Final on Dabur

8/8/2019 Final on Dabur

1/18

GROWTH STRATEGY OF

AYUSHI SHARMA

LALIT KHATRI

SHREYA SHARMA


2/18

Highlights

Introduction of

Dabur

Introduction of

the case

Analysis of the

caserecommendations


3/18

DABUR

1884 Birth of Dabur1896 Setting up a manufacturing plant1900s Ayurvedic medicines

1919 Establishment of research laboratories1920 Expands further1936 Dabur India (Dr. S.K. Burman) Pvt. Ltd.1972 Shift to Delhi1979 Sahibabad factory / Dabur Research Foundation1986 Public Limited Company1992 Joint venture with Agrolimen of Spain1993 Cancer treatment1994 Public issues1995 Joint Ventures


4/18

Conti..

1996 3 separate divisions

1997 Foods Division / Project STARS

1998 Professionals to manage the Company

2000 Turnover of Rs.1,000 crores

2003 Dabur demerges Pharma Business

2005 Dabur aquires Balsara

2005 Dabur announces Bonus after 12 years

2006 Dabur crosses $2 Bin market Cap, adopts US GAAP

2006 Approves FCCB/GDR/ADR up to $200 million

2007 Celebrating 10 years of Real

2007 Foray into organised retail

2007 Dabur Foods Merged With Dabur India

2008 Acquires Fem Care Pharma

2009 Dabur Red Toothpaste joins 'Billion Rupee Brand' club


5/18

History of Dabur

Dabur India Ltd. (Dabur), a leading Indian fast movingconsumer goods (FMCG) company, was established in1884 as a small pharmacy based in Calcutta (nowKolkata). Since then, it had gone on to become a Rs.22 billion company (as of 2007). Its product rangeincluded Toothpastes and Toothpowder (Dabur Red

and Lal Dant Manjan), Hair Oils (Vatika), Shampoos(Vatika) , Digestives (Hajmola), Fruit Juices (Real),Nature Care Isabgol, Medicated Oils, Ayurvedicproducts (such as Churnas, Asav Arishtas, RasRasaynas, and Chyawanprash), and Honey.

It had two major strategic business units - ConsumerC

are Division andC

onsumer Health Division. Itsproducts were produced in 13 manufacturinglocations in Nepal, Nigeria, Egypt, Dubai, andBangladesh and it products were sold in more than 50countries.


6/18

Snap shot of Dabur

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 InternationalBusiness Division (IBD)

3 Subsidiary Group companies - Dabur International, Fem CarePharma and newu and 8 step down subsidiaries: Dabur Nepal PvtLtd (Nepal), Dabur Egypt Ltd (Egypt), Asian Consumer Care(Bangladesh), Asian Consumer Care (Pakistan), AfricanConsumer 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 over60 countries

Wide and deep market penetration with 50C&Fagents, more than5000 distributors and over2.8 million retail outlets all over India


7/18

"Dedicated tothe health andwell being of

everyhousehold"

This is ourcompany. We

accept personalresponsibility,

andaccountability

to meet

business needs.

They all areleaders in our

area ofresponsibility,with a deep

commitment todeliver results.

We aredetermined tobe the best at

doing whatmatters most.

People are ourmost importantasset. We addvalue throughresult driven

training, and weencourage &

rewardexcellence.


8/18

They havesuperior

understanding ofconsumer needs

and developproducts to fulfill

them better.

They worktogether on the

principle ofmutual trust &

transparency in aboundary-less

organisation. We

are intellectuallyhonest inadvocatingproposals,including

recognizing risks.

Continuousinnovation inproducts &

processes is thebasis of our

success.

They arecommitted to theachievement ofbusiness success

with integrity.We are honest

with consumers,

with businesspartners andwith each other.


9/18


10/18

Introduction to case

A finger in many pies

The company had adopted a combination of the organic andinorganic routes in fueling its growth.

Further, it enhanced its product portfolio in the various productcategories. For instance, Homemade cooking pastes like ginger,garlic, tomato puree, etc. were added to the food business.

On the inorganic growth front, the company acquired the Balsaragroup of companies in 2005. This acquisition gave Dabur newbrands in toothpaste (Promise, Babool, and Meswak), mosquitorepellants (Odomos), toilet cleaners (Sani Fresh), and airfreshners (Odonil). .


11/18

Conti

In fact, the Rs 1,852-crore (Rs 18.52 billion) company has a presence incategories ranging from mosquito repellents and juices to face packs andhoney, some acquired and some developed in-house. Trouble is, not one ofthese categories contributes more than 21 per cent to the company'srevenues.

Still, Dabur has been growing at a lively 17 per cent over the past threeyears. Which raises an interesting strategy question: is there a right way togrow? What is better: a few power brands that are nurtured to offer hugereturns, or a wide array of products all of which contribute meager sumsthat, nevertheless, add up to a reasonably good total?

There is a school of thought that believes Dabur's choice may not be thebest way of ensuring future growth: too many segments will constrain it fromscaling up significantly to match increasing competition and that will bringdown overall pace of growth. Hear some analyst


12/18

Conti

Dabur isn't the category leader in any of the consumerproduct categories where it has a presence: it is No. 4 in

shampoos, No. 3 in toothpastes and nowhere in the reckoning

in toilet soaps. But that doesn't appear to bother the

company overmuch -- it is too busy launching new products

In the past two years, there have been five launches underthe Dabur umbrella and two under Vatika. And that doesn't

include the eight brands the company gained when it

acquired Balsara in 2005


13/18

Growth strategy by Dabur

Focus on growing our core brands across categories, reaching out tonew geographies, within and outside India, and improve operational

efficiencies by leveraging technology

Be the preferred company to meet the health and personal grooming

needs of our target consumers with safe, efficacious, natural solutionsby synthesizing our deep knowledge of ayurveda and herbs with

modern science

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, developingand retaining quality personnel

Be responsible citizens with a commitment to environmental protection

Provide superior returns, relative to our peer group, to ourshareholders


14/18

Dabur says

"We want to be in as many categories as possible, aslong as they offer a herbal platform, even if our share issmall."

the strategy for a new brand launch is simple: by the

third year, a new brand must contribute to commonoverheads and by the fifth year, it should make "someprofit". "I don't intend to be the market leader. It'senough that I'm growing faster than the market," headds.

"We are consciously entering only those categories thatoffer a platform for herbal products. That is why wehave forayed into personal wash but will stay awayfrom laundry,"


15/18

Analysis

When a banyan tree's

branches hit the ground,

they start acting as roots, too


16/18

In Dabur's case, though, the banyan treestands for what has not been achieved. The

company has been branching out -- it has

seven brands in the oral care category, nine in

the hair care space and six brands in foods.

Competition from larger players such as

Hindustan Lever (HLL) and Procter & Gamble

is increasing,"


17/18

"It will not be easy for Dabur to grow itsshare, even though the category is

underpenetrated.". Even traditionally higher-

margin categories, such as foods, are now

likely to be under threat as large retailers

One way of scaling up could be through the

inorganic route


18/18

recommendations

More focus on penetration should be laid.

It is probably better for a company to create a fewchampion brands rather than dissipate its energies on

too many products, because that is what will result insustainable margins

It is difficult to scale up organically these days becausebrands are constantly being upstaged. Now, ifcompanies don't scale up, margins are going to beunder pressure.

The company should discard products where volumesaren't growing fast enough to deliver margins

Final on Dabur

Documents