Dabur India Ltd In the present era of globalization of markets, where there is extensive foreign competition with the

reduction of entry barriers, it is necessary to benchmark a companys financial indicators with its global competitors. Benchmarking encourages the companies to create transnational and global strategies. Do global standards have an effect on a companys asset structure? Does the company hold more cash and other short term assets than its competitors or does it concentrate its assets in physical plant and equipment? Does the company have more payables compared to its benchmarks, or does it hold a higher concentration of long-term debt? Does the firm have a relatively higher cost of goods sold, operating costs, or income taxes compared to its global benchmarks? Are their returns on equity higher? Are profit margins greater? Are inventories held longer? These classic questions can be answered by considering the competitors in the same or similar industries at a global level. But this is not an easy task as the firm has to determine its competitors competing in the same sector, but not necessarily competing directly with the company in local markets. This report considers the case of Dabur India Ltd. which examines its global strategies and its future operations. Dabur has created an image distinct from similar businesses and has an ability to adapt to changes ahead of others and set new standards in corporate governance & innovation. The 125-year-old company, promoted by the Burman family, was set up in 1884 as an Ayurvedic medicines company in Kolkata, West Bengal. Since then, Dabur India Ltd has become one of the biggest Indian-owned consumer packaged goods company with the largest herbal and natural product portfolio in the world. Dabur started its operations as a family-run business and has now been transformed into a professionally managed enterprise. In 1884, Dr. S.K Burman started Dabur as a small pharmacy. He initiated to prepared Ayurvedic medicines to treat diseases like malaria, plague and cholera that had no cure during that period. His dedication, commitment and empathy made Dabur a famous among the masses. Dabur went through several structural and strategic changes after that to maintain its market strength. The real mass production started in 1896. In the early 1900s, Dabur was the first company to provide health care products which were scientifically tested. Eventually they set up a Research and Development center and automated its manufacturing operations in 1957 which led to significant improvements. Dabur maintained its operational efficiency due to the large product portfolio in the market. It became a public limited company in 1986 after which it diversified in Spain in 1992 to cope up with the business environment. Dabur came up with its IPO in 1994. Because of its position, excellent performance and brand image, Daburs issue was oversubscribed by 21 times. In 1998, a non-family member took over the business where the operations were handed over to the professionals. After its successful implementation, its essence was maintained.

In the Indian economy, the FMCG sector was struggling with the slow growth, so Dabur decided to take a number of strategic initiatives, reorganize operations and improve its brand image further. It decided to concentrate its marketing efforts on Dabur, Vatika, Anmol, Real and Hajmola to strengthen their brand equity, create differentiation and emerge as a pure FMCG player. Competition increased and large retailers were entered into the FMCG market. Dabur faced fierce competition from HLL, P&G, Marico, Himalaya and ITC. The supply chain of Dabur was becoming complex because of its wide range of products. These factors posed a threat to Dabur and these small changes were not enough to handle the competition. Southern markets did not contribute much in the sales figure. Only a 7% contribution was estimated. Thus, the south team adopted a three-phase approach. Firstly, it focused on point of sale promotions and stocking practices. The second phase included better marketing efforts through advertising and packaging. Finally, it launched a customized product for the Southern states. In 2001, Dabur set up a subsidiary- Dabur Oncology plc in the UK for which it invested $16 million and invested over Rs 12 crore on oncology research. The company set apart its oncology business as part of the company`s strategy to focus on its core businesses of FMCG products and over-the-counter drugs. It also took over Balsara hygiene and home products business and bought the entire promoters stake of three Balsara companies through an all-cash deal of Rs.140 crore. Dabur India Ltd has restructured its pharmaceutical business and has virtually separated it from the FMCG business. The pharmaceutical business continued to operate under the management of Dabur India but functioned as a separate business unit internally with a separate business head and functional heads and separate books of accounts. This was done to provide greater focus and growth to each business under separate business heads. It laid out a growth strategy of introducing new product, selling its brands to new segments, and focusing on new geographies. This strategy led to high dividends for Dabur and its sales growth crossed the consumer non-durable sector average. Dabur India Limited has achieved a significant position and enjoys a market leadership status. The success of the company is due to its dedication, corporate and process hygiene, dynamic leadership and commitment to the partners and their stakeholders. Dabur India Ltd has revenues of about US$ 910 Million (Rs 4110 Crore) and has over 2.8 million retail outlets operating in both urban and rural markets. It has 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). Dabur India is a world leader in Ayurveda and has a portfolio of over 250 Herbal/Ayurvedic products. Dabur has its 17 ultra-modern manufacturing units around the globe. It operates in the overseas market where its products are distributed in over 60 countries. Its brands are highly popular in the Middle East, SAARC countries, Africa, US, Europe and Russia. Dabur's overseas

revenue today accounts for over 30% of the total turnover. Dabur has 3 major strategic business units (SBU) that are- Consumer Care Division (CCD), Consumer Health Division (CHD) and International Business Division (IBD). The Consumer Care Division (CCD) handles the consumer needs across four distinct business portfolios of Personal Care, Health Care, Home Care & Foods. Its master brands include Dabur Ayurvedic healthcare products, Vatika - Premium hair care, Hajmola - Tasty digestives, Ral Fruit juices & beverages and Fem - Fairness bleaches & skin care products. The Consumer Health Division (CHD) provides a range of Ayurvedic medicines and products offering more than 300 different ayurvedic products that are also sold through prescriptions. Its products are promoted through an organized community of traditional practitioners and fresh batches of students. The International Business Division (IBD) deals with the health and personal care needs of international customers, in the Middle East, North & West Africa, EU and the US. It had a compound annual growth rate of 33% in the last 6 years and contributed to about 20% of total sales. The International Division follows a strategy of localization of manufacturing and sales & marketing. The operating margins of Daburs international business are just slightly below that of the domestic business which shows that it is profitable. It further aims at expanding its margins for the international business. Its International operations are setup in 25 different countries spread over six continents where the major part of its business is concentrated in the Middle East. Dabur has its four manufacturing facilities located in UAE, Bangladesh and Egypt. The company aims at expanding its market share and customer base in the Middle East, the Indian Subcontinent, Russia and Africa. The US and Europe are the developed markets for which Dabur is looking at alliances with distributors. Dabur India has set up a manufacturing unit in Pakistan where the company had initiated talks with local FMCG players in the neighboring country and finalized a deal to start manufacturing hair oils and shampoos. Satisfaction of the internal customers is very essential for the success of an enterprise. Various efforts taken by the management include training and development programs like Young Manager Development Program, Prayas, Leading and Facilitating Performance, Campus to Corpora and a Balanced scorecard approach for performance evaluation that motivates the employees and encourages them to realize their potential.

Dabur adopted an innovative HR program of offering ESOPs (Employee Stock Ownership Plan) to the new engineering and management trainees at the time of joining the company and to boost the employee morale further it also gives bonuses to its employees. In a survey conducted by Grow Talent & Company and Great Place to Work Institute, USA, Dabur was listed as the 10th Great Place to Work where the results were published in Business World dated February 2006. For a business to be at par with the latest technology, a continuous effort of R&D is essential. The IT department of Dabur took initiatives to do so. In all business units, a centralized ERP system was installed and a country wide new WAN Infrastructure was implemented for its running. It also set up new Data Center at its Head Office. Its production and operation functions were automated and various approaches like debottlenecking, Kaizen and wastage control measures were implemented. (Strategic Strengths

SWOT

analysis

of

the

FMCG

Sector analysis)

Low operational costs Presence of established distribution networks Weaknesses Lower scope of investing in technology ,especially in small scale Low export levels Opportunities

Untapped rural market Large domestic market Export potential High consumer goods spending Increase in purchasing power of consumers

Threats

Slowdown in rural demand Removal of import restrictions resulting in replacing of domestic brands Tax and regulatory structure

SWOT analysis of Dabur Strengths

strategic partnerships worldwide coverage 100 years of experience

research plants Weaknesses

no retail outlet no doorstep delivery Opportunities

Overseas dealerships strategic alliances export of ayurvedic products Kerala hub of ayurveda

Threats