages team spirit. 4. 4. (DNPL) and other businesses. Backward integration of SAP with suppliers. don’t create a great workplace. It has also 20 . 3. Dabur has made its brand identity more contemporary. It follows more of a paternalistic approach to care about its employees. It cares for the employees’ development along with the growth of the organization. 4. Forward integration of SAP with distributors and stockists. Implementation of SAP HR and payroll. in the year 2007.

hence about 30 of them were shifted to Baddi. The Silvassa plant was overstaffed with 100 workers. Each year. it is upgraded to make the learning experience more enriching and rigorous with a greater focus on functional and conceptual inputs and an objective learning evaluation system. rather than a company that does some international business. For example Balsara's R&D team was seamlessly absorbed into the larger organization. one share for every one share held. Also the Kanpur factory was a small scale factory. a new factory. A number of people quit citing locational constraints as Balsara is a Mumbaibased company.300 people on its rolls. It announced issue of 1:1 Bonus share to the shareholders of the company. These exits were the most painful part of Dabur India's acquisition of the Balsara group's hygiene and home products business. while Balsara had 600. but close to 300 people quit. There was a huge chaos as there was no room for any duplication for posts. some areas were integrated smoothly. Kanpur (Uttar Pradesh) and Baddi (Himachal Pradesh) much easier.e. which made integration of that division invaluable on the other hand the oral care research division possessed skills that complemented Dabur's own team. Dabur gave Bonus to its employees after 12 years. people. near Delhi. with just 10 workers hence the decision to stop manufacturing there didn't cause too much disruption. • Employee Bonus: In 2005. while Dabur is headquartered at Sahibabad. Acquiring Balsara: The people paradox The deal created a lot of unrest but the biggest issue was. Dabur already had 2. Even the manufacturing facilities didn't pose too many problems. which was understaffed at just eight Silvassa (Dadra & Nagar Haveli). of course. i.taken the first steps towards becoming a true multinational. The fact that neither of the organizations were unionized helped as well. thus solving two problems. • Young Managers Development Programme (YMDP): Dabur has a twopronged approach in recruiting dynamic professionals as lateral recruitments and the Management Trainee Engineer/Trainee recruitments at entry level under YMDP. Though Dabur did not retrench anybody. It aided in decision making about Balsara's three plants -. Dabur had no experience in home care. Despite of these problems. This boosted the employee morale further. 21 .

the management ran a comparison between both. To overcome this challenge. about 55 managers conducted workshops for sales staff across the country. Before the acquisition two distinct distribution networks were in place at Dabur. Challenges faced in the modern era Dabur is a hundred year old organization. and external consultants were brought in to conduct detailed assessments of all employees and redeployments were made on the basis of their recommendations. Dabur had to invest in several thousand manhours of training. While the departures have meant huge savings in staff expenses. There were people who had been in the company for long. since Balsara people helped fill vacancies in group companies. of whom 120-odd were from Balsara. Had Dabur continued with just two lines Balsara may not have got the required focus. suitable modifications were also necessary. i. This requires modernization in practically every aspect. Using the "train the trainer" module. Dabur's original distribution was along two verticals: Line 1 for health care and Line 2 for personal care. on 22 . a third line was created that to look after home care and all oral care (including Dabur's range) products. conventional ‘as per my experience’ perspective. For such an old organization to be successful in changing times it must innovate continuously and evolve over a period of time. substantial re-training in selling techniques to match up with that of Dabur was also required. Salaries were hiked to bring them in line with the Dabur structure. Now. But such an initiation requires a very difficult milestone to be achieved.Following Dabur policies at Balsara did mean some expense. Since Line 3 covered Dabur and Balsara products. Dabur's consumer care frontline was made to have a total of 400 people. Major issues The major portion of trouble for the HR division lay with sales. Inspite of the above mentioned factors that year's wage bill was likely to be 50 per cent lower than last year's. While the decision was taken to aggregate the smaller business into Dabur's infrastructure. managed by employees of both organisations. with new product portfolios coming in. recruitment costs also came down across the group. and were used to doing things in a certain set way. and a more system-and-facts based decision-making model.e. changing mindset of the people associated with the company.

Even for Dabur. In 2008-09. The addition of these high margin products in the portfolio also leverage the players against the no frills coconut oil segment. Also. Shanti Amla and Hair & Care has been comparatively faster at 14%. PEST Analysis of Dabur India Limited (Period 2005 onwards) Political Factors The key factors that have triggered growth for the FMCG industry in the period include reduction in excise duties. the growth of value added oils like Sampoorna. While the coconut oil brand of Marico. This speaks of the success of the value added products. With the revival in demand in the FMCG sector and capacity planning done by all major FMCG companies in tax haven areas the future looks promising. the government thrust on agriculture and rural economy has facilitated improved demand for the FMCG products. Given the fact that there is only a moderate scope for differential in coconut oil segment. Dabur Amla (Dabur) and Hair & Care (Marico) firmly rooted in the programs. They have been successful in the venture with brands like Vatika. and this coupled with lower income tax 23 . finance minister’s decision to reduce CENVAT rate to 14% was in line with the GST roadmap. relaxation of licensing restrictions and reduced dominance of unorganized sector due to creation of level playing field. 'parachute' grew by 8% in volumes in FY '05. This also provides a significant upside potential for companies like Marico and Dabur. Badam and so on. The hair oil industry is witness to a large amount of unbranded oil manufacturers that account for nearly half of the total coconut oil market. This let the organization clearly see realistic and practical answers to the questions raised with regards to modernization. The implementation of Value added tax is also expected to tilt the balance in favor of organized players. the players concentrated on value added oils like Amla. the flagship brand 'Dabur Amla' reached a milestone in FY '05 by crossing a turnover of Rs 200 crore and registered a 16% growth.

which ultimately improves the standard of living of the people in that country. Economic Factors Better reforms and investment policies attract foreign investments. alongside consumer care division (CCD) that encompassed all the personal care and home care products. H&B Stores. baby care to over-the-counter drugs. cosmetics. through its wholly owned subsidiary. This presents a tremendous opportunity for makers of branded products who can convert consumers of unbranded products to branded products. ‘Dabur Foods Limited' was merged with Dabur India Ltd. It envisaged selling products ranging from personal care. With improved standard of living more and more consumers prefer using branded FMCG products which have so far remained an aspiration. Consumers who are already using branded products will upgrade themselves to premium products. FMCG market remains highly fragmented with almost half of the market representing unbranded. rising demand and a growing GDP. FMCG sector is going to be in the limelight with strong economic fundamentals. It thus became one of the business divisions of Dabur India. It was now an over Rs 2. unorganized sector products. Dabur also made retail venture under the health and beauty format. Social Factors 24 . distribution and selling efficiencies. We could expect similar recovery in our economy in the FMCG segment in the coming years. in 2007. and thus augurs well for the FMCG sector. and consumer health division (CHD).incidence on individuals will accelerate disposable incomes. The future growth is expected to come from newer segments such as the youth and through increased rural and small town penetration.200-crore entity including the Rs 200-crore from Dabur Foods. In the scheme of things. The Internet and e-commerce will change the dynamics of this industry helping companies improve their procurement.

which made the market very lucrative. as there seems to a shift of the consumer from toothpowder to toothpaste segment. 2500 crores growing @ 10% p. Babool etc. The penetration levels of shampoo are abysmally low in the country. The Indian shampoo market is characterized by sachets.In 2004.. Per capita consumption of toothpaste in the country was only 70 gm compared with 300 gm in Europe and 150 gm in Thailand. This provided a good opportunity to expand the market and encourage people to use modern dentifrice to improve oral hygiene. Moreover. The penetration in urban areas is around 65% while it’s just 35% in rural areas. Meswak. a critically low dentist to population ratio in our country. The company is compensating for the loss in the category by launching Dabur Red toothpaste that has grown into Rs 50 crore brand in two years of its launch. the frequency of usage of oral care products in India as compared to developed world was very low. The general trend in the international markets is to introduce a brand through sachets and thereafter upgrade the consumer to bigger bottles. giving scope for growth to the sector. Also the per capita consumption of shampoo is just 16 ML compared to 1000 ML in UK and US. to consider inorganic growth. Around 70% of total shampoo sales are through sachets. This provides an opportunity to the players to improve the market and their size. It was also worthwhile for Dabur India Ltd. acquiring Balsara was an obvious step to grow inorganically.) was making losses. However the company is witnessing negative growth rates in the category. Technological Factors 25 . It also relaunched brand Vatika in 2007.a. results in low oral hygiene consciousness and widespread dental diseases. Also. Even though Balsara (with brands Promise. Dabur thus shifted gears to anti-dandruff shampoo (Dabur Vatika anti-dandruff shampoo) in 2004. Thus. it did possess synergies with the growing oral care business of Dabur. it is one of the larger players in the toothpowder category. Dabur estimated the market for this category to be Rs.

The market size of hair removing cream is around Rs 110 crore and is growing at 22% with Fem having around 7% market share. Operations Strategy of Dabur India Limited The Operations Strategy of Dabur India Limited has changed as their business has evolved over time. The section highlights the key defining operational strategies adopted by the company during this period.The market size of bleach products in India is around Rs 85 crore and is growing at 15% with Fem holding 60% market share in it. SAKA men's bleach and Bambi fabric softeners. Research and Development Initiatives. Fem is world leader in bleaching cream category by tonnage. Apart from Fem bleach. Dabur was thinking of launching its products into ayurvedic skin care category. other popular brands by the firm are Oxybleach cream. Fem has reach of around 25000 parlours. Dabur will become key player in skin care category. Vendor Management etc over the time frame from late 1990s till 2009. Procurement procedure. Botanica anti-ageing cream. Fem brand is very well placed in India and aboard. Dabur acquired 72. its ayurvedic products which will launch shortly and through Fem. the Supply chain initiatives over the years. The company will continue its initiative in skin care category through Gulabari. The liquid soap market size in India is around Rs 50 crore and is growing at 25%. which can be leverage by Dabur for promoting its own Gulabari skin care products and its Vatika brand. Manufacturing 26 . In 2009.15% stake in Fem Care to provide the company with the technology to enter high-growth skin care market with an established brand name 'FEM'. Inventory Management. Quality Management. With this acquisition. where Fem has 2 main competitors. will delay its launch by couple of months due to acquisition. Stratum colour protecting hair conditioners. The section below tracks the various key operations strategy such as the Manufacturing ( processes involved and locations). Dettol and Lifebuoy.

Kalyani and Narendrapur (West Bengal).33 lacs per worker in 2002-03. mainly due to better shop floor practices. Alwar (Rajasthan). Dabur focused on enhancing productivity of capital and existing assets. from Rs. The APIs and formulations of the Company are manufactured in-house at Kalyani.28 lacs per worker in 200102 to Rs. Dabur has been giving considerable emphasis on improving manufacturing and operational efficiencies. As a result of these measures. Productivity increased by almost 18 per cent. operating profit margin (excluding other income) of the Company had improved from 9. while the Personal care products portfolio. During the year under review. which accounts for the remaining 50 per cent. from 1998-99 to 2002-03. Fifty per cent of FMCG products. Wastage on the shop floor had reduced by more than 20 percent in 2002-03 over 2001-02. Baddi (Himachal Pradesh). Source: Dabur Annual Report 2002-03 In 2002-03.3 per cent in 2002-03. Sahibabad and Baddi. for manufacturing Personal care products. The Company had plans to 27 . Dabur was in the process of setting up a manufacturing facility at Jammu.By the year 2002-03 the company had 6 manufacturing facilities at Sahibabad (Uttar Pradesh). Katni (Madhya Pradesh). are out-sourced to eight contract manufacturers. The purpose of implementing TQM was to achieve lower rejection of raw materials. Total Quality Management (TQM) techniques were implemented on a pilot basis at two plants in the area of statistical process control.2 per cent in 2001-02 to 10. lower breakdowns and improved efficiency in energy use. The chart below shows the continuous improvement of the Company’s productivity (defined as value of sales per worker). improving plant efficiencies in the existing manufacturing facilities and following more stringent quality control and supervision norms at outsourcing locations. comprising the Health care products and Ayurvedic specialities portfolio. and make the procurement process more efficient. tight budget controls and energy audits constituted some of the other initiatives undertaken by the Company to improve its operational performance. Jammu had been selected as the new site in order to avail fiscal benefits offered for setting up manufacturing facilities in that location. are manufactured in-house. time savings. Standardisation of processes.

Dabur Foods acquired a new facility near Jaipur for manufacturing fruit juices. In 2004-05. Total Production Maintenance (TPM) measures were initiated in two locations in 200304. West Bengal.000 28 . Kewra water and intermediaries. lean organization structure. including fluoride based toothpaste. Baddi and Kanpur. Hajmola tablets. giving it access to a variety of fruits including litchi. Uttaranchal. Dabur’s Jammu plant which was commissioned in 2003. shampoos. located at Silvassa. This is achieved through an efficient production planning system that is a part of the overall supply chain initiative called project Garuda. This plant featured a modern and compact shop floor design. While the Silvassa and Kanpur facilities were primarily engaged in manufacturing household range of products and the private label business. The initiative has helped reduce stocks and. Higher batch sizes and larger scales of production at this facility contributed to major improvements in product quality. It was located at the heart of a major fruit-producing and trading area. Supply Chain Initiatives at Dabur India Limited 1) In 2001. This plant was set up in 2004-05 and enjoyed greater tax benefits as were available to new units in Himachal Pradesh. In addition. thus. consistency and productivity. Dabur successfully commissioned its largest and state-of-the-art manufacturing facility at Rudrapur. Amla hair oil. the Company remained focused on leveraging higher operational efficiencies and superior quality levels from this plant. it was in close proximity to the Dabur Foods’ juice plant located in Nepal. guava. Dabur added three more manufacturing facilities to its fold. became fully operational during the year. As a result of the Balsara acquisition in the fiscal year 2004-05. Dabur decided to tackle its extended supply chain of over 30 factories. therefore. six key warehouses. was utilized to manufacture hair oils. The plant had manufacturing facilities for 200 ml packs. This initiative is aimed at improving the productive efficiency of capital assets In 2004-05. Lal Tail and Janam Ghunti. mango and tomato at competitive prices. The success of DIL's manufacturing lies in is its ability to regularly produce and meet requirements of the sales plan. The plant produced pulp and concentrates and brought the Company a step closer to achieving full backward integration and realising the resultant cost efficiencies. and hence TPM has become an integral part of the production processes of your Company. thereby reducing time and cost of transportation. requirement of space with the CFAs. Dabur Foods’ multi-fruit processing facility at Siliguri. improved system processes and stringent quality control norms. It was set up in a record time of four months. Vatika hair oil. The ability to sustain much higher levels of growth with the same level of inventory as 2006-07 bears testimony to efficiency of DIL's production and supply chain system. Moreover. the Baddi plant produced oral care products. and 52 stocking points distributing over 1. Gulabari. The location of this plant was a major source of its competitive strength. While the Rudrapur facility enjoyed similar fiscal benefits as the Jammu and Baddi plants. This plant was upgraded to manufacture 1 litre and 200 ml packs of ‘Real’ brand of fruit juice and the ‘Coolers’ range of products.implement TQM for other functional areas in the future. the plant was used to manufacture Chyawanprash.

The BenefitsA By integrating its primary and secondary supply chains.000 stockists countrywide. A 'My Page' feature allowed the dealer to "see if the details of yesterday for intransit shipments. the system could forecast seasonal spikes in sales and manufacture accordingly. account status. The hardware was mostly owned by the primary CFA (Carry and Forward Agent) except for the networking equipment.SKUs to 10. The features included  tight integration of schemes  stockists credit limit control  automated banking of cheques  online cheque reconciliation The incorporation of these top stockists into its supply chain was a first for any FMCG company in India. The zonal offices in Mumbai were hooked up in a similar manner. At some locations VPNs had to be used because it was not possible to set up a dish. the status of checks. 2A http://www. stockists performance. and sales officers' performance. carrier information. credit notes and dealing with complaints”. Fifty-five Ku Band TDMA VSATs were used to link primary distributors to the system. Factories were hooked up using PAMA (Permanent Assigned Multiple Access) Dabur built a system using Visual Basic and ASP with SQL Server 2000 as the database. brings down inventories. The company needed a system to accurately control distribution and sales forecasting to reduce inventory in the pipeline. A The integrated primary and secondary system had a number of unique features. The main aim was to save Rs 5 crore by means of this system. The aim was to shift focus to the stockists rather than the CFAs to get a true picture of what's happening in the market and react faster. The integrated system allowed each Area Manager to plan for the month's sales forecasts. Beyond this.networkmagazineindia. The integration allowed better control on pipelines in primaries and secondaries. Dabur had purposely decided not to use a packaged SCM solution due to high cost.shtml 29 . Dabur intended to reduce the days of inventory carried in the pipeline by four days from the present 29 days. and offers better control on production and sales against a confirmed forecast. copies of orders. which was owned by Dabur.

Efficient supply chain management has enhanced the flexibility of operations.reduced delivery costs. During 2002-03. the Company’s material cost as percentage of sales came down from 43. In fact.lowered operation cycles and finished goods inventories. These initiatives resulted in a saving of around 7 per cent to 8 per cent on current prices of these raw materials. while at the same time result in substantial savings and greater transparency in the procurement process. Information Technology (IT) has played a major role in strengthening the supply chain management by improving operational efficiencies in procurement. Under this initiative. The Company also appointed Freemarkets. During the year. Uttar Pradesh. Dabur continued to realize procurement efficiencies and reduce its input costs in spite of inflationary pressures. During the year the Company successfully deployed the ‘Spend Visibility’ programme in collaboration with ‘Ariba’ (earlier FreeMarkets) to further strengthen its procurement efficiencies. With the implementation of Baan and Mfg Pro.7 percent in 2003-04 to 42. Jammu and Kashmir and Nepal to develop sustainable cultivation of these engendered species through contract farming and buy back arrangements. 4) The Company was also intent upon creating a backward integration platform for herbal inputs. To this end. Dabur entered into 30 . Dabur made a foray into contract farming for selected herbs as part of the Agrobiotechnology initiative. the Company followed a strategy of rationalising its vendor base. especially those on the endangered list. This initiative would help rationalise and upgrade the vendor base of the Company.2) Efficient supply chain management had always been critical to Dabur. 3) During the year 2004-05. the Company conducted successful reverse auctions for two raw materials – saffron and jadi-booti – as well as for fixing freight rates. Through usage of innovative procurement strategies and modern forecasting and research tools. a leading e-procurement company. Uttaranchal .to assist the Company in implementing its e-sourcing initiatives. This program had significantly enhanced the quality of information and visibility in sourcing priorities of the Company. Dabur was one of the few companies in the FMCG industry which had reduced its input costs consistently over the last few years by focusing on high degree of skills in the area of procurement and materials management. In addition to meeting tight budgetary controls. Haryana. which markets over 600 SKUs. supply chain management has benefited from stable and more efficient production planning on the basis of accurate secondary sales and stock data. The supply chain integrates a wide range of functions encompassing production scheduling to materials planning and procurement to primary distribution. The Company adopted plans to procure more products through the reverse auction route.9 per cent in 2004-05. a number of backward integration programmes had been set up in Andhra Pradesh. these improvements have resulted in substantial reduction in costs due to freeing up of extra working capital. while improving customer-servicing levels. Tamil Nadu. Himachal Pradesh. Dabur had over 500 vendors through which they source their raw materials. production and delivery systems.

Examples Through significant technological up-gradation. Other important benefits of the project would have been to decrease the total delivery costs and a supply chain system which would VAT-compliant. it undertakes regular factory quality audits by trained quality auditors. helped the Company come out with actual Inflation figures that enabled it to plan ahead in a more focused manner. Concurrently the creation of a Dabur Inflation Basket focusing on the commodities most relevant to the Company's operations helped maintain and manage costs effectively. along with the software services major “ Accenture”. 31 . The production process of Hajomla candy was upgraded to convert the product into depositor form. use of calibrated hedging mechanisms and e-sourcing initiatives. The Dabur Inflation Basket. which was linked to WPI( whole sale price index). As part of its quality assurance programme. The Company also organized quality-planting material with promising genetic potential to farmers on no-profit-no-loss basis and provides additional technical support. In this regard. ensures compliance with ISO 9000 procedure and implementation of established standard operating procedures across its manufacturing bases. Three-month forecasts on the industry scenario were provided by these planners to the brand teams for taking effective measures to combat inflation. Procurement Controlling costs in the inflationary scenario was one of the biggest challenges faced by DIL over the years. thus. over the last few years. Quality Dabur remains resolute in its commitment to enhance quality levels across its product portfolio. Project Garuda was expected to improve business and capital efficiency and reduce working capital requirements. the Company has maintained a sharp focus on upgrading technology and improving manufacturing processes at all its plants. the manufacturing process of Hajmola Anardana Goli was made free from human touch.contract farming agreements with farmers through a local coordinator. 5)” Project Garuda “was launched by DIL in the year of 2006. thus giving it a smoother finish. One of the key factors that enabled the Company to keep costs under control was the short and medium-term planning programme that ensured regular forecasts from its team of strategic planners within each division and departanent. which came force in 2005. bringing in improvement in hygiene. The company effectively tackled this challenge on the strength of its strategic futuristic planning.

Government of UK. Dabur Honey has stringent measures of quality. There are over ten diverse areas in which Dabur Research Foundation carries out research besides conducting tests and trials. Traditional Ayurvedic products had been the primary focus of Dabur India and it continues to take advantage on the value by effective Research and Development. 32 . peptide research. in order improve its production and operation management. The process of making honey has been mechanised completely and the final product confirms the statutory requirements of Agmark and the PFA.The Honitus and Nature Care product lines at the Baddi plant was set-up to meet appropriate standards of safety. This has been facilitated by Dabur Research Foundation which was set up in 1979. analytical. Pharmaceutical research. Phytopharmaceuticals. Glucose and Honey received Hazard Analysis and Critical Control Point (HACCP) certifications. has gone into kaizen. quality. Personal care products. Food products industry is something which needs primary emphasis on quality improvement and standard control. Agronomy. The research not only focuses on upgrading the current consumer products but also to make a mark on highly specialised areas and in significant aspects of health care like cancer therapy. the plants manufacturing Chyawanprash. Dabur. debottlenecking and wastage control. oncology research. It could be observed that before 1994. Biotechnology. food research and clinical research. we could observe that the range of research has been diversified which would be analysed in detail later. automation. the Research process was concentrated in healthcare and such products and after the Joint ventures from 1995. Apart from this. synthetic chemistry. They are Ayurvedic Research. This has been achieved in Dabur India also. Research and Development Dabur with its rich experience in health care and consumer products industry has its knowledge base and research as its main asset. performance and effectiveness as set by Medicines and Healthcare Products Regulatory Agency (MHRA) — the executive agency of the Department of Health. The research facilities in the research foundation are modern and there are scientists from all the relevant fields to contribute to the research and innovation process.

Vendors are communicated about the same with an objective to improve their performance and build long term relationship. an evaluation committee comprising its 10 board members will assess the performance of each board member including Chairman VC Burman. Strong corporate governance is indispensable for safeguarding the interests of shareholders and other stakeholders. 3 http://www. Quality parameter of inputs. Suppliers of quality items procured by Dabur have been welcomed to furnish details of their products. Vice-chairman Dr Anand Burman and other directors. As per the process. The Burman family . monitoring management performance and development/compensation and statutory compliance and corporate governance.Vendor Management 3 Dabur is in continuous process of developing strong vendor base for varied variety of items procured. The three broad areas around which the board members will be evaluated are: the guiding strategy. The promoters provide the strategic direction to the Company and the group. Dabur is a strong proponent of efforts towards improving transparency in 33 . which in turn determine the quality.has reduced its strength on the Board of Directors to 4 members and provides only broad policy guidelines for growth and diversification. besides evaluating newer avenues for growth. regulations and voluntary practices that are able to attract the best of capital and talent.promoters of Dabur . and cost of output is laid down meticulously for each items and strictly followed and adhered to in procurement process. Dabur came up with a process of performance evaluation system for its board of directors. Every vendor is rated yearly on the basis of parameters laid down to gauge vendor performance. It includes obtaining samples from suppliers for quality assurance and visit of Dabur team to vendor location. In 2004 itself. Excellence in governance and superior financial performance go hand in establishment and other parameters as mentioned in Vendor Registration Form. A well-defined process has been laid out for qualification of a supplier as Approved Vendor.3 Corporate Governance Corporate Governance refers to the blend of law.

Remuneration. This reduction has come despite an 8-9% volume increase in manufacturing. role in reporting major performance deficiencies. Compensation and Nominations • Meets all Corporate Governance Code requirements of SEBI Dabur-Sustainability Conservation of natural resources and the environment is of great importance at Dabur. the other initiatives of Dabur on corporate governance include: • • • • • Professionalization of the board Lean and active Board (reduced from 16 to 10 members) Less number of promoters on the Board More professionals and independent Directors for better management Governed through Board committees for Audit.Within that. These measures helped to lower the cost of production. Successful implementation of various energy conservation projects have resulted in a 13. like: 34 . role in succession planning for senior management and others.8% reduction in the Company’s energy bill in the 2008-09 fiscal alone. Shareholder Grievances.7% increase in cost of key input fuels. besides reduce effluent and improve hygiene conditions & productivity. and an average 11. generation of biogas and installation of energy efficient equipment. Besides above. b) Technology Absorption Dabur has also made continuous efforts towards preserving natural resources by technology absorption and innovation. each member will have to score on various parameters like role in defining the mission. Dabur incorporates the concept of sustainability by a three pronged approach: a) Conservation of Energy Dabur has been undertaking a host of energy conservation measures like use of bio-fuels in boilers. policies and long-term goals/plan for the company. role in setting up annual business plan.

Technology and Facilities by having a dedicated “Safety Management Team”.• Improvement in water treatment plant through introduction of RO (Reverse Osmosis) system for DM water. cost reduction. import substitution. cleaner environment and waste disposal by these measures. product development. c) Health Safety & Environmental Review Dabur addresses to the safety of its three core resources – People. but also educate & motivate employees on various aspects of Health. resulting in 30% reduction in bulk wastage by using non-stick coating and formulation change The Company has achieved a host of significant benefits in terms of product improvement. reutilization of waste water from pump seal cooling and RO reject waste-water management • Introduction of water efficient CIP system with recycling of water in fruit juice manufacturing • Minimum use of water in process by pre-concentration of herbal extract and reduction in concentration time • Development of in-house technology to convert fruit waste into organic manure by using the culture Lactobacilus burchi • Uniform heating in VTDs by hot water as against steam earlier. Other efforts include: • Continuously monitoring its waste in adherence with the pollution control norms • Conserve and maintain the ground water level by rain water harvesting • Initiated a Carbon footprint study with an aim of becoming a carbon positive company in near future 35 . Safety and Environment. that would not only work towards the prevention of untoward incidents at the corporate and unit level.

2) Threat of New Entrants • • • In case of home care segment the entry barriers are low since the costs to set up manufacturing facility is not very high. Premium personal care products face competition from international brands as well as boutique products. 4) Threat of Buyers Bargaining Power • • • The buyer’s bargaining power is low since they cannot influence the prices to such a great deal. traditional insect repellents. where product innovation is high Home grown and traditional substitutes to Home care products e. Casper entering the vaporizer segment and Good Knight the personal spray and gel segment. Even in case of Modern trade the buyer’s bargaining power is moderate as it generates less than 10% of FMCG sales. So is the exit barrier.g. 3) Threat of Substitute Products • • Substitutability is highest in Food category followed by Personal care category.Porter’s Five Forces Model for Dabur 1) Threat of competitors • • • • The threat of competitors is high because there are a lot of players in the Market. The exit barriers are low and thereby firms can enter and exit easily. Price sensitivity is high especially in the Food and Home Care category 36 . But the entry barriers in terms of building a national brand as well the distribution network is high.g. Existing players are entering new segments which will increase the competition e. The ayurvedic platform is also being used by other players like Emami and Ayur.

g. Certain oils are not available everywhere which increases the raw material supplier’s bargaining power when negotiating the price with Godrej etc. Hajmola. higher rotations and a personal touch(relevant for premium products).g. Health Supplements and Home care categories. SWOT Analysis for Dabur India Limited Strengths • • • • Unique “Ayurvedic and Health” Positioning Extensive market penetration with 50 C&F agents. Vatika. which is a major weakness in FMVG as it is constantly creating new products. more than 5000 distributors and over 2. Opportunities • • • • Packaged Foods category Sugar free food and health care substitutes e. Sugar Free Chyawanprash Expanding size of pie in Home care segment due to efforts by firms like GodrejSara Lee and niche products like Jyothy laboratories Increasing Modern trade is a good indicator for Personal care segment as it provides higher visibility. Réal Monopoly status in multiple product categories like digestives (90% MS). Threats 37 . (Appendix 5) Dabur’s R&D work is low and insignificant.8 million retail outlets all over India* High brand awareness and perception of Dabur. branded honey(75% MS) and Chyawanprash(65% MS) Weaknesses • • Low Penetration in Rural areas in Food.5) Threat of Supplier’s Bargaining Power • The number of suppliers is low for the Home Care category e.

• • • Counterfeit products in the Food and Home care category Increasing competition from private labels Increasing bargaining power of modern trade especially in the Personal Care segment EXHIBITS 38 .

Sanifresh Digestive Health Supplements Oral Care Home Care Financial Ratios Liquidity Ratios Current Ratio Quick Ratio Management Efficiency Ratios Receivables Turnover Inventory Turnover Asset Turnover Ratio Financial Leverage Ratios Debt Ratio Debt to Equity Ratio Interest Coverage Ratio Profitability Ratios Gross Profit Margin Return on Assets 39 2009 1.63 10. Gulabari.19 23. Odonil. Pudin hara Chyawanprash.21 0. Binaca. (Anmol coconut) Vatika heena conditioning. promise. Gripewater. Odopic.73 . Olive oil. Dabur Honey.27 38. chyawanshakti. Lal paste. Vatika fairness face pack Janmaghutti. Promise Odomos.34 17.99 22. silky Sarso root- Baby & Skin Care Vatika fairness. Glucose Babool (rural market). Meswak (unani method). Hingoli.94 4. Amla. Dabur lal tel Hajmola range.84 0.Product Category Hair oil Shampoo Products Vatika. strengthening Anmol-natural shine.19 0.

8 Financial Position: Fixed Assets (Net) Current Assets.3 Profit Before Tax (PBT) 81 85 82 106 124 176 257 319 384 445 Taxes 4 7 14 14 15 19 30 39 52 54 Tax Rate (%) 4.0 12.2052 47. Loans & Advances Current Liabilities & Provisions Net Working Capital 251 243 371 257 250 295 512 379 465 559 412 393 504 522 340 408 471 640 774 951 108 158 183 241 294 400 436 452 732 808 304 235 322 281 46 8 35 189 42 143 Days of Sales 113 78 98 80 14 2 7 33 6 18 40 .1 18.6 8.41 Ten Year Highlights RS Crores FY00 Operating Results: Sales 982 1100 1200 1285 1236 1417 1757 2080 2396 2834 FY01* FY02** FY03 FY04*** FY05 FY06# FY07^ FY08 FY09 Other Income 34 19 12 7 9 9 13 26 34 47 EBITDA 128 137 144 162 164 217 300 376 443 517.6 11.8 48.4 6.3 EBITDA Margins (%) 13.9 13.0 12.8 11.5 16.6 13.0 12.3 15.1 18.5 12.5 8.9 7.1 5.6 13.0 10.2 13.3 12.5 13.1 13.Return on Capital Employed Return on Net Worth Dividend Policy Ratios Dividend Yield Payout Ratio 38.4 12.3 17.1 Profit After Tax (PAT) 77 78 64 85 107 156 214 282 333 391 PAT Margins (%) 7.4 0.5 18.7 12.

3 3.8 RONW (%) Equity Share Data: Earnings Per Share (Rs) 24.8 1.Total Assets 609 558 705 640 433 543 624 670 749 1081 Share Capital 29 29 29 29 29 29 57 86 86 86.3 48.6 31.3 3.75 No of Shares (In Crs) 2.6 20.5 1.0 19.5 1.5 Manufacturing Locations of Dabur India Limited in India and Abroad.1 28. 41 .3 55.5 Reserves & Surplus 292 334 365 388 257 335 440 393 531 731 Shareholders Funds 320 362 393 417 286 364 497 480 618 818 Loan Funds 289 196 304 964 132 164 121 160 99 228 Total Capital Employed Return Ratios: ROCE (%) 609 558 705 640 433 543 624 670 749 1081 17.0 3.5 46.7 3.9 4.4 2.0 2.7 22.0 1.7 47.6 57.0 45.6 16.6 28.1 2.5 12.3 86.0 0.7 5.3 39.9 2.9 28.6 38.1 43.1 61.5 1.4 3.6 28.42 1.6 28.5 Dividend Per Share (Rs) 10.7 2.3 86.6 38.0 16.4 86.4 27.

taken from company website Source: DIL Investor Presentation Goldman Sachs August 2009. August The Research and Development Strengths of Dabur India Limited 42 .Source: DIL Investor Presentation Goldman Sachs Conference. taken from company website www.

com Dabur Hair Care BCG Matrix Dabur Chyawanprash BCG Matrix 43 .Source: DIL Investor Presentation Goldman Sachs Conference. taken from company website August 2009.

com/99june10/busi.htm 44 .dailyexcelsior.Dabur Real Juice BCG Matrix REFERENCES   http://www.

com/About%20Dabur-Corporate%20Governance   45  500.pdf  http://www.domainb.html   http://www.html  http://profile.pdf  http://www.  http://www.htm#9    http://www.html   http://www.htm   http://www.asp   http://profile.

icmrindia.networkmagazineindia.icmrindia.htm  %20and%20Organization%20Behavior/  %20and%20Organization%20Behavior/HR%20Restructuring-The%20Coca %20Cola%20&  http://www.html  http://www.shtml 46 .icmrindia.businessworld.htm#The_Leader_Humbled  http://www.htm  http://www. %20and%20Organization%20Behavior/HR%20Restructuring-Coca%20Cola %20&%20Dabur-Case%20Studies.

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