A Report on

Strategic Management Practices

Followed in Dabur India Ltd

Submitted to,
Prof. K. M. Thomas

Submitted by
Naeema K
09308024
11 April, 2011
 Dabur India Ltd
Introduction
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. 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,
Egypt UK etc.It has three 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). 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 and US. This
division has high level of localization of manufacturing and sales & marketing.
Strategic Analysis:

1: SWOT Analysis

Strengths

 Unique “Ayurvedic and Health” Positioning

 Extensive market penetration with 50 C&F agents, more than 5000 distributors and
over 2.8 million retail outlets all over India*

 High brand awareness and perception of Dabur, Vatika, Hajmola, Réal

 Monopoly status in multiple product categories like digestives (90% MS), branded
honey(75% MS) and Chyawanprash(65% MS)

Weaknesses

 Low Penetration in Rural areas in Food, Health Supplements and Home care
categories.

 Dabur’s R&D work is low and insignificant, which is a major weakness in FMVG as it
is constantly creating new products.

Opportunities

 Packaged Foods category

 Sugar free food and health care substitutes e.g. Sugar Free Chyawanprash

 Expanding size of pie in Home care segment due to efforts by firms like Godrej Sara
Lee and niche products like Jyothy laboratories

 Increasing Modern trade is a good indicator for Personal care segment as it provides
higher visibility, higher rotations and a personal touch(relevant for premium
products).

Threats
 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

2: 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 ayurvedic platform is also being used by other players like Emami and Ayur.

 Premium personal care products face competition from international brands as well
as boutique products.

 Existing players are entering new segments which will increase the competition e.g.
Casper entering the vaporizer segment and Good Knight the personal spray and gel
segment.

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.

 The exit barriers are low and thereby firms can enter and exit easily.

 But the entry barriers in terms of building a national brand as well the distribution
network is high. So is the exit barrier.

3) Threat of Substitute Products

 Substitutability is highest in Food category followed by Personal care category,

where product innovation is high

 Home grown and traditional substitutes to Home care products e.g. traditional
insect repellents.

4) Threat of Buyers Bargaining Power

 The buyer’s bargaining power is low since they cannot influence the prices to such a
great deal.

 Even in case of Modern trade the buyer’s bargaining power is moderate as it

generates less than 10% of FMCG sales.

 Price sensitivity is high especially in the Food and Home Care category

5) Threat of Supplier’s Bargaining Power

 The number of suppliers is low for the Home Care category e.g. Certain oils are not
available everywhere which increases the raw material supplier’s bargaining power
when negotiating the price with Godrej etc.

Some of the strategic decisions and practices followed in DABUR:

 In 1994, Dabur reorganised its business in three separate divisions of Sales,
Marketing and Operations
 In 1995, Dabur launched Vatika
  In 1997, Foods division was carved out which consisted of Real Fruit Juice and
Homemade cooking pastas
 Launched a unique initiative called STARS (Strive to Achieve Record Success) to
achieve accelerated growth in the future years.
 In April 1997, Dabur hired the leading management consulting firm McKinsey & Co.
for mapping out a comprehensive restructuring plan for its varied businesses and
strengthen its competitive position
 Dabur paid a fee of Rs 10 crore to McKinsey & Co. and started following its advice
religiously
 Dabur India limited also scaled down its stake in Excelsia Foods to 40 per cent,
handing over control to in favour of Nestle SA to become a minority partner. Dabur
sold its 20 per cent stake in Excelcia Foods Ltd for Rs 10.6 crores
 The roles of Management Committee, Board of Directors and Family Council were
defined and formalized
 In 2001, Family Council was constituted for formalizing the promoter family’s role
in managing the business interests encompassing all group companies.
 In 2002, Dabur roped in Accenture to study its sales and distribution system. As per
its recommendations, Dabur restructured its Pharmaceutical business and
separated it from its FMCG business.
 Dabur leveraged information technology to drive supply chain efficiencies and had
invested to the tune of Rs. 12 crores by 2004 for the IT backbone of the organisation.
The company started to work on two ERP systems - Baan and Mfg Pro in 2001, in
production and distribution respectively

In 2003, Dabur collaborated with Accenture so as to keep itself competitive. The need of
the hour was to work smarter and faster so as to improve profitability and revenue growth.
Accenture advised Dabur to focus on the following key areas:

 Competing on core competencies, while outsourcing non-core functions to trusted third-

party providers.

 Viewing information technology (IT) as a strategic asset that creates real values—not
simply a cost to be managed.

 Streamlining processes wherever possible

 In May 2003, the board of Dabur India demerged the pharmaceuticals business and
created a separate entity Dabur Pharma Ltd. At that point of time pharmaceuticals
contributed around 15% of total sales.
 In 2007, the company sold its non-oncology business to Alembic for Rs 159 crore to
focus on its oncology segment.
 In 2008 German major Fresenius Kabi acquired 73% stake in India’s largest anti-
cancer drug maker Dabur Pharma for around Rs 872 crore
 In Jan 2005, Dabur India Ltd (DIL) acquired three Balsara group companies for
Rs143 crore in an all-cash deal. It mopped up Rs. 120 crores through internal
accruals and financed the remaining Rs. 23 crores through borrowings
 Dabur acquired Fem care in June 2009 and the result has been phenomenal. The
market share in the skin segment increased from 1% to 6.6% within 5 months of
this deal, making DIL the second biggest skin-care company in the country behind
HUL. The Fem Care brand accounts for half of the skincare segment within the
Dabur portfolio and 4.2 per cent of Dabur’s total revenue.
 First Dabur India had acquired 72.15% of Fem for Rs203.7 crore in an all-cash deal.
Further due to SEBI’s guideline (substantial acquisition of shares and takeovers)
Regulation,2007
 Post 2000, Dabur concentrated and differentiated product offering and meticulous
brand building initiatives.
 Brand ambassadors were also changed according to the re-branding of the products.
 The frequency of the advertisements and the modes of advertisements increased
significantly.
 It launched new packaging in several products to address the needs of the
customers in a much more efficient manner
 In the modern trade segment, Dabur has opened its retail subsdiary called H&B
Stores Ltd. in NCR and South India. At present there are 11 stores functional and
there are plans of 12 stores to be opened in the future. Dabur initiated a programme
christened DARE (Driving Achievement of Retail Excellence) to improve its
effectiveness in organised retail in 2009. For Dabur, about 3 per cent in 2008 of
sales come from modern trade and it was expected to grow up to 7.5 per cent in
2010.
 In the year 2004-05 a whole new brand identity of Dabur was born. The old Banyan
tree was replaced with a new, fresh Banyan tree.
 Implemented a country wide new WAN infrastructure for running centralized ERP
system

TQM

 In 2002-03, Total Quality Management (TQM) techniques were implemented on a

pilot basis at two plants in the area of statistical process control. The purpose of
implementing TQM was to achieve lower rejection of raw materials, time savings,
and make the procurement process more efficient. The Company had plans to
implement TQM for other functional areas in the future. In addition, Total
Production Maintenance (TPM) measures were initiated in two locations in 2003-
04, and hence TPM has become an integral part of the production processes of your
Company. This initiative is aimed at improving the productive efficiency of capital
assets
 As part of its quality assurance programme, it undertakes regular factory quality
audits by trained quality auditors, ensures compliance with ISO 9000 procedure and
implementation of established standard operating procedures across its
manufacturing bases.