iilm institute for higher Education (GURGAON)

Chandra Prakash Mishra PGP20102085 Ph-)+919911002896

Acknowledgement

“Words often fail to express one’s feelings of gratitude and indebtedness to one’s

benefactors, but then it is the only readily available medium through which the undersigned can

express their sincere thanks to all those who are associated with the work in one way or

another.”

A project can never exist and thrive in solitude. Project work is never the work of an

individual. It is more a combination of use, suggestion and contributions and work involving

many individuals. This project also bears the impact of many people. Thus, one of the most

pleasant parts of writing this report is the opportunity to thank all those who have been active

part in it.

I am thankful to for his vital inputs and valuable suggestions and continuous guidance,

which have gone a long way in providing necessary impetus to our efforts in consummating this

report.

I am thankful to our professors from Marketing department for their vital inputs regarding the

project work. I am also thankful to friends who helped me in understanding of the topic given in

an easier way.

Table of content

Dabur India Ltd. –Company Profile

Milestone of Dabur

Product Line, Depth and Width

Overview of FMCG Sector in India

SWOT Analysis of Dabur

Pest Analysis

Porter’s Five Forces Model

Competitors Analysis

Distribution

ANSOFF’S Product Market Expansion Grid

The role of Dabur in FMCG Sector

The Reason for Dabur Success

Recommendation

Conclusion

Dabur India Ltd. – Company Profile

Dabur India Ltd is one of India’s leading FMCG Companies

with Revenues of about US$750 Million (over Rs 3416 Crore) & Market Capitalisation of over

US$3.5 Billion (over Rs 16,000 Crore). Building on a legacy of quality and experience of over

125 years, Dabur is today India’s most trusted name and the world’s largest Ayurvedic and

Natural Health Care Company.

Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic

products. Dabur's FMCG portfolio today includes five flagship brands with distinct brand

identities -- Dabur as the master brand for natural healthcare products, Vatika for premium

personal care,Hajmola for digestives, Réal for fruit juices and beverages and Fem for fairness

bleaches and skin care products.

Dabur today operates in key consumer products categories like Hair Care, Oral Care, Health

Care, Skin Care, Home Care and Foods. The company has a wide distribution network,

covering over 2.8 million retail outlets with a high penetration in both urban and rural markets.

Dabur's products also have a huge presence in the overseas markets and are today available in

over 60 countries across the globe. Its brands are highly popular in the Middle East, SAARC

countries, Africa, US, Europe and Russia. Dabur's overseas revenues stands at over Rs 500

Crore in the 2008-09 fiscal, accounting for about 20% of the total turnover .

The 125-year-old company, promoted by the Burman family, had started operations in 1884 as

an Ayurvedic medicines company. From its humble beginnings in the bylanes of Calcutta,

Dabur India Ltd has come a long way today to become one of the biggest Indian-owned

consumer goods companies with the largest herbal and natural product portfolio in the world.

Overall, Dabur has successfully transformed itself from being a family-run business to become

a professionally managed enterprise. What sets Dabur apart from the crowd is its ability to

change ahead of others and to always set new standards in corporate governance & innovation.

MILESTONE:-

1884: Birth of Dabur

1972: The Company shifts base to Delhi from Kolkata

1986: Registered as Public Limited Company

1994: Listed in BSE

1998: Professional team inducted to run the company

2000: Crosses Rs 1000 crore turnover

2003: Pharma Company de-merged to focus on core FMCG business

2004: Profit exceeds Rs 100 crore

2005: Acquires Balara strengthening oral care &provided entry into Home care segments

2006: Dabur figures in top 10 great places to work

2007: Dabur ranks Asia’s best under a billion enterprises by Forbes

2008: Acquires Fem Care Pharma entering the mainstream skin care segment

2009: strong growth momentum continued in spite of economic downturn.

2009: Dabur Red Toothpaste joins 'Billion Rupee Brands' club. Dabur Red Toothpaste becomes

the Dabur's ninth Billion Rupee brand. Dabur Red Toothpaste crosses the billion rupee turnover

mark within five years of its launch

2010: Dabur stock ranked 14thin Value 100 list, a ranking of attractively priced stocks of firms with real

earnings.

Dabur Amla Hair Oil & Real voted as Most Loved FMCG Brands with highest top-of-the-mind recall

Dabur Chairman Dr Anand Burman amongst India's most powerful CEOs, placed at No. 41 on the list.

Dabur India Ltd ranked as India's Most Customer Responsive FMCG Company.

Dabur Uveda ranked amongst most successful brands launched in 2009 Brand Derby

PRODUCT LINE and Product Width:-

Foods

Real

Real Active

Hommade

Lemoneez

Capsico

Shankha Pushpi

Dabur Balm

Sarbyna Strong

Personal Care

Hair Care Oil

Amla Hair Oil

Amla Lite Hair Oil

Vatika Hair Oil

Anmol Sarson Amla

Hair Care Shampoo

Anmol Silky Black Shampoo

Vatika Henna Conditioning Shampoo

Vatika Antidandruff Shampoo

Anmol Natural Shine Shampoo

Oral Care

Dabur Red Gel

Dabur Red Toothpaste

Babool Toothpaste

Dabur Lal Dant Manjan

Dabur Binaca Toothbrush

Skin Care

Gulabari

Vatika Fairness Face Pack

PRODUCT WIDTH

Consumer care:

Hair care, oral care, health supplements, digestives, home care, skin, and baby care. Some of its

major brands include, Vatika, Meswak, Hajmola, Babool and Odomos among others.  

Consumer healthcare Ayurvedic products

Foods(juices, nectars, drinks and food)

OVERVI EW OF FMCG SE CTOR IN INDIA

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in

excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well-

established distribution network, intense competition between the organized and unorganized

segments and low operational cost. Availability of key raw materials, cheaper labor costs and

presence across the entire value chain gives India a competitive advantage.According to a study

by the McKinsey Global Institute (MGI), 'Bird of Gold': The Rise of India's Consumer Market,

Indian incomes are likely to grow three-fold over the next two decades and India will become

the world's fifth largest consumer market by 2025,moving up from its 2007 position as the

world's 12th largest consumer market.India ranks second in the Nielsen Global Consumer

Confidence survey released on January 7, 2010²an indication that recovery from the economic

downturn is faster in India with consumers more willing to spend. The survey showed that in

addition to the emerging markets of Indonesia and India, eight of the top ten most confident

markets in the fourth quarter of 2009 came from the Asia Pacific region.

The FMCG market is set to treble from US$ 13.1 billion in 2009 to US$ 33.4 billion

in2015.Penetration level as well as per capita consumption in most product categories like jams,

toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential.

Burgeoning Indian population, particularly the middle class and the rural segments, presents an

opportunity to makers of branded products to convert consumers to branded products. Growth is

also likely to come from consumer 'upgrading' in the matured product categories. With 200

million people expected to shift to processed and packaged food by 2010, India needs around

US$ 28 billion of investment in the food-processing industry.

According to a FICCI-Technopak report, despite the economic slowdown, India's fast moving

consumer goods (FMCG) sector is poised to reach US$ 43 billion by 2013 and US$ 74 billion

by 2018. The report states that implementation of the proposed Goods and Services Tax (GST)

and the opening of Foreign Direct Investment (FDI) are expected to fuel growth further and

raise the industry's size to US$ 47 billion by 2013and US$ 95 billion by 2018.

The Ministry of Food Processing Industries is also planning to double the market size of the

food processing industry to US$ 165.1 billion by 2009-10 and trebling it to US$271.8 billion by

2014-15. Demand for personal care products such as shampoos, toothpastes and hair-oils grew

faster in rural areas than urban areas during April-September 2009, a period that includes the

peak monsoon months, as per the numbers released by market researcher AC Nielsen.

As socio-economic changes sweep across India, the country is witnessing the creation of many

new markets and a further expansion of the existing ones. According to Pradeep Kashyap, chief

executive officer of MART Rural Solutions, speaking at the Calcutta Management Association

Rural Marketing Meet, over 300 million people would move up from the category of rural poor

to rural lower middle class between 2005 and 2025and rural consumption levels are expected to

rise to current urban levels by 2017.

SWOT ANALYSIS OF DABUR

STRENGTHS

Strong presence in well defined niches( like

value added Hair Oil and Ayurveda

specialties)

Core knowledge of Ayurveda as competitive

advantage

Strong Brand Image

Product Development Strength

Strong Distribution Network

Extensive Supply Chain

IT Initiatives

R & D – a key strength

WEAKNESS

Seasonal Demand( like chyawanprash in

winter and Vatika not in winter)

Low Penetration(Chyawanprash)

High price(Vatika)

Limited differentiation (Vatika)

Unbranded players account for the 2/3rd of the

total market(Vatika)

OPPORTUNITIES

Untapped Market(Chyawanprash)

Market Development

Export opportunities.

Innovation

Increasing income level of the middle class

Creating additional consumption pattern

THREATS

Existing Competition( like Himani,

baidyanath and Zandu for Dabur

Chyawanprash and Marico,Keo Karpin, HLL

and Bajaj for Vatika Hair Oil)

New Entrants

Threat from substitutes (like Bryllcream for

Vatika hair oil)

PEST  ANALYSIS

Political 

Stable political government.

Restrictions in import policies.

Rise in customs duty on petrol & diesel.

Partial withdrawal of stimulus packages

Economical 

Growth in GDP

Inflation rate

Increase in disposable income.

Indian FMCG Recorded 16% Sales Growth in last fiscal.The FMCG sector is the

4thlargest sector of Indian economy with market size of more than 60,000crore

Social 

Rising rural India.

Consumerism.

Demography

Technological 

Volatility 

Research and development intensity 

Information technology 

 Porter’s Five Forces:-

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 playerslike emami and ayur.

Premium personal care products face competition frominternational brands as well as boutique products.

Existing players are entering new segments which will increase the competition.

E.g goodnight entering the personal spray and gel segment.

Threats of New Entrants

The threat of new entrants is low because entry barriers interms of building a

national brand as well as the distribution network is high and also the exit barrier is also

high.

Threat of substitute products

Substitutability is highest in food category followed by personal care category, where product

innovation is high.

Threat of buyer’s bargaining power 

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

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 is bargaining power.

COMPETITOR ANALYSIS

The key competitor’s of Dabur in the Hair Oil segment are Keo Karpin, Emami, Bajaj, Marico,

HLL which together with Dabur have about 64% of India's domestic market.

Dabur is one of India's largest players in the hair oil segment and the fourth largest producer of

FMCG. It was established in 1884, and had grown to a business level in 2003 of about 650

million dollars per year. Dabur Hair Oils have a market share of 19%.

We have tried to analyse the competition for Dabur in the Hair Care segment as follows:

Keo Karpin , a fifty-year old brand, is a pioneer in the light hair oil category. The pleasantly

perfumed hair oil has its main market in the Hindi belt and also has significant presence in

eastern and western India. Its share is 6% of the total hair oil market.

Emami has existence in hair oil market through Himani Navratan oil and Himani Oil. Emami

has taken Madhuri Dixit as brand ambassador for emami oil and Amitabh Bachchan for Himami

Navratan Oil. Overall it has a share of 4% in hair oil market.

Bajaj has two flagship oil brands - Bajaj Brahmi Amla and Bajaj Almond Drops — currently

have a value share of 19 per cent and 12 per cent in their respective oil categories as per ORG-

Marg. Besides, the company has also decided to enhance its retail presence by nearly 20 per

cent from the existing 5 lakh retail outlets in an attempt to reach the rural parts. Overall it has a

market share of 4% in hair oil market.

Marico’s Parachute is premium edible grade oil, a market leader in its category. Synonymous

with pure coconut oil in the market, Parachute is positioned on the platform of purity. In fact

over time it has become the gold standard for purity. Parachute's primary target has been

women of all ages. The brand has a huge loyalty, not only in the urban sections of India but also

in the rural sector. It has a market share of 28%.

HUL has two products, Clinic plus Hair Oil and All Clear Clinic Hair Oil. Overall it has a 3%

share in hair oil market.

The key competitor’s of Dabur in the Chyawanprash segment are Baidyanath, Zandu and

Himani, which together with Dabur have about 85% of India's domestic market.

Dabur Chyawanprash (herbal honey) has a market share of 61%.We have tried to analyse the

competition for Dabur in the Chyawanprash segment as follows:

Sri Baidyanath Ayurvedic Bhawan Ltd . (Baidyanath for short) was founded in 1917 in

Calcutta, and specializes in Ayurvedic medicines, though it has recently expanded into the

FMCG sector with cosmetic and hair care products; one of its international products is Shikakai

(soap pod) Shampoo. Its Chyawanprash has a market share of 10%.

Zandu Pharmaceutical Works was incorporated in Bombay in 1919, named after an 18 th-

century Ayurvedic. The company focuses primarily on Ayurvedic products (in 1930,

pharmaceuticals were added, but the pharmaceutical division was separated off about 30 years

later).

The Emami Group , founded in 1974, provides a diverse range of products, doing 110 million

dollars of business annually, though only a portion is involved with Ayurvedic products,

through its Himani line; the company is mainly involved with toiletries and cosmetics, but also

provides Chyawanprash and other health products. Its market share is 12%.

DISTRIBUTION

Supply chain: Dabur has steadily improved its procurement and distribution systems to achieve

a significant reduction in material costs. Dabur has an extensive supply chain and distribution

network that has grown and spans 29 factories, 47 stocking points, 4 zonal offices, a dozen

manufacturing locations, six mother-warehouses and over 50 Carrying and Forwarding

Agents(CFAs) that distribute more than 1,000 SKU’s to several thousand stockists and

dealers.

MIS: An in-house developed, easy-to-use, Intranet based data-warehouse displays as-of-

yesterday sales, stock, receivables, banking, and other MIS. Over 5,000 ASP pages meet almost

all reporting requirements and make this a single source of MIS for all levels of decision

makers.

VSATs : This Success paved the ground for the company's supply chain initiative. Fifty-five Ku

Band TDMA VSATs were used to link primary distributors to the system. Factories were

hooked up using PAMA (Permanent Assigned Multiple Access) VSATs. At some locations

VPNs had to be used because it was not possible to set up a dish. The integrated primary and

secondary system has a number of unique features. The features like tight integration of

schemes, stockist’s credit limit control, automated banking of cheques, and online cheque

reconciliation has obvious advantages in the primary distribution. These are basically extensions

to the MFG/PRO ERP system and not core customizations. The integrated system allows each

Area Manager to plan for the month's sales forecasts, stockists’ performance, and sales officers'

performance. The integration allows better control on pipelines in primaries and secondaries,

brings down inventories, and offers better control on production and sales against a confirmed

forecast. The idea is to increasingly shift focus from primaries to secondaries. Schemes based

on secondary volumes will help control secondary pipelines and sales. Primary sales will

therefore come from a resultant 'pull' from secondary replenishments. Further, sales order

servicing can be improved by taking orders through the Internet, and by setting stocking norms

and replenishing stocks to improve ROI of stock holders.

ANSOFF’S PRODUCT MARKET EXPANSION GRID

MARKET PENETRATION : The new campaigns, featuring Amitabh Bachchan and, for the

first time, Vivek Oberoi, makes an aggressive attempt to establish the relevance of

Chyawanprash in an increasingly tough and demanding lifestyle, for the entire family. As a

market leader, Dabur’s focus has been to increase the relevance of this time-tested and proven

product in the family - both for users and non users - and increase penetration. In their new

campaign they have tried to establish the fact that Chyawanprash, with its ‘well - being’

properties, gives an edge to the users and dispel the myth that it should be consumed in illness

or is meant only for Children or the aged.

MARKET DEVELOPMENT : Dabur has identified exports as a major thrust area for the

future. An international business division has been set up within the company to promote

exports and it expects this business to grow steadily in the coming years. The company plans to

focus on Russia and CIS countries along with Afghanistan, West Indies and the Asia

Pacific region. It has also entered the North American markets by appointing distributors and

initiating marketing of products to the ethnic Indian segment. The company has already been

exporting hair oils, shampoos and Hajmola candies to Afghanistan. In Bangladesh, Dabur is

entering into a joint venture with a local partner to manufacture and market its products. Dabur

will hold a majority stake in this joint venture.

Role of Dabur in FMCG sector:-

The FMCG sector is the fourth largest sector of the economy, and is expected to grow at an

average CAGR of 8.5% from USD 11.6bn in 2003 to USD 33.4bn in 2015.

India is one of the largest emerging markets with a population of over 1 billion. It is also one of

the largest economies in terms of purchasing power with a very strong base of middle class.

While the FMCG industry’s size is accorded to the large population base, in terms of per capita

consumption and FMCG’s penetration levels, the industry lags its emerging market peers,

offering huge potential for growth as income levels increase, and demographics show a growing

middle class and youth population with a shift towards urbanization.

Consumer Profile 1999 2001 2006

Population 846 1012 1087

Population <25 years

of age

480 546 565

Urbanization 26 28 31

Around 45 percent of the population in India is below 20 years of age and the young population

is set to rise further. Aspiration levels in this agegroup have been fuelled by greater media

exposure, unleashing a latent demand with more money and a new mindset.

Investment Rationale

Dabur has a robust model for developing its products overseas. It has established market share

in Africa and Middle East while maintaining margins around 14%. The growth potential in

newer markets is higher than India. Thus, the international division grew 40% relative to Dabur

India which recorded 15.6% growth vis-à-vis the industry growth of 14.5%

Dabur has a disciplined policy of maintaining or increasing ROE and ROCE and this is visible

in its dividend policy and capex development.

Dabur has concentrated on North Indian markets with only 6% of its total sales coming from

South India. This is highly unusual for a national brand owner like Dabur. The company has

initiated marketing efforts in the south which should contribute to overall growth. It aspires to

see that south will contribute 10%of its revenue.

The retail venture is a limited effort relative to the size of Dabur’s balance sheet. The concern’s

enveloping this endeavor and the resultant impact on market capitalization far exceeds the

impact of the venture upon consolidation.

Amongst FMCG companies Dabur has successfully maintained market share while earning one

of the highest EBITDA in the industry. Consistent 12%-15% growth with high ROE makes

Dabur distinctive as an investment in these turbulent times.

Valuation:

The stock currently trades at 15.2X for 2009 and 12.5x and 10.4xits 2010 and 2011 expected

EPS of Rs.5.19 and Rs.6.26 respectively.

The company’s low beta of 0.48 offers a safer investment avenue in these turbulent markets.

On a DCF computation, the Fair Value given the current conditions gives us a value of Rs.110

per share. The stock should trade 20X forward in average market conditions.

We believe that bear markets allow long term investors to investin high quality brands and

franchise businesses at attractive valuations. At current levels or lower Dabur’s stock can easily

yield a 15% compounded return over 3 years.

Strategic Business Units:-

Sales

(Rs./crs.)

Q1FY09 Q1FY08 Growth% FY08 FY07 Growth %

CCD 458 417 10 1830 1599 14

CHD 39 31 25 155 147 5

IBD 108 77 40 376 299 25

Retail 1 0 - 0 0 -

Miscellaneo

us

6 5 20 36 35 2

Total 612 530 15 2398 2021 15

Consumer care divison:-

The consumer care divison consist a portfolio of 4 product categories :

Health Care: Share of 45% of CCD revenues. It comprises of Health supplements, oral care,

digestives and confectionery.

Personal Care: Contributes to 35% of CCD sales and comprises of hair care, skin care and

baby care.

Home Care: This segment became a part of the portfolio after the acquisition of Balsara and

has a 6% share in CCD sales.

Foods: This segment contributes about 14% to CCD revenues. Its main products are juices and

culinary additives.

Rs./crs. Q1FY09 Q1FY08 Growth % FY08 FY07 Growth %

Health

Supplements

63 53 19.1 349 300 16.3

Digestives

&Confection

ery

36 37 -2.4 144 130 10.8

Oral Care 87 82 5.5 361 314 15

Hair Care 151 131 14.8 522 455 14.7

Baby Oils

and Skin

Care

26 27 -5.3 104 100 4

Home Care 25 25 0.8 108 97 11.3

Foods 71 62 14.5 241 202 19.3

Total 458 417 9.8 1830 1599 14.4

Health care:-

1-Oral Care

Dabur’s toothpaste portfolio grew by 27% with Meswak, Red and Babool growing by 40%,

23%, 30% respectively

Mkt SizeDabur Dabur Mkt Share2800crs

2800crs. 360crs. 13%

Oral care Market:-

Chyawanprash Market

Dabur HUL Colgate Anchor Others

13.00% 21.00% 50.00% 2.00% 14.00%

2-Health Supplements

Within this portfolio Glucose sales grew by 32% against the overall category growth of 9% and

sales now exceed Rs.50crs

Chyawanprash grew by 6% while the Chyawanprash market was pretty much stagnant and as a

result managed to cement its place as the leader with its 61% market share.

Dabur is also the leading player in Honey with sales exceeding Rs.100crs. and demonstrating

growth of 26%.

Mkt size Dabur Mkt share

600crs. 349crs 58.00%

Dabur Baidyanath Zandu Emami Others

61.00% 12.00% 8.00% 9.00% 10.00%

3- Digestives and Confectionery

The Digestive market in India is worth Rs.500crs. Dabur with sales of Rs.150crs. commands a

30% share.

Pudin Hara registered a 16% increase in sales while Hajmola sales grew by 9%.

Dabur’s candy portfolio consisting of Hajmola candy, and the three new flavors; Kachcha Aam,

Natkhat Nimbu and Mint Masala registered a 22% increase.

Mkt size Dabur Mkt share

500crs. 150crs 30.00%

Digestive Market:-

Dabur knoll Glaxo pfzier Other

32% 14% 19.00% 19% 22.00%

Personal Care:-

Hair Care

1-Hair Oils

Dabur managed to maintain its market share as the hair oil market grew 13%. The Amla

franchise with sales of about Rs.250 crs. grew by an impressive 18%. The Anmol brand also

performed well with a healthy 17.3% growth.

Mkt Size Dabur Mkt Share

2500crs. 420crs. 17.00%

Hair Oil Market:-

Dabur Marico Bajaj Deys Labs other

17.00% 33.00% 6.00% 3.00% 41.00%

2-Shampoos

Hair Oil Market

Digestives Market

with its Vatika range of shampoos Dabur increased its market share as the market grew 15%

and the company’s range grew by 25%.

The hair care segment with sales of Rs.522crs. contributed 29% to FY08 revenues

MKT size Dabur MKT share

1800crs. 102crs. 6.00%

Shampoo Market

Dabur CavinKare HUL L'Oreal P and G

6.00% !3% 51.00% 4.00% 26.00%

Food and home care:-

1-Food

Dabur recorded a healthy 19% growth in the foods segment and with sales of Rs.241crs. enjoys

a healthy 51% market share.

MKT size Dabur MKT share

473crs. 241crs. 51.00%

Care Fruit:

Tropicana Godrej XS Fresh Gold Other

Dabur

51.00% 34.00% 2.00% 8.00% 5.00%

2-Home Care

The home care market is estimated to be worth Rs.2000crs. Dabur records a revenue of

Rs.100crs through its presence in air fresheners and mosquito repellant cream category where it

commands 94% and 91% market share respectively.

Freshners Markets:-

Dabur Other

94.00% 6.00%

Mosquito Repellant:-

Dabur Other

91.00% 9.00%

International Business Division:-

The International Business division manages Dabur’s business in Middle East and North Africa

(MENA). The division contributes about 16% to Dabur’s annual revenues.

Sales have grown by 25.5% from Rs.299crs. to Rs.376crs. In FY08.The company has built its

brand architecture in these regions with the Dabur andVatika brands.

The company has divided its target markets into Focus, Potentialand Opportunistic markets.

While the initial focus of the company was to cater to the Indian population in the MENA

region, the company now has moved towards identifying needs of consumers in these regions of

localizing the products portfolio on offer.

Also the company is not relying on its portfolio of domestic products for international sales.

The company has been proactive and in line with its innovation strategy, is launching products

catering the specific needs of consumers in various target markets abroad. Its has launched of

Vatika Olive and Vatika Cactus have helped the Vatika brand increase its revenues 90%. It has

also outsourced Italian technology and developed intensive hair treatment masks under the

Vatika Naturals Hamam Zaith brand.

Consumer Health Division:-

This division comprises Dabur’s range of ayurvedic products which have use in health related

issues. This division consist of the OTC market and the ethical brands and classical segment.

The OTC forms about 57% of this market and the ethical and classical segment 43%. The OTC

market in India is estimated at Rs.7500crs and the ethical at Rs.500crs.

The consumer health division is relatively small and contributesabout 7.5% to Dabur’s annual

revenue. However given the low levels of penetration, thecompany believes there is

considerable scope in this business. The company also believes that the growing preference for

herbal/ayurvedic healing without side-effects will lead to improved performance going forward.

Sales increased by 5.4% from Rs.147crs. in FY07 to Rs.155crs. InFY08. This division is

currently in a consolidation phase. The company is following a two pronged approach to

enhance growth in this segment. The first is to build upon the existing offerings by improving

the products line. So far over 50% of the OTC portfolio has undergone extensive package up

gradation. The second part involves the aggressive launch of new products across OTC

categories.

In the first half of FY09 this division has grown 12% as effects of consolidation have started

kicking in.

Retail:-

Dabur has forayed into the retail segment through its wholly owned subsidiary H&B Stores Ltd.

The company will run a chain of retail stores across India under the brand new. The stores will

retail the latest branded cosmetics, fragrances, skin, face, baby and family care along with

fashion accessories and jewelry.

The stores are to be located at airports, business parks, high street markets and such specialized

locations. The company launched its first store in March 2008, and there are six operational

outlets. The company plans to have 12-13 operational by the end of FY09 and targeting 350

stores in the next 5 years.

The company has planned a equity investment of Rs.140crs. In this venture over the next 3

years. During FY09 the company will launch products under its private label, leveraging its

expertise in ayuervedic and herbal products. While the venture will require investments in the

initial years, the company expects the venture to reach optimal scale in about 2 year’s time.

Financial Performance ofDabur in5years:-

Dabur has achieved consistent growth in return on equity from 20% in 2003 to 54% in 2008.

While the company has reduced leverage from 1.5 in 2003 to1.2 in 2008, it has improved

capital efficiency substantially, increasing the asset turnover from 2 times in 2003 to 3 times in

2008. Other than the improvement in capital efficiency the main driving force behind the

improvement in ROE has been the increase in net profit margins from 6.7% in 2003 to 14.1% in

2008.

The average receivables days for the company has come down to 24days and is in line with

industry standards. The company’s average inventory turnover period at 86 days is also now in

line with industry standards. The days payable period varies through the industry.

The company's cash conversion cycle has halved from 142 days in 2003 to 69 days in 2008

resulting in higher free cash flows for the company.

On the margin front Dabur has seen deterioration in gross margins in the past two years,

however continual improvement in operational efficiency has seen EBIDTA margins improve

from 12.3% in 2003 to 16.5% in 2008.

THE REASONS FOR DABUR'S SUCCESS-

Dabur India has consistently delivered sales growth of 15-18 per cent for over five years and

there seems to be no stopping the momentum. Its 2009-10, sales were up almost 20 per cent,

largely driven by higher volumes, which grew 13.3 per cent. Notably, its sales and profit growth

are expected to hover at over 15 per cent in the next two years. Additional surprises in the form

of acquisitions could prop up growth rates further.

All-round growth over the years, Dabur has successfully transformed itself from a company

known for its health supplement, Chyawanprash, to a multi-product, fast moving consumer

goods (FMCG) player.

Strong brand equity, ability to understand customer needs and launch products accordingly,

identification of new growth areas and expansion of distribution reach are among the reasons

for Dabur's success and robust growth rates.

For 2009-10, too, it reported a healthy 19.6 per cent top line growth (including 3 per cent

contribution from Fem Care's acquisition), with most segments clocking growth rates of 11-26

per cent.

Operating profit margins also improved 150 basis points to almost 20 per cent, led by lower

input prices and cost-management measures, thereby boosting net profits by almost 30 per cent.

"Even when the industry is facing the negative impact of rising food inflation, aggressive cost

management initiatives helped Dabur expand Ebitda margins for the consolidated business for

2009-10. The company continues to register sales growth ahead of the market in several key

categories, and this growth is almost entirely volume-driven," said Dabur India [ Get Quote ]

CEO Sunil Duggal.

The hair care business, the largest sales contributor to Consumer Care Division (CCD, which

accounts for two-thirds of Dabur's consolidated sales), saw shampoo sales jump 27 per cent, led

by an impressive 40 per cent growth in Vatika Normal shampoo.

Although the 30 per cent drop in sachet prices to Re 1 impacted sales growth in the March 2010

quarter, analysts expect growth rates to pick up from the second quarter of 2010-11 helped by

new launches like Vatika Enriched Almond Oil and Dabur Amla Flower Magic as well as 4-5

per cent price hikes. The management expects the business to return to double-digit volume

growth in 2010-11.

Dabur's oral care business improved its market share by 100 basis points to 10.3 per cent. While

its Red Tooth Paste and Meswak brands clocked 17-27 per cent rise in sales, the Babool brand

clocked 19.4 per cent growth, helped by the launch of Babool Mint Gel at an attractive price

point.

The foods business also did well, wherein Dabur forayed into the fruit drinks category with Real

Burrst. While Dabur's skin care sales jumped 33 per cent, Fem Care sales grew at a healthy 17

per cent helped by re-launch of some products and expansion of parlour coverage. Analysts

expect these three businesses to grow 20-25 per cent in 2010-11.

Notably, Dabur's international business division (IBD, a sixth of consolidated sales) did

exceptionally well with the top line growing 26 per cent on the back of new product launches,

among others. The management hopes IBD will grow 20-25 per cent in 2010-11.

Investment rationale on the back of its strong brands, product development capabilities and

innovative strategies, Dabur should report strong domestic sales, as well as further improve its

position in foreign markets.

Analysts expect Dabur to clock sales growth of over 15 per cent, sustain margins at 18-20 per

cent and report an earnings per share (EPS) growth of 17-20 per cent annually in 2010-11 and

2011-12. At Rs 182, the stock trades at 22 times its 2011-12 estimated earnings and can be

considered on dips.

RECOMMENDATIONS

Focus on growing core brands across categories.

Reaching out to new geographies, within and outside India.

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 solutions by synthesizing the deep knowledge

of ayurveda and herbs with modern science.

Provide consumers with innovative products within easy reach.

Vatika hair care centre: On the lines of Marico’s Kaya Skin Clinic, Dabur could start a

venture called Vatika hair care centre which would provide total hair care solutions. It

could have hair care experts to solve hair problems. Services could include dandruff

treatment, straightening of hair, treatment for split ends, etc.

Position Dabur Chyawanprash as not more of a medicine but as something which is

necessary for health.

More initiatives like “Dabur ki Deewar” to

increase brand visibility. It is an initiative to

occupy shelf space.

CONCLUSIONS

The Chyawanprash Industry is yet to capture the beverage market in full swing. Packed

Chyawanprash followed by Amla, Ashwagandha, Hareetaki, Dashmul, Ghrit and several

other herbs and herbal extracts. The consumer’s patriotic love for tea and coffee is unfared.

Chyawanprash are yet to establish their supplement use in the average household here in lies

the great opportunities. Within the market, it is safe to conclude that dabur has hit off rather

well with the masses. Dabur has clearly lost it head start advantage and thereby acquiring just

35% of the market share while others enjoy rest of the market share. This could be well

attributed to dabur successful ATA (Availability, Taste and Affordability) marketing module,

the attributes most rated by the consumers. Lack of publicity has hampered the growth progress

of the brand so aggressive advertising is needed to promote Chyawanprash and Vatika hair oil

brand .The brands such as that of Chyawanprash by vednath, Chyawanprash with its

‘sonacahndi, ‘Minute- made’ and also US food giantssDel Monte are ready to hit the

Chyawanprash market very soon.

Vatika hair oil has no major competition except an Australian Product Tobasco. As a new

product so people are not able to digest it yet Dabur is getting 8 Crores from Vatika hair oil in

which accounts for 4 Crores, Lemoneez 1 Crore & others 3 Crores .

As the strategies of the companies keeps on changing, be it in Chyawanprash industry, a

company has to create perceptions and cover them into realities. It is an expensive proposition

requiring huge expenditure on advertising, sponsorships and media.Thus, the ideal company

will be the one which combines the high end technology with consumer insight.

As 16% of the excise duty is exempted on food products in this budget, many food companies

including Dabur got benefited from it. On the analysis of survey it was found that target Market

of Chyawanprash want quality benefit rather then Price benefit, so it is better to stress on

quality rather than on decreasing price to increase sales and profit. To increase market share

Dabur should give slight price benefit on Dabur brand so that customers of other Juice brand

should switch from other brand to Dabur brand.

As Vatika hair oil is a new product introduced by Dabur and as Dabur is getting excise benefit

from the Government so Dabur should pass slight Price benefit to the target market so that

target market should use the Vatika hair oil and adopt it in making daily food thereby

increasing the market share of Vatika hair oil. In the other segment the company is also getting

competition but at a smaller level. Hence in other segments the company does not have to take

two much worry but keep updating the products regularly according to the market conditions

and competitors.