DABUR Project

Dissertation Report on

Dabur India Limited

AMITY SCHOOL OF BUSINESS NOIDA

AMITY UNIVERSITY ----------UTTAR PRADESH----------

Submitted to: Submitted by: Mr. Ashish Noel Akshay Jhamb(D- 32) Lecturer Bajrang Jain ( D-40)

Atul Madaan (D- 14)Arun Prassanna (D- 36)

Niharika Verma ( D-11)

Radhika Ahuja (D-

INTRODUCTION

Dabur India Limited has marked its presence with significant achievements and today commands a market leadership status. Our story of success is based on dedication to nature, corporate and process hygiene, dynamic leadership and commitment to our partners and stakeholders. The results of our policies and initiatives speak for themselves.

Leading consumer goods company in India with a turnover of Rs. 2834.11 Crore (FY09)

3 major strategic business units (SBU) - Consumer Care Division (CCD), Consumer Health Division (CHD) and International Business Division (IBD)

3 Subsidiary Group companies - Dabur International, Fem Care Pharma and newu and 8 step down subsidiaries: Dabur Nepal Pvt Ltd (Nepal), Dabur Egypt Ltd (Egypt), Asian Consumer Care (Bangladesh), Asian Consumer Care (Pakistan), African Consumer Care (Nigeria), Naturelle LLC (Ras Al Khaimah-UAE), Weikfield International (UAE) and Jaquline Inc. (USA).

17 ultra-modern manufacturing units spread around the globe

Products marketed in over 60 countries

Wide and deep market penetration with 50 C&F agents, more than 5000 distributors and over2.8 million retail outlets all over India.

Consumer Care Division   (CCD) addresses consumer needs across the entire FMCG spectrum through four distinct business portfolios of Personal Care, Health Care, Home Care & Foods

Master brands: Dabur - Ayurvedic healthcare products

Vatika - Premium hair care

Hajmola - Tasty digestives

Réal - Fruit juices & beverages

Fem - Fairness bleaches & skin care products.

9 Billion-Rupee brands: Dabur Amla, Dabur Chyawanprash, Vatika, Réal, Dabur Red Toothpaste, Dabur Lal Dant Manjan,Babool, Hajmola and Dabur Honey

Strategic positioning of Honey as food product, leading to market leadership (over 75%) in branded honey market 

Dabur Chyawanprash the largest selling Ayurvedic medicine with over 65% market share.

Vatika Shampoo has been the fastest selling shampoo brand in India for three years in a row

Hajmola tablets in command with 60% market share of digestive tablets category. About 2.5 crore Hajmola tablets are consumed in India every day

Leader in herbal digestives with 90% market share

Consumer Health Division   (CHD) offers a range of classical Ayurvedic medicines and Ayurvedic OTC products that deliver the age-old benefits of Ayurveda in modern ready-to-use formats

Has more than 300 products sold through prescriptions as well as over the counter

Major categories in traditional formulations include:- Asav Arishtas- Ras Rasayanas- Churnas- Medicated Oils

Proprietary Ayurvedic medicines developed by Dabur include:- Nature Care Isabgol- Madhuvaani- Trifgol

Division also works for promotion of Ayurveda through organised community of traditional practitioners and developing fresh batches of students.

International Business Division   (IBD) caters to the health and personal care needs of customers across different international markets,

spanning the Middle East, North & West Africa, EU and the US with its brands Dabur & Vatika 

Growing at a CAGR of 33% in the last 6 years and contributes to about 20% of total sales

Leveraging the 'Natural' preference among local consumers to increase share in perosnal care categories.

HISTORYThe story of Dabur goes back to 1884, to a young doctor armed with a degree in medicine and a burning desire to serve mankind. This young man, Dr. S.K. Burman, laid the foundations of what is today known as Dabur India Limited. The brand name Dabur is derived from the words 'Da' for ‘Daktar’ or ‘Doctor’ and 'bur' from Burman. From those humble beginnings, the company has grown into India's leading manufacturer of consumer healthcare, personal care and food products. Over its 125 years of existence, the Dabur brand has stood for goodness through a natural lifestyle. An umbrella name for a variety of products, ranging from hair care to honey, Dabur has consistently ranked among India’s top brands. Its brands are built on the foundation of trust that a Dabur offering will never cause anyone slightest of harm. The trust levels that this brand enjoys are phenomenally high.

FAMILY TREE OF DABUR

VISION

"Dedicated to the health and well being of every household"

PHILOSPHY OF DABUR

This is our company. We accept personal responsibility, and accountability to meet business needs.

We all are leaders in our area of responsibility, with a deep commitment to deliver results. We are determined to be the best at doing what matters most.

People are our most important asset. We add value through result driven training, and we encourage & reward excellence.

We have superior understanding of consumer needs and develop products to fulfill them better.

We work together on the principle of mutual trust & transparency in a boundary-less organisation. We are intellectually honest in advocating proposals, including recognizing risks.

Continuous innovation in products & processes is the basis of our success. We are committed to the achievement of business success with integrity. We are honest with consumers, with business partners and with each

other.

DABUR’S BUSINESS MODEL

Manufacturing Facilities in India

REASONS BEHIND DABUR’S SUCCESS

Sales in FY09 grew by 18.3% to Rs 2834.1 crore from Rs 2396.3 crore in FY08.This was on the back of robust volume growth in key categories such astoothpaste, hair care and foods especially in rural India. It was led by rural Indiaalong with the resurgence of the international business division. Going forward,we expect net sales to grow at a CAGR of 16.9% over FY09-11E from Rs 2834.1crore in FY09 to Rs 3875.6 crore in FY11E. This will be led by new product launches and the company’s foray into skincare via the FCPL acquisition. The company is expected to benefit from a better distribution footprint and operational efficiencies.

Having alliances with other strong and popular businesses is a major plus point for Dabur India as it helps bring in new customers and make business more effective.

Keeping costs lower than their competitors and keeping the cost advantages helps dabur India pass on some of the benefits to consumers.

Experienced employees are key to the success of dabur India helping to drive them forward with expertise and knowledge.

High quality machinery, staff, offices and equipment ensure the job is done to the utmost standard, and is strength of dabur India.

Dabur India has an extensive customer base, which is a major strength regarding sales and profit.

Dabur India’s reputation is strong and popular, meaning people view it with respect and believe in it.

Dabur India’s international operations mean a wider customer base, a stronger brand and a bigger chunk of the global market.

Supplier relationships are strong at dabur India, which can only be seen as strength in their overall performance.

Dabur India limited In the Market

CODE:BSE: 500096  NSE: DABUR  

Current Market Price : 98.5Dividend (D0) : Rs 2.00

Assumption:

Super Normal Profit : 21% For 3 yearsNormal Growth : 18.225% and forever thereafter .

Market Price( Po) @ 20% is 138.69 @ 40% is 88.96.

So By interpolation we get

20/ 49.67* 40.17 = 16.17%So marke Price is 20 + 16.17 = 36,17%

Value Of the Firm = NBT/ Ke= 501/ 36.17%= 1385.13

The actual shareholders fund for FY 10 is 935Cr and according to me it is coming 1385.13, So the difference is of 450.13.

Interpretation: The share of the company is slightly overvalued in the market so there is

possibility that in the near future the prices of its share may come down. It is littlie risky to invest in the company right now.

The other reason can be that the market price which I have taken for measurement may not be the same at that period of time when actually it was taken into consideration.

GROWTH OF DABUR LIMITED COMPANY

The growth of 17%   3% is on account of the Hobi acquisition. So, the normal organic growth is around 14% and the split is around 10% and 4%; 10%, volume and 4%, price.

By looking at the above graph we can see the growth has been consistent throughout the past 5year tenure.

In the recessionary phase also the growth was not much affected, there was a drop of 2.1% but due to its internal strengths the company again picked up its growth from 15.5% to 20.00%. this is why DABUR was ranked at the 19th position amongst India's Best Wealth Creators.

Some of the reasons that lowered down the growth in the previous Financial year were:

Delay in retail foray The company, which had planned to establish 350 retail stores of minimum store area of 700 sq ft and maximum area of 6000 sq ft over a period of five years, has trimmed down expansion plans due to severe financial pressures faced by the retail industry. The company has opened nine stores and is fine-tuning the format, location strategy and the rental costs of the stores to reflect the fall in real estate prices. However, the velocity of sales expected has been adversely impacted, thereby pressurising margins. Any significant losses incurred can subsequently impact earnings.

Foreign Currecny Fluactions Insignificant Fluctuation in the foreign currency market also affected the company and thus increasing the cost and lowering down the profits and the growth as well.

Deficient monsoons Depending on the severity of the monsoon deficiency, the company (which derives around 50% of its revenues) and monsoon is the source of many of its raw material has been severely hit by the monsoon condition prevailed in the last FY year

Inflationary pressures This has also been the down fall in the growth of the company in the previous Financial Year. This has relived but not to much of the extent.

Technique to overcome

Some of the thing that had helped DABUR to sustain in the situation like Recession and come out successfully of it. This is what makes the DABUR to maintain its position in the INDIAN market.

Conservation of Energy The company has done things in conserving the energy and coming Dabur has been undertaking a host of energy conservation measures.Successful implementation of various energy conservation projects have resulted in a 13.8% reduction in the Company’s energy bill in the 2008-09 fiscal alone. What was noteworthy was the fact that this reduction has come despite an 8-9% volume increase in manufacturing, and an average 11.7% increase in cost of key input fuels. The host of measures – key among them being use of bio-fuels in boilers, generation of biogas and installation of energy efficient equipment – helped lower the cost of production, besides reduce effluent and improve hygiene conditions & productivity.

Health Safety & Environmental Review Renewing the commitment to Health Safety and Environment, Dabur has formulated a policy focusing on People, Technology and Facilities. A dedicated “Safety Management Team” has also been put in place to work towards the prevention of untoward incidents at the corporate and unit level, besides educate & motivate employees on various aspects of Health, Safety and Environment.The Company is also continuously monitoring its waste in adherence with the pollution control norms. In pursuance of its commitment towards the society, efforts have also been initiated to conserve and maintain the ground water level. The efforts include implementation of rainwater harvesting, which has delivered encouraging results and has put the company on the path to becoming a Water-Positive Corporation. Dabur also initiated a Carbon Foot Print Study at the unit level with an aim to become a carbon positive Company in years to come.Dabur is committed to sustainable development throughout our diverse operations. And, we will strive to translate the good intentions into concrete and lasting results, contributing to the ultimate good of the society.

Technology Absorption

Dabur has also made continuous efforts towards technology absorptionand innovation, which have contributed towards preserving natural resources.These efforts include:

Minimum use of water in process by pre-concentration of herbal extractand reduction in concentration time.

Uniform heating in VTDs by hot water as against steam earlier, resulting in 30% reduction in bulk wastage by using non-stick coating and formulation change.

Improvement in water treatment plant through introduction of RO(Reverse Osmosis) system for DM water, reutilization of waste water frompump seal cooling and RO reject waste-water management.

Introduction of water efficient CIP system with recycling of water in fruitjuice manufacturing

Development of in-house technology to convert fruit waste into organicmanure by using the culture Lactobacillus burchi

Strategic Intent

We intend to significantly accelerate profitable growth. To do this, we will: Focus on growing our core brands across categories, reaching out to new

geographies, within and outside India, and improve operational efficiencies by leveraging technology

Be the preferred company to meet the health and personal groomingneeds of our target consumers with safe, efficacious, natural solutions bysynthesizing our deep knowledge of ayurveda and herbs with modernscience

Provide our consumers with innovative products within easy reach. Build a platform to enable Dabur to become a global ayurvedic leader. Be a professionally managed employer of choice, attracting, developing

and retaining quality personnel. Be responsible citizens with a commitment to environmental protection. Provide superior returns, relative to our peer group, to our shareholders

Research and Development contribution

Dabur India has a well equipped inhouse research wing - Dabur Research & Development Centre (DRDC) – that follows a ‘brush-to-brand’ approach. They have our in-house nursery, which growsseveral rare herbs that go into various products. This in-depth knowledge about nature and natural ingredients is one of our big strengths in the market. DRDC also undertakes detailed tests on individual ingredients and products to ensure that the final product meets customer needs and aspirations.

The Company has achieved a host of significant benefits in terms of product improvement, cost reduction, product development, import substitution, cleaner environment and waste disposal, amongst others.

Company in the Year 2009-2010 In an intensely competitive environment, Dabur India Ltd. continued to drive

Industry-best volume-led growth and posted one of its best performances, growing the Revenues by 20.6% and Net Profit by 28..

645, It is the percentage growth in Net Profit between 2001 and 2010. It is the strength of a corporate brand that has not only survived the ups and downs of the economy, but more importantly gone on to report strong growth year after year.

The GDP, which recorded high growth of about 8-9% from 2004-05 to 2007-08, had slowed down to 6.7% in 2008-09 but recovered again in 2009-10, growing at 7.4.

15, It is the number of new brands, products and variants launched by Dabur in 2009-10. The new launches - which include Uveda range of Ayurvedic skin care products and Réal Burrst range of fruit beverages - further strengthened Dabur's presence in existing categories besides opening up newer avenues of growth.

14.6, It is the revenue increase in percentage terms during 2009-10 of Consumer Care Division, the largest SBU of the company, which today accounts for 68.1% of total consolidated revenue.

20, It is the percentage growth of Dabur’s Toothpaste brands in 2009-10 making it among the fastest growing toothpaste companies in India.

25, It is the number in million of Hajmola tablets that are consumed daily in India. It is the story of a brand that has been touching millions of Indians daily thereby emerging as the most-preferred post-meal digestive in the country and becoming a billion rupee produce.

20, It is the growth in percentage terms in 2009-10 of the foods business, which now contributes 14.2% to the CCD sales, driven by both the range of fruit juices and culinary portfolio. The Company, which primarily operates in the packaged fruit juices & nectars market with Réal and Réal Active.

CONCLUSIONDabur is the most consistent company. The reason can be because of the wide variety of the product line that the company is catering in the sector.

Dabur has been a steady dividend paying company and has also witnessed a sharp increase in its market cap, which has increased ten-fold from Rs 17 billion in 2001 to more than Rs 170 billion in 2010. In fact, a Motilal Oswal study had recently ranked Dabur as the biggest wealth creator in the FMCG (non-Food) category during 2004 to 2009. As per another study by Dalal Street Journal, Dabur was ranked at the 19th position amongst India's Best Wealth Creators. As per this study, Rs. 1 lakh invested in Dabur in January 2005, would have become Rs. 5.04 lakh i.e. a gain of 404%.

The management and the employee are the base and the pillar of the company and company is also doing so many things for its employee.

The company also gives good amount of “Return” to its shareholders. the invertors also knows that the company is not a risky company its shares do not fluctuate much.