Dabur Over the Years: The
Dabur Story

chillibreeze writer — Nisha Punjabi

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A classic case of a family owned business being handed over to professionals, a company making timely strategic interventions to adapt to the business environment and maintaining its brand equity over the years.

Dabur India Limited (DIL) is the third largest FMCG Company operating in India with a turnover of more than Rs. 2,233 crores. It operates under three business categories namely Consumer Care Division (CCD), Consumer Healthcare Division (CHD) and Dabur foods Limited (in July 2007, Dabur announced the de-merger of DFL with DIL).

Background

Dr. S.K Burman started Dabur in 1884 as a small pharmacy. Initially, he prepared Ayurvedic medicines to treat diseases like malaria, plague and cholera that had no cure during that period. It was his dedication, commitment and empathy that made Dabur a renowned name among the masses. And today, after more than 120 years, Dabur is known for its trustworthiness more than anything else.

During this passage of time, Dabur went through several structural and strategic changes to maintain its market strength. The real mass production started in 1896. Early 1900’s saw Dabur emerge as the first company to provide health care through scientifically tested methods. It achieved significant improvements after setting up Research and Development centers and manufacturing automation. The launch of Dabur’s Amla hairoil and Chyawanprash was a boon to the expanding business. To keep up with the times, Dabur computerized its operations in 1957. Its Dant Manjan and digestive tablets were widely accepted as well.

However with a large product portfolio in the market, Dabur had to maintain operational efficiency. To make sure it adjusted to the business environment it became a public limited company in 1986 followed by diversification in Spain in 1992. A major change came when Dabur came up with its IPO in 1994. Because of its position, Dabur’s issue was 21 times oversubscribed. Dabur further divided its business into three separate groups:

• Health Care Products Division
• Family Products Division
• Dabur Ayurvedic Specialties Limited

In 1998, for the first time in the history of Dabur, a non-family member took charge. Dabur handed over the operations to professionals. Successful implementation of procedures, timely changes and maintaining its essence, Dabur achieved its highest-ever sales figure of Rs 1166.5 crore in 2000-01.

As FMCG sector was struggling with the slow growth in the Indian economy, Dabur decided to take numerous strategic initiatives, reorganize operations and improvise on its brand architecture beginning 2002. 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 recognized as a herbal brand. This was chosen after a study with Accenture, which revealed that Dabur was mainly perceived as a Herbal brand and connected more with the age group above 35.

Also, larger retailers were making their foray into the FMCG market. Apart from HLL, P&G, Marico and Himalya, ITC was also posing a challenge. The supply chain of Dabur was becoming complex because of the large array of products. Southern markets share in the sales figure was negligible. These factors posed a threat to Dabur and hence small changes were not enough.

Given below is the product portfolio of Dabur (Consumer Care Division 2006):

Product Category	Products
Hairoil	Vatika, Amla, Sarso (Anmol coconut)
Shampoo	Vatika heena conditioning, root-strengthening Anmol-natural shine, silky
Baby & Skin Care	Vatika fairness, Gulabari, Vatika fairness face pack Janmaghutti, Olive oil, Gripewater, Dabur lal tel
Digestive	Hajmola range, Hingoli, Pudin hara
Health Supplements	Chyawanprash, chyawanshakti, Dabur Honey, Glucose
Oral Care	Babool (rural market), Meswak (unani method), promise, Lal paste, Binaca, Promise
Home Care	Odomos, Odonil, Odopic, Sanifresh

Given Below is a Segment Wise Competitor list:

Category	Dabur’s Share	Main Competitors
Fruit Juice	58% Real and Active	Tropicanna
Fruit Drinks (coolers)	1% Coolers	Frooti And Maaza
Hair oil Coconut base	6.4% Vatika	HLL
Shampoo Vatika	7.1%	HLL and P&G
Hair care (overall)	27%	HLL, P&G and Himalaya
Chyawanprash	64%	Himani, Zhandu and Himalaya
Honey	40%	Himani, Hamdard and local Players
Digestives	37%	Paras and local players

Recent Initiatives

Following its plans, Dabur made significant changes in the time period 2002-2007.

Brand Rejuvenation

With youth forming a major population of India, Dabur decided to revamp its brand identity. Dabur associated itself with Amitabh Bachchan, Vivek Oberoi, Rani Mukherjee and Virender Sehwag for endorsements. New packaging and advertising campaign saw the sales of Chyawanprash grow by 8.5 per cent in 2003-04.

The year 2004-05 saw a whole new brand identity of Dabur. The old Banyan tree was replaced with a new, fresh Banyan tree.

The logo was changed to a tree with a younger look. The leaves suggesting growth, energy and rejuvenation, twin colors reflecting perfect combination of stability and freshness, the trunk represented three people raising their hands in joy, the broad trunk symbolized stability, multiple branches were chosen to convey growth, and warmth and energy were displayed through the soft orange color. ‘Celebrating Life’ was chosen as a new tag that completely summarized the whole essence.

The Chairman in his annual report message said, “If I were to summarize your Company’s performance during the year under review (2004-2005), it would be ‘Pursuit of Profitable Growth’”.

HR Initiaves

The culture at Dabur gives full autonomy to its employees. Various training and development programs like Young Manager Development Program, Prayas, Leading and Facilitating Performance, Campus to Corpora and a Balanced scorecard approach to performance evaluation, helps employees realize their potential.

Recently, Dabur has adopted an innovative HR program of offering ESOPs to new engineering and management trainees at the time of joining. Also in 2005, Dabur gave Bonus to its employees after 12 years. This boosted the employee morale further.

Dabur was listed as a “Great Place to Work”, 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”. The results were published in Business World dated February 2006.

IT initiatives

Dabur installed centralized SAP ERP system from 1st April 2006 for all business units. It also implemented a country wide new WAN Infrastructure for running centralized ERP system. Further it set up new Data Center at KCO Head Office.

Supply chain Initiatives

Dabur has undertaken e-procurement in a big way. In 2003-04 Dabur India procured Rs.210 crore of raw materials through e-sourcing — or almost 50 per cent of total raw material expenditure — and, in the process, considerably controlled raw material costs which were on a rise.

For better production and operation management, Dabur included automation, debottlenecking, Kaizen and wastage control. It set up production units in locations providing tax holidays to reduce cost and improve efficiency.
Other important changes

Dabur made its largest acquisition by taking over Balsara hygiene and home products business. Dabur bought the entire promoters’ stake of three Balsara companies through an all-cash deal of Rs.140 crore. This was done to ensure Dabur’s presence in all price segments in the herbal oral care market. Moreover, it allowed Dabur’s entry in the household care segment, where Balsara has well-established brands.

Dabur also de-merged its pharmaceutical business to come out as a pure FMCG player

Dabur estimated that the southern region was contributing as low as 7% to its overall growth. For this purpose, the south team adopted a three-phase approach. First, it focused on point of sale promotions and stocking practices. Second phase included better marketing efforts in terms of advertising and packaging. Finally, it envisioned customized product launches for the Southern states. The completion of first two phases by 2005-06 resulted in increasing contribution to 10%.

Vision 2010

After the successful implementation of the 4-year business plan from 2002 to 2006, Dabur has launched another plan for 2010. The main objectives are:

• Doubling of the sales figure from 2006
• The new plan will focus on expansion, acquisition and innovation. Although Dabur’s international business has done well — growing by almost 29 per cent to Rs.292 crore in 2006-07, plans are to increase it by leaps and bounds.
• Growth will be achieved through international business, homecare, healthcare and foods.
• Southern markets will remain as a focus area to increase its revenue share to 15 per cent.

With smoothly sailing through its previous plans, this vision seems possible. Time and again, Dabur has made decisions that have led to its present position. However, if Dabur could be more aggressive in its approach, it can rise to unprecedented levels. To conclude, this is a 10 year performance table from Dabur’s website.

* Stock split from Rs 10/share to Rs 1/ share
** Consolidated results from FY02 onwards
***Dabur Pharma got de-merged.
#Bonus issue of 1:1 was issued during the year
^ Bonus Issue of 1:2 was issued during the year

Select References: The case study has been compiled on the basis of thorough information provided on the companies website: www.dabur.com

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—About our writer: Nisha says, "Born and brought up in the city of Nawabs and Kebabs - Lucknow, I'm a simple and funloving person who likes to control her own life. With a PG diploma in Management, I've chosen to become a freelance writer and I'm enjoying every bit of it!"

 

 

 

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