SVKM’s Narsee Monjee Institute of Management

Studies, Hyderabad

Post Graduate Diploma in Management

2018-20

Industry Analysis Project Report

Dabur

Submitted By:
Rohit KVN
80303180153
 Introduction
DABUR INDIA LIMITED
Dabur India Limited came into existence over 100 years ago in 1884 in Calcutta. The founder
of Dabur India Limited-Dr. S.K.Burman (1856-1907) was a physician who brought Ayurvedic
medicines for the masses of Bengal. His off quoted dictum is the guiding spirit behind Dabur
even today:

"What is the life worth which cannot bring comfort to others"

And the Vision of DIL is:

"Dedicated to the health and wellbeing of every household"

Dabur India Limited came into existence over 100 years ago in 1884 at Calcutta. The founder,
Dr.S.K.Burman, was a practicing allopathic doctor. At that time Malaria, Cholera and Plague
were the common diseases. He was a physician who brought ayurvedic medicines to the
masses of Bengal. Initially established as a proprietary firm for the manufacture of chemicals
and ayurvedic drugs it was later on 19th November 1930 incorporated as a private limited
company. Late Shri C.L. Burman, son of late Dr. S.K. Burman and his son late Shri P.C.Burman
in the name of Dr.S.K. Burman Pvt. Ltd. to expand the operations by setting up production
facilities at Garia and Narendrapur, West Bengal and Daburgram, Bihar. Dabur
(Dr.S.K.Burman) Pvt. Ltd. was merged with Vidogum and Chemicals Ltd. w.e.f. 1st July 1985
and the amalgamated company was renamed DABUR INDIA LIMITED and a fresh certificate
of incorporation was issued to that effect. In 1970, the bulk of manufacturing facilities were
shifted from West Bengal to Faridabad in Haryana. In 1975, vidogum and chemicals were
incorporated in technical collaboration with Unipekin AG (Switzerland) for the manufacture
of edible grade and industrial grade Guar gum powder at Alwar in Rajasthan.
In 1977, a modern automated plant was set up in Sahibabad (U.P.) for the manufacture of
Chyawanprash, Asavrishthas, Hair oil, Tooth powders, Hajmola, and other Ayurvedic
specialties. Certification for production of toiletries and food grade products was issued on
13th October 1986 by the registrar of Delhi and Haryana to the company, Dabur Private
Limited, a closely held Public Limited Company. It was incorporated as a Private Ltd. The
company in the name of Dabur (Dr. S.K.Burman) Pvt. Ltd. From a humble beginning in 1884,
a manufacturer of traditional medicine in Calcutta, Dabur has come a long way to become a
multifaceted multinational, multi-product, modern Indian corporation with a global presence.
It now enjoys the distinction of being the 2nd largest FMCG Company and is praised to
become a true Indian Multinational. The main plant was set up in Sahibabad (U.P.) in 1977
for manufacturing of Chyawanprash, hair oil, tooth powder, hajmola, and other ayurvedic
medicines and food products etc. Dabur's main line of business is in the sphere of Health
care, Personal care, and Beauty care. Its strength lies in natural and herbal preparations.
Dabur's corporate philosophy has always been ahead of its time. The founder's initial success
was mainly due to his direct main campaigns- a technique that became very popular nearly a
century later. The company was one of the earlier Indian companies to have fully equipped
R & D lab as early as in 1919. Today, the company has its own mainframes and computers
are a way of life here. Dabur is also an ISO 9002 certified company. The certification was
obtained in1995 by SGS YARSLEY international services Limited U.K. Dabur's revenue today
exceed Rs.800 crores with plans to achieve Rs.2, 000 crores by year 2003. Dabur has 34,000
shareholders with a market capitalization of over Rs.1,400 crores. Dabur has 11
manufacturing plants in India and Nepal and a licensee in the Middle East. It has
manufacturing base in Egypt also. The company has over 4,000employees with around 1,500
looking after sales and marketing functions. The Indian market is being served through a
transactional network of sales offices and carrying and forwarding agents. The company has
its offices in London, New York, and Moscow. Dabur products are being exported to around
50 countries. Dabur portfolio is exceeding 500 products of FMCG and health care products

1. Financial Forecasting – Dabur

Annual Income
Statement Data

Actuals in M INR Estimates in M INR

Fiscal
2016 2017 2018 2019 2020 2021
Period March
112
Sales 84 360 77 014 77 483 87 177 98 682
292
EBITDA 15 198 18 073 16 174 18 479 21 380 24 714
Operating
13 860 16 644 14 553 17 101 19 826 22 825
profit (EBIT)
Pre-Tax
15 572 16 104 16 931 19 370 22 614 26 638
Profit (EBT)
Net income 12 527 12 769 13 544 15 513 18 219 21 197
P/E ratio 35,4 38,5 42,6 46,9 40,2 34,4
EPS ( INR ) 7,08 7,21 7,66 8,85 10,3 12,1
Dividend per
2,25 2,25 2,50 3,68 4,25 4,94
Share ( INR )
Yield 0,90% 0,81% 0,77% 0,89% 1,02% 1,19%
Reference price
250.75 277.35 325.95 414.95 414.95 414.95
( INR )
According to the Q2 2018-2019 Earnings Consolidated revenue from operations grew
at 8.5%. Domestic FMCG business recorded growth of 8.6% on the back of volume
growth of 8.1%. Sales growth ex Foods was 10.2%.
Healthcare vertical reported growth of 10.6%. Health supplements grew by 12.3% led
by double-digit growth in both Chyawanprash and Honey. Digestives category
recorded growth of 10.8% on the back of good growth in Hajmola tablets and Pudin
Hara. New Variants, focus marketing inputs and distribution expansion contributed to
driving this growth. OTC and Ethical grew by 7.7%
HPC vertical posted growth of 10.2% led by strong performance in Hair Care, Home
Care and Skin Care. Hair oils category registered growth of 11.1%. Volume market
share in hair oils moved up by 120 basis points vis-à-vis same quarter last year.
Shampoos posted a robust performance growing by 49%. This is the fourth
consecutive quarter in which the shampoo category has grown at 30% plus.
International business reported a growth of 8.9% during the quarter. Egypt market
continued to perform well with constant currency growth of 27%. Sub Saharan African
business posted constant currency growth of 16% while SAARC markets grew by 13%.
Turkey reported growth of 16% in constant currency, although devaluation of the Lira
impacted the translated INR growth. GCC markets had a soft quarter on account of
consumption pressure and sharp decline in categories in the region. Operating
margins in international declined by around 160 basis points on the account of
increased BTL and adverse currency impact.
 Table denoting various ratios that were calculated (Left) as well as the ROE (Right)

Insights: As can be seen in the table given, the value of current ratio has gone up from
0.83 to 0.95 over the span of one financial year. From this we can say that Dabur is
employing proper inventory management, strict standards for collecting receivables
or low burn rate.
Quick ratio has increased from 0.42 to 0.48 which means that they were sufficiently
able to meet their short-term liabilities. In 2017 and 2018, the ratio was lower than 1
which usually means that the company was also relying heavily on its inventory and
assets but it is slowly regaining its position.
The Asset Turnover Ratio has decreased significantly from 1.53 to 1.32. This means
that the inventory of the company is not being used efficiently to generate sales.
Net Profit Margin has increased from 18.86 to 19.17 indicating that Dabur is buying
materials at a low cost so there is no issue with its supplier relationships.
Inventory Turnover Ratio has improved as well, going down from 8.96 to 7.96. A high
inventory turnover ratio indicates large discounts or high sales.
ROE has gone down every financial year for the last 5 years. This indicates that the
company is incurring a steady loss.
Overall, we can say that Dabur has some problems with respect to its relying heavily
on its inventory and assets. The inventory is not being used properly.

2. Dabur Marketing Mix (4Ps) Strategy

Product:
Dabur has a wide range of product portfolio. The following are the products in the marketing
mix strategy offered by Dabur globally:
• Hair Care: Dabur Amla and Vatika Naturals are the brands in this category
This category includes products such as Hair oils, Shampoos, Conditioners, Hair Cream, Hair
oil treatment, Shampoo replacement, Men’s hair tonic, Men’s hair cream and kids oil.
• Oral Care: Dabur Herbal and Dabur Miswak are the two brands offered in this category
The products include a range of natural toothpastes from the house of Dabur (Classic range,
Gel range, Premium range, New ingredient range)
• Skin Care: DermoViva USA, Fem and Jaquline are the brands offered in this category.
The prodcuts include face wash, face scrub, face mask, body creams, body lotions, sun care,
soap, body wash and hand wash.
• Baby Care: DermoViva Baby is the brand offered in this category.
The product list includes Hair Oils, Massage Oils, Soaps, Shampoos, Body lotions, Creams,
Enriched powder and baby wipes.
The following are the product categories offered by Dabur in India: Health Supplements,
Digestives, Shampoos, Hair Oils, Skin Care, Foods, Oral Care, TC & Ethicals, Home Care, Guar
Gum. Dabur positions its products as healthy for its customers. Its committed in offering its
customers products that are of excellent quality and are herbal.
Price:
Dabur follows different pricing strategies in its marketing mix for different product offerings.
For its premium products such as Dabur Herbal (Premium range), Sun care, body wash, body
creams are priced at a premium as they are targeted at high end target segment. For its low-
cost products, the prices are kept low and competitive pricing strategy is followed. More
emphasis is given on the product quality and its products are priced low to gain more
customer base. Its main aim is to sell more units although through a lesser margin. Since it a
competitive industry with major players, Dabur has to follow a competitive pricing policy for
its non-premium products to sustain itself in the long run.
Place:
Dabur is one of the leading FMCG companies in India. The main aim of the FMCG company is
to make its products available at the greatest number of outlets and also to ensure that there
is no stock out. Shelf space also plays an important role in creating visibility. Being in the
industry for many years, Dabur has built an extensive network of distribution channels. The
marketing mix promotional strategy of Dabur is dependent upon its manufacturing plants,
distributors and retailers. The distribution is not only in India but abroad as well.
In India, Dabur has various plants manufacturing located throughout the country. Most of its
plants are located in Himachal Pradesh, Rajasthan and Madhya Pradesh. From these plants,
the products are transported to the carrying and forwarding agents. From there they are
passed down to the stockists, distributors, wholesalers and then retailers and Kirana stores
from where the final consumers can purchase the products. Sometimes the products are
transported directly to the supermarkets and modern retail through the distributors.
Dabur also exports its products to Dubai, Bangladesh, Egypt, UK, Nigeria, US and Nepal where
they have overseas offices which manage the distribution and sales.
Promotion:
Dabur does its major promotions through TV advertisements. In India, famous celebrities and
sportsmen endorse their products. Amitabh Bachchan is seen in ads like Dabur Chyawanprash
and Dabur Hajmola. Sonakshi Sinha endorses for Dabur Vatika. It also advertises on
newspapers. Hoardings are put up at retailers and supermarkets. This covers the marketing
mix of Dabur.

3. Import and Export of products by Dabur

Dabur’s International Business started as an exports business in the early 1980s for the Indian
diaspora in the Middle East. Gradually, the business expanded and started to cater to the local
population in the Middle East and neighbouring markets. Today, local people in Dabur’s
markets are the biggest consumers and it offers a large portfolio of Personal Care products
based on natural and herbal theme. The key regions in its International Business are Middle
East, Africa, South Asia, US and Turkey.

An overview of performance of each of the regions during fiscal 2016-17 is presented below.

Middle East

Middle East is the largest region in Dabur’s International Business comprising 31% of total
sales. The region remained under pressure during 2016-17 due to significant economic and
geopolitical challenges. The biggest markets in Middle East include KSA (Kingdom of Saudi
Arabia), UAE, Kuwait and Oman. In this region, it operates in categories such as Hair Oils, Hair
Creams, Shampoos, Hamam Zaith, Hair Gels and other Hair Care, Oral Care and Skin Care
products. Amla and Vatika are the main brands in the Hair Care segment. In Saudi Arabia,
which is one of Dabur’s important markets in this region, Dabur is the largest Hair Oil and Hair
Cream company with 67% share in Hair Oils and 35% in Hair Cream category. In the Shampoo
category, Dabur has built a niche position on the herbal platform with a wide range of herbal
shampoos under the Vatika brand. The Oral Care portfolio comprises Dabur Herbal
Toothpastes, Miswak toothpaste and their extensions and variants. Fem and Dermoviva
represent the Skin Care range.

GCC region, which comprises around 23% of International Business has borne the brunt of
low oil prices as oil is the major contributor to the GDP in these countries. Low oil prices
(touched a low of $42 in FY2016-17), have led to a downward pressure on oil producing
economies with governments adopting austerity measures, curbing spending on major
projects and reducing subsidies which eroded disposable incomes.

Africa

Africa is an important region for Dabur contributing to 20% of total international business.
Key markets within Africa are Egypt, Nigeria, South Africa and Kenya. In Africa, the Company
aims to enhance its growth curve with a two-pronged portfolio strategy:
a) Build ethnic African Hair Care segment with ORS brand, acquired as part of the Namaste
Labs acquisition.
b) Add the Dabur portfolio from Middle East and Hobi Kozmetik from Turkey to the ORS
platform and increase its saliency.
Dabur Egypt, the largest market in Africa, contributes to 11% of the international business.
The business comprises brands such as Dabur Amla, Vatika, Miswak, Fem and Dabur Herbal
Toothpaste. Dabur is a leader in main Hair Care categories, with 72% share in Oils, 60% in Hair
Creams and 60% in Hammam Zaith with Vatika as the umbrella Hair Care brand. In many other
categories such as Hair Gels and Oral Care, Dabur is the fastest growing brand with increasing
market share.
Dabur Egypt posted strong growth of 23% in constant currency terms. The country has seen
high inflation and severe currency devaluation during 2016-17. This impacted the business
Profitability although sales continued to grow at a good pace. Dabur invested strongly behind
its brands and introduced several new products in the portfolio. With growth of digital media,
Dabur has undertaken many initiatives not only via Facebook but also through bloggers and
Influencers with integrations in both offline and online mediums. A new communication for
Vatika Hair Cream and Vatika Hair Oil with celebrity endorsement, launch of new products
like Vatika Mayonnaise, Fem Hair Removing Halawa, Vatika Oil Replacement as well as
extensions of existing brands through launch of new relevant variants like Mink and
Wheatgerm Hammam Cream, Black Seed and Argan Vatika Hair Cream were some of the key
initiatives during the fiscal year.
To counter currency fluctuations and ensure continuous supply to important Sub-Saharan
Africa (SSA) markets, ‘localization of manufacturing has been top priority. In line with this,
West Africa, East Africa and Southern Africa economic zones are being anchored at Lagos,
Nairobi and Johannesburg respectively. This will provide a strong manufacturing base for
African Hair Care products under the brand ORS (Namaste brand). Manufacturing, Sales and
Marketing synergies are being leveraged across the three hubs created as part of the Sub-
Saharan business operations. Focus is on tapping opportunities with the addition of qualified
manpower to the regional talent pool.
Manufacturing capability has been added for Namaste range of products with the acquisition
of CarboTech Limited (CTL) in South Africa, plus new capacity set-up at Nigeria and Egypt
units. Commissioning of manufacturing operations at Lagos, Johannesburg and Egypt now
ensures supply to all important markets within ECOWAS, SADC and COMESA economic blocks.
Sourcing from Nigeria, Egypt and Dubai units to SSA economic blocks has also been dovetailed
with the Namaste logistics to improve operating efficiencies.

South Asia

Dabur’s key markets in this region are Nepal, Bangladesh, Pakistan and Sri Lanka. The region
contributes 19% to International Business sales.
The South Asia business registered strong double-digit growth during the year.
Nepal is a large market for Dabur and the business grew at healthy double digits. It also
crossed the C 250 crore mark. All categories grew in double digits with the high salience Fruit
Juice business growing in strong double digits. Consumer Care business, other than juices,
also posted strong growth with Hair Oils, Digestives and Oral Care performing well. New
product initiatives coupled with strong trade & consumer activations and investments in
brand building were some of the contributors to this performance. Greater localization in
products and communication resulted in better consumer connect. Rural distribution
expansion and enhanced coverage helped in increased penetration of our products in the
Nepal hinterland.
Bangladesh business posted a steady performance. Brands such as Honey, Odonil and
Shampoos registered strong growth. Wholesale activations and thrust on a3ordable packs
were some of the key initiatives to drive penetration and enhance presence of our brands.
The smaller businesses in Sri Lanka and Myanmar also posted healthy growths with Sri Lanka
growing in strong double digits, driven by Fruit Juice category. Myanmar reported strong
growth with Oral Care and Skin Care driving growth.
In Pakistan, Dabur markets its range of Hair Oils, Shampoos and Digestives under the brands
Amla, Vatika and Hajmola. Dabur Amla Hair Oil has a strong position in Hair Oils category. The
market specific variants such as Sarson (Mustard), Shikakai in Hair Oils, and Reetha Shikakai
under Vatika Shampoo brand continued to do well. The shampoos franchise was expanded
with launch of Amla shampoo, which has been well received. Hajmola brand is well
entrenched in Pakistan and caters to digestion needs of the consumers. The brand performed
well with sustained advertising and promotional investments and enhanced distribution
reach. ‘Dabur Hazmazza was launched to provide additional choice to the
consumer/customer, targeting the lower end of the market. The launch has been very well
received by trade and consumers and offtake is building progressively especially in the rural
areas of Sindh and Punjab. Dabur Red Toothpaste, introduced last year in the Oral Care
category, is performing well and is expected to become an important driver of growth in
future.
Insights: From the Import and export data we can observe that Dabur’s biggest export market
is the Middle East comprising of 31% of total international sales, Dabur should focus on
increasing the sales in this region as it has the potential to cross 40% of total sales by 2025,
since Dabur Egypt witnessed a drastic impact due to inflation and devaluation of currency is
recent past, Dabur should not risk its business by expanding the product line here, instead it
can invest in South Asian markets such as Sri Lanka and Myanmar, Sri Lanka is a safe bet as
the market share is growing in double-digits compared to any other International business.

4. Human Resource Management – Dabur

HR Policies followed by Dabur
 Performance Appraisal: Management by objectives (MBO). Annual evaluation based
on the goals set by the organisation. The reasons for failures, if any are also discussed
 with the employees. a standard value system is provided to the appraiser, based on
which assessments are done in four categories, namely:
o Outstanding
o Excellent
o Good
o Below Average
There is no open appraisal or 360 deg. feedback in the company. Also, there is only
annual Feedback and discussion on reasons of failures.
In Dabur, positive leniency errors are more common, with most evaluators marking
appraises high, due overestimation of targets achieved. Based on survey of employees
at Dabur, performance appraisal is satisfactory, not very good. The process needs to
be integrated into the career planning of its employees in a more effective manner,
with the appraisal outcome used more for the purpose of rewards. An open system
with joint goals set by the appraisee and appraiser is desired.

 Reward and Recognition: At Dabur, the Human Resources department supports the
business operations and helps enhance performance parameters for each employee.
Special care is taken in nurturing talent, promoting entrepreneurship among
employees and motivating employees to innovate and improve their performance
through an innovative reward and recognition programme called ‘Applause’. The
objectives of this scheme are:
o To reward contribution of employees beyond normal monetary rewards
o To recognize and applaud for immediate recognition
o To promote positive behaviours in the organization
 Health and Safety Scheme: Dabur has also institutionalized Health, Safety &
Environment policy (HSE), which describe an occupational health and safety
management system based on seventeen elements (OHSAS-18001:2007) that include:
o A clear statement of overall health and safety objects.
o A commitment to the prevention of occupational injuries and illnesses.
o A commitment to continual improvement.
o A commitment to compliance with all applicable Act/Rules & legislation.
o A commitment to training, communication and make it available to all
interested parties.

 Talent Management: Dabur’s Talent Management strategy is focused on building
future leaders and creating a talent pool within the organization to ensure a pipeline
of high-quality business leaders to steer the company forward on its growth trajectory.

Career Development Centre (CDC) is an innovative HR initiative undertaken by Dabur

in a bid to provide career development and advancement opportunities for employees
who have been part of the Dabur India family for some time. This is an assessment
 process for identifying the performers and rewarding them through promotions to the
next level of being supervisors or managers. While a particular employee may be
performing extremely well in his/her current role and delivering an excellent
performance consistently, it does not assure that the same employee may be a right
fit for a larger role or may be able to perform equally well in an enlarged role as a
supervisor or a manager. CDC helps company identify talent and reward them by
taking them to the next level on the Corporate ladder.

 Training Development
o Special programmes have been devised for the sales force. Through audio-
visual and real time sessions, the sales teams are trained intensively on various
nuances of different sales channels. The entire process is highly proactive and
well structured.
o In all 1,034 training and skill upgradation programmes were organized during
the year for skilled and unskilled employees
o The company has a well-developed Young Managers’ Development
Programme (YMDP), which is a cross departmental training programme
designed for new Management Trainees and ensures a regular talent flow
within the company.

 Gender Diversity
o Dabur is consciously working towards enhancing gender diversity at the
workplace and 2.75% of the employees on its rolls are women.
o Today, 43% of our brand managers across categories are women. Around 25%
of the management trainees recruited during the last two years are women.
Keeping this in mind, we have been celebrating International Women’s Day
(IWD) at Dabur as a gesture to tell our women employees.
o The women employees were invited for special interactions and hi-tea with
the top management. Besides, a special health, wellness and grooming session
was organized for all women employees with executives from Bharti Taneja’s
Beauty School. A session on healthy eating and its importance for healthy living
was also held. Besides, beauty & grooming tips will be offered by leading
beauty experts, and special gift hampers & gift vouchers distributed among
women employees on the occasion.

 Work Life Balance: Dabur’s HR department, along with line managers, ensures that
workplace environment is safe, hygienic, humane, and upholds the dignity of the
employees. A host of programmes and policies that facilitate Work-Life balance have
been implemented to acknowledge the fact that employees have responsibilities. The
following work rules have been put in place to ensure that our employees maintain a
healthy Work-Life balance:
o 5-day working week at the Corporate office.
 o 2nd & 3rd Saturday off in Zonal offices.
o Maternity benefits for all Women employees.
o Special approval is given on case-to-case basis for working women in case of
any special requirement pre and post-delivery.
o Employees are also entitled to take special occasion leave on account for
marriage anniversary/Birthday.
o Male employee can take paternity leave on the occasion of birth / adoption of
child.

 Recruitment and Selection: Dabur uses features of different kind of tests to make one
tests, according to them tests work better when combined in isolation. Dabur carries
the whole selection procedure in a very planned, structured and systematic way

Insights: The Pros and Cons of HR policies of Dabur are

Pros: The working environment is healthy, there is lot of scope for diverse knowledge,
there is ample growth opportunities for performers and there is support from the
management for new ideas.
People involved in the organisation expressed satisfaction in work-life balance
Cons: The increments are very low as compared to the competitors, the hierarchy is
big and takes a lot of experience to reach higher designation, and people also
expressed concern about the lack of freshness in Ideas due to the ageing workforce in
the company, the employees are looking forward to work with young force to improve
the efficiency of the company.

5. Logistics and Supply chain - Dabur

Dabur procures raw materials worth around `500 Cr from a wide base of vendors. The
Company has wide and integrated distribution network for its around 600 SKU delivering to
around 2100 stockiest, further connecting to the thousands of retail outlets covering every
small and remote part to organized stores of India. Dabur has improved distribution system
through its unique Retails Excellence program, “DARE” (Driving Achievement of Retail
Excellence). the Program covers a major objective as a channel focus, activating key customer,
improving rural focus, rewarding distribution efficiency, maximizing brand impact and
building information capabilities.
5.1 Strengths:
 Strategic partners- Dabur has various alliances with other companies to improve
the stronghold over the market and make up for its weaknesses. Some of these
include Aviva, Centre for Integrated Mountain Development (Dabur Nepal) etc.
Worldwide Coverage- the company has its offices and manufacturing centres all
over the world and is spread and marketed across more than fifty countries
worldwide. It therefore has world-wide coverage.
 Experience- the company was established in 1884 and hence is one hundred and
thirty years old (as of 2014). Due to it being so old, its establishment in the market
is not even a question.
 Manufacturing Facilities- there are several manufacturing centres spread across
the whole of India, Nepal and various other countries. Almost each state has many
manufacturing plants within it. Therefore, there is no lack of production centres
for its goods and services.
 Research plants- being a research-based company, one of the chief highlights of
Dabur is that it is constantly improving due to the various research plants and
research centres across the nation to not just expand its line of ayurvedic products
 but also bring about necessary modifications in both ayurvedic and non-herbal
products.

Dabur has used Direct Shipment Strategy which was implemented in order to
bypass warehouses and distribution centres. Thus, Dabur delivers products
directly to the retailers/consumer through the Institutions & Modern Trade
System. Advantages of implementing strategy are –
 The retailer avoids the expense of operating a distribution centre
 Reducing lead time

5.2 Drawbacks in the supply chain

 No Retail outlet
Dabur does not have dedicated retail outlets to itself. We do not see any "Dabur
Stores" because that engages in retail trade instead of creating its own retail outlets
from which customers can purchase the goods directly. The company along with the
other outlets, customers would be more attracted to purchase the goods and sales
would increase by a considerable percentage.

 No Doorstep Delivery
Today’s consumer is more luxury loving. And why not? There are so many services that
make a world of products available to them right at their doorstep. In this scenario,
Dabur must expand its vision and include door to door delivery of its goods since that
is an added advantage when seen from the perspective of the modern-day consumer.
Since the company is so vast, it could either include its own service of door to door
delivery or form partnerships with related companies for such alliances. This will
greatly increase the sales of this well-established manufacturing giant.

Insights:
The modified supply chain: Given below is a model of the modified supply chain that
incorporated the above two drawbacks.
Firstly, since retail outlets was an issue, a portion of the trade is directed entirely to
private retail outlets and from the wholesalers, a part of the trade is guided to the
company's retail outlets whereas the rest is still in the hands of the alliances with
respect to respect to retail trade. To address the problem of door step delivery, there
are two changes suggested. One is to form an alliance with companies that are well
established and known for doorstep delivery like Flipkart etc. that are available online.
The other solution is to provide its own sellers or selling stations from where delivery
boys can proceed to the nearby areas for delivery of goods. This will ensure door to
door delivery of goods whilst maintaining the former method of retail traders to
consumers also.
 5.3 Using IT in supply chain:

Dabur also has 47 C&F (Carrying & Forwarding) Agents. The scale of operations
is such that the company dispatches 100 truckloads of goods every day from the 29
factories. These products reach to more than 750 large distributors all over the
country through the C&F agents.
According to Anil Garg, Head IT, Dabur India, decided to implement SAP’s Advanced
Planner and Optimiser (APO) to make Dabur’s supply chain more efficient. He is telling
that they are driving efficiency to Dabur's Supply Chain. When the management
decided to make Dabur’s supply chain more efficient, it was easier said than done.
Given Dabur’s vast product portfolio, its supply chain was far more complex than other
FMCG companies in the country. The company has a diverse product portfolio with
more than 800 SKUs spanning multiple ‘shelf life’. The company also had a large
fragmented front-end and seasonal product with significant sales skew. The company
that was already running SAP ERP for many years now, decided to implement SAP’s
Advanced Planner and Optimizer (APO). To ensure the accuracy of SAP APO, historical
data was deconstructed to derive the baseline sales and impact of ATL/BTL inputs. The
entire project was divided into different phases —diagnosis, design, build and
implement, and finally run (go live). After the project went live in 2010, Dabur greatly
benefited from SAP APO with perceptible business outcomes. For instance, post this
deployment, lost sales opportunities which were accounted at about 6 percent were
reduced to 3.75 percent; error forecast was reduced from 85 percent to 40 percent.
The forecast accuracy increased from just 25 percent to over 60 percent. It also
revealed that even as most of the MNCs have started sourcing their products from
India, Indian companies are going global and are focusing on overseas markets like
Bangladesh, Pakistan, Nepal, Middle East and CIS countries. India’s leading ayurvedic
drug maker and FMCG major, Dabur, has evolved a multi-pronged strategy to double
its export turnover. The company plans to launch Dabur and Vatika globally in West
Asia, Gulf Cooperation Council and the SAARC countries.

6. Key Performance Indicators (KPIs) - Dabur

 OUT OF STOCK RATE (OOS)

This FMCG KPI shows the moment of the day and of the week where your inventory is
exhausted, and how much of it is unavailable. Managing your inventory is of course a
must-do in the fast-moving consumer goods industry. You need to have an even-more
accurate vision of your stocks because of the short sales cycle time and high demand:
evaluating the Out of Stock Rate will give you a great advantage in terms of supply.
You should also know that around 80% of the ‘stockouts’ are actually caused by
defective shelves replenishment practices: implementing appropriate internal
measures to refill your store’s sections will decrease the OOS rate. That way, you can
easily avoid frustrated customers who in response tend to switch stores. You should
also understand the reasons behind inventory stockouts so that you can address the
causes more efficiently and avoid a situation to repeat itself over and over.

Performance Indicators
Studies for the FMCG industry usually show an average OOS rate of 8% – managing to
keep your stockouts below this line is crucial.

 DELIVERED ON-TIME & IN-FULL (OTIF)

The OTIF measures the delivery performance within a supply chain: On-Time, In-Full
delivery. It measures several levels of delivery: if the right product was delivered to
the quality standards agreed upon, in the quantity ordered, at the place agreed on,
and at the time expected by the customer – often with a tolerance range predefined.
As a supermarket, you can use this FCMG KPI to compare the performance of your
suppliers: how often do they provide you with what you want, when you need it. It is
usually calculated as a percentage according to the following formula: OTIF = (number
of deliveries “OTIF” ÷ total deliveries) *100. The “OTIF” deliveries used to calculate
this percentage should answer a couple of requirements: they have a delivery date,
they measure the date and hour of said delivery, archive it in the system, and maintain
a track record of the reasons behind an order not “OTIF”.

Performance Indicators
Implement the right measures so as to keep your OTIF rate above 90% for a well-
performing supply chain.

 AVERAGE TIME TO SELL

This FCMG metric is all the more important in the fast-moving consumer goods
industry. Speed being an inherent part of this sector, that deals with a lot of fresh
products, the Average Time to Sell is a crucial KPI to measure. According to the type
of items (food and beverages, personal care, tobacco, household care etc.), the
freshness varies and has to be respected to avoid poisoning and observe the law.
Evaluating how long it takes for your products to be sold will give material for the
procurement strategies, but will also help in the inventory management. Holding
items in your inventory incurs costs, such as labour, storage, or freight costs.

Performance Indicators
Ideally, you want the time to sell to be as low as possible, meaning that you manage
to sell most of your inventory within the short deadlines.

 PERCENTAGE OF SOLD PRODUCTS WITHIN FRESHNESS DATE

This FMCG KPI calculates the percentage of your inventory sold within the freshness
date, depending on the type of product. On the illustration aside, we see that only
81,4% of the freshest products needing to be sold within 3 days, are actually sold.
Where is that coming from? Actually, you will always face a trade-off between the
availability of your products on the shelves, and their expiration date. Indeed, if you
want to have 100% of your products sold, that means that your store will have to deal
with shelf unavailability at some point – and this is why many discounters who have
such strategy cannot provide you with anything you want on a Saturday evening, one
hour before closure.

Performance Indicators
Align your metric’s target with the strategy of your store and what has the priority:
availability at any time, or selling the inventory within due date.

 CASH-TO-CASH CYCLE TIME

This FMCG KPI combines 3 ratios: the days of inventory (DOI), the days of payables
(DOP), and the days of receivables (DOR). It represents the time period needed
between the moment a business pays cash to its suppliers, and receives cash from its
customers. It is also referred to as “cash conversion cycle”, and is useful when you
need to determine the amount of cash needed to fund ongoing operations. For fast
moving goods, estimating the financing requirements is crucial for smooth operations.
The formula used to calculate the cash-to-cash cycle is the following: Cash-to-Cash
Cycle = DOI + DOP – DOR. A cycle of 40 days means that a business must support its
expenses for 40 days – not more. This is a useful calculation for forecasting or trying
to address an expensive debt for instance.

Performance Indicators
The shorter the cycle, the better it is for a company’s operations. A short cycle
means that a business can operate with less cash tied up in operations.

 SUPPLY CHAIN COSTS

The Total Costs of Supply Chain gather all the costs associated with the supply chain
management: planning, sourcing, delivering, managing returns, labor, etc. Reducing
supply chain costs can notably increase the profits, without needing to increase sales.
The supply chain costs have a strong correlation with the carrying costs of inventory:
to reduce the total costs, many companies have used strategies to reduce inventory
safely. However, you have to be careful and assess the impact of cost reductions on
the supply chain as a whole: cutting on one part can result in increasing costs
elsewhere, which is a waste of time and energy. Analyse carefully all the changes
incurred by a certain cost saving, to avoid such situation.

Performance Indicators
Perform a benchmark within your specific sector, and compare your supply chain
costs to those of your competitors.

 SUPPLY CHAIN COSTS VS SALES

Directly linked to the previous FMCG KPI, calculating your supply chain costs as a
portion of sales will give you an understanding of how much you are spending
relatively to the whole. By doing such a spend analysis, you can identify where you
could do savings. As stated above, savings are a good thing if made soundly: cutting
costs here that increase the operations there is a useless hassle. There are many
benchmarks out there comparing the costs of supply chain to the sales (as a
percentage), but you can also perform your own with specific competitors. In any case,
comparing your ratio to your industry average is a best practice, as it will show where
you stand and if you can do better.

Performance Indicators
The industry average for ambient, non-frozen food and beverages companies is of
7,6%. You should aim at maintaining your ratio below that value.

 CARRYING COST OF INVENTORY

The Carrying Costs of Inventory are also referred to as ‘holding costs’, and are
calculated as a percentage of the inventory value. It is essentially all the costs incurred
by a business to hold and store its inventory over a certain time. It includes employee
costs, insurance, opportunity cost, cost of capital, but also the losses caused by
obsolescence, pilferage, and damage. You can calculate them with the following
formula: Carrying Cost of Inventory = Inventory carrying rate * Average inventory
value. By determining the carrying costs of inventory, businesses know how much
profit can be made on current inventory. In the fast-moving goods sector, businesses
have a “JIT” (Just in Time) inventory, since most products expire quickly.

Performance Indicators
The ideal, like with any costs, is to reduce them. An efficient inventory management is key
in the matter. Coupling low costs and high inventory turnover rates is a success factor.

 ON-SHELF AVAILABILITY
On-shelf availability (OSA) measures the percentage of time an item is visibly
accessible for sale on shelf by consumers, where they expect it and at the moment
they want to buy it. This can be performed by a physical audit or an inventory data
analysis. When measuring the OSA, other metrics are also considered: the out of stock
rate, the value of sales lost due to unavailability, or the proportion of lost sales
compared to actual sales. This FMCG metric evaluates the performance of a business
to address demand. If shoppers are repeatedly facing out-of-shelves items in the same
 store, they will move to another one. An item that isn’t on shelf might however be
available somewhere else in the store, or in the warehouse: to avoid losing customers
who won’t ask for the item, implement good staffing measures that reduce out of
shelves situations.
Performance Indicators
An increase in OSA can impact sales significantly: measure your availability over time
and improve it as much as possible.

 SALES VOLUME AND MARGIN BY PRODUCT CATEGORY

As for every business, you need to measure the amount of sales performed over a
certain time and the total volume they represent. Calculating how much sales you
have done and breaking it down per category will give you an idea of your strong areas.
Comparing it to the target you fixed (actual sales versus forecasted sales) lets you
know if you are on track with your planned goals – and if not, you have to find the
reasons why: were you too optimistic? Were there unplanned issues, like stockouts or
an on-shelf availability always low due to staffing shortages? Likewise, calculating the
sales margin helps you determine how much of every dollar made in sales, actually
stays with your company as gross profit after accounting for the cost of an item sold.

Performance Indicators
Comparing sales margins per product lets you know which are the most profitable.

7. Porter’s Five Forces Framework - Dabur

Threat of Substitutes Products:

 Dabur a leader in Herbal Digestives where the product has 90% of the market share
 FMCG or Healthcare products especially Ayurvedic, hardly had substitutes until a
couple of years ago, but now with Patanjali taking over the Ayurvedic segment of the
Market, Dabur is having a tough time keeping up with the profits
 Dabur therefore has to constantly re-invent its existing product lines in order to cope
up with the innovations of its competitors

Threat of New Entrants:

 Dabur holds a 100-year legacy in the market, it holds the first mover advantage
 The brand loyalty is so strong that the new entrants find it difficult to position
themselves in the market
 There are no significant entry barriers in the Ayurvedic segment

Bargaining Power of Customers

  The Bargaining Power of Customers has increased dramatically due to a wide range of
available choices from competitors, both local and global
 Dabur has to come up with a strategy to keep abreast with the increasing competition
by improving the quality and reducing the prices over the period

Bargaining Power of Suppliers

 100 years presence - Dabur has a very strong bond with the suppliers
 Has a policy of accountability to stakeholders – be it customers, shareholders,
employees or suppliers (who have a vested interest in making it all happen)

Rivalry Among Existing Competitors

 Key players and competitors of Dabur India currently are

 Hindustan Unilever Ltd, Tata Tea, Nestle India Ltd., Britannia Industries Ltd.,
Colgate Palmolive Ltd., Marico Ltd., Galaxo Smithkline consumer, Cadbury
India ltd., Reckitt Benckiser Ltd., Procter & Gamble
E.g. - Himani, Baidyanath and Zandu for Dabur Chyawanprash, Marico, Keo
Karpin, HLL and Bajaj for Vatika Hair Oil
Dabur has to constantly relook its strategy and keep reinventing and branding,
in order to maintain and increase its market presence

Insights: Being the largest FMCG company in India, Dabur has a strong brand equity and can
expand its business in rural segments. With increased customer preference towards natural
and herbal products, it can expand its market through winning competitive strategies.

7.1 Swot Analysis

Strengths

 Century Old Company

 Established Brand
 Ayurvedic/ herbal Product line
 Leader in Herbal Digestives where the product has 90% of the market share
 Core knowledge of Ayurveda as competitive advantage
 Strong Brand Image
 Strong Distribution Network
 Extensive Supply Chain
 R & D - a key Strength

Weakness

 Seasonal Demand (like Chyawanprash in winter and Vatika not in winter)

 Profitability is uneven across product line
 Low Penetration (Chyawanprash)
 Limited differentiation (Vatika)
 Unbranded players account for 2/3rd of the total market (Vatika)

Opportunities

 Extend Vatika brand to new categories like Skin Care and body wash segments
 Market Development
 Export Opportunities
 Innovation
 Increasing income level of the middle class
 Creating additional consumption pattern

Threats

 Existing Competition like Himami, Baidyanth and Zandu for Dabur Chyawanprash
and Marico, Keo Karpin, HLL and Bajaj for Vatika Hair Oil)
 New Entrants
 Other fields of medicine- Allopathic and Homeopathic

Insights: From the above points it is can be understood that, Dabur being a century
old company is able to cope up with the competition in the market due to its strong
brand image and its extensive supply chain, whereas currently Dabur’s profitability is
uneven across the product line due to the unbranded players that account for 2/3 rd of
the total market value, Dabur should seize the opportunity to innovate different
marketing strategies and use technology to study the consumer behavior and increase
the penetration of brand in the market.

7.2 Value Chain Analysis

Primary:

 Inbound Logistics:
 Long term contract with raw material suppliers
 Personnel at regional offices for overseeing the smooth transit of goods.
 Transparency and monitoring through deployment of IT all transactions
through ERP (enterprise resource planning).
 Efficient storage facilities – easy storage and retrieval
 Operations:
 Ayurveda –special competence.
 Apprentice Trainee Course - ensuring stable source of skilled manpower.
 Outbound Logistics:
 Distributors, all across the country.
 Long term contracts with transporters–higher volume of business to
transporters ensures competitive price.
 Regional Sales Office linked through ERP application.
 Efficient security system for prevention of any kind of pilferage.
 Marketing and Sales:
 Large network of dealers.
 Structured approach to understanding the requirements of individual
customers – QFD’s (quality function deployment) conducted at regular
intervals.
 Clear identification of product requirements, leading to development of
innovative products.
 Quick assessment of the changing market dynamics and consumer.
 After Sales (Services):
 Efficient collection of data from field and communication to the respective
plants.
 Pan India presence.
 Large network of distributors & retailers

Secondary:

 Procurement:
 E-procurement initiative.
 Long term relationships with a stable and loyal pool of suppliers.
 Technology driven procurement – SAP and VCM.
 Localized supplier base at manufacturing locations – low inventory levels.
 Infrastructure:
 Multi–Location facilities.
 Best in class prototype building facilities.
 Technology – ERP application.
 Large product portfolio.
 Technology:
 Approximately 2% of the annual profits of the company invested in research
and development.
 Knowledge portal – helps employees keep abreast with the latest
technologies.
 Extensive prototype building and testing facilities.
 Formal benchmarking process.
 Human Resources:
 Vast pool of technically competent managers.
 Focus on development of managerial capabilities - executive training programs
at premier business schools.
 Career advancement schemes.
References:

1. https://www.porteranalysis.com/porters-five-forces-model-of-dabur/
2. http://marketingofdaburr.blogspot.com/
3. https://prezi.com/ci-aas6zushk/dabur-india-ltd/
4. https://www.indiainfoline.com/company/dabur-india/management-discussions/3392
5. https://www.infodriveindia.com/india-export-data/dabur-india-export-data.aspx
6. https://www.marketscreener.com/DABUR-INDIA-LTD-9058822/financials/
7. https://www.datapine.com/kpi-examples-and-templates/fmcg
8. https://www.moneycontrol.com/news/business/dabur-india-limited-q2-2018-19-earnings-
conference-call-3204291.html
9. https://economictimes.indiatimes.com/Dabur-India-Ltd/stocksupdate/companyid-
11796.cms
10.