Ankit Goel Roll No.

-120 PG- Finance

DABUR GROUP
Company Profile:

Leading consumer goods company in India with a turnover of Rs. 5,283 Crore (FY12) 2 major strategic business units (SBU) - Consumer Care Business and International Business Division (IBD) 2 Subsidiary Group companies - Dabur International and NewU and several 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) 17 ultra-modern manufacturing units spread around the globe Products marketed in over 60 countries Wide and deep market penetration with 50 C&F agents, more than 5000 distributors and over 3.4 million retail outlets all over India

Horizontal Scope: Hair care Health care Home care Skin care Health supplements and digestives Fruit based beverages and juices Culinary paste

Geographic scope: GCC countries Egypt Nigeria

Ankit Goel Roll No.-120 PG- Finance

Bangladesh Nepal US

Turnover: - Rs. 6,146.4 crores for Financial year 2012-2013. Profits: - Rs. 763.4 crores for Financial year 2012-2013. Total Head Count: - 5650

Accolades 2013

Dabur ranked amongst India's Most Admired Companies by Forbes India Dabur & SUNDESH Bags CII's CSR Award Dabur ranked amongst Top 50 Large-Cap Companies by Dalal Street Dabur named a leading 'Globetrotter' brand by marketing magazine Pitch

2012

Dabur ranked as Most Trusted HealthCare, Ayurveda brand in India Dabur moves up 15 places, ranked 186 in Fortune India 500 list Dabur ranked Third in list of Asia's Best Investor Relations Companies Dabur ranked 153 in FE-500 list of India's Finest Companies Dabur bags People's Choice Corporate Green Star Award for 2012 for its environmentfocused initiatives

Dabur has 4 Strategic Business Units Consumer Care Business incorporating the Health Care and Home & Personal Care (HPC) verticals. This accounts for 54.5% of the consolidated sales Foods comprising fruit-based beverages and culinary pastes business, which contributes 10.8% to consolidated sales

Ankit Goel Roll No.-120 PG- Finance

International Business, which includes Daburs organic overseas business as well as the acquired entities, Hobi Group and Namaste Laboratories LLC. This vertical now accounts for 30.5% of Daburs consolidated sales Others which accounts for 4.2% of sales

I will focus on the consumer care SBU of dabur. Turnover of Consumer care business for year 2012-2013:- Rs. 3319 crores Profitability: - Rs. 381 crores. 2012-13 2011-12 2010-11 Dabur Group 16.3% 29.6% 20.3% Consumer Care SBU 13.3% 11.4% 15.4%

Industry Analysis Some key points: The consumer products industry has been growing at a brisk pace in the past few years backed by robust economic growth and rising rural income. The consumer sector is valued at Rs 1.6 trillion (Source: Nielsen). The industry is urbancentric with 66% share of the goods being consumed by urban India. Metropolitan cities & small towns (population of 1-10 lakh) have been driving the consumption in urban India since 2002. In fact middle India, comprising of the small towns and consuming 20% of overall FMCG sales, has been growing the fastest across rural and urban segments. As per Nielsen, the market size of middle India is set to expand from Rs 287 bn in 2010 to over Rs 4 trillion by 2026. Rural India, where 70% of the population resides but only 34% consume consumer goods, presents the biggest market potential for the industry. Backed by low unit packs and aggressive distribution reach, rural market size has expanded four times to Rs 564 bn since 2002. Companies such as Hindustan Unilever and Dabur which derive nearly half their sales from rural India have been increasing their reach. Consumer goods are retailed through two primary sales channels - General Trade and Modern Trade. General Trade comprising of the ubiquitous kirana stores is the largest sales channel forming 95% of overall retail sales. However, growth of consumer goods

Ankit Goel Roll No.-120 PG- Finance

retailed through Modern Trade channel is outpacing the growth in General Trade. Factors such as a comfortable and modern store experience, access to a wide variety of categories and brands under a single roof and compelling value-for-money deals are attracting consumers to organized retail in a big way. But modern trade is still an urban phenomenon with 17 key metros contributing to 73% of overall modern trade in India. Modern Trade is expected to gain greater importance with opening up of foreign direct investment in multi-brand retail. The implementation of the Goods and Services Tax (GST) is expected to benefit the sector immensely by reducing the overall incidence of taxation. GST aims to reduce the cascading effect by replacing a multitude of indirect taxes such as central excise, service tax, VAT and inter-state sales tax with a single GST rate. Moreover, companies will be able to optimize logistics and distribution costs in the GST era. The resulting cost savings by the companies can be passed on to the final consumer thereby boosting demand.

Supply: Abundant supply through a distribution network of over 8 m stores across the country. Distribution networks are being beefed up to penetrate the rural areas. HUL has tripled rural network in 2011 and Dabur wants to double rural reach by FY13. Demand: Being items of daily consumption, demand is least impacted by economic slowdown. Porter Five forces Threat of new entrants: Moderate Low regulatory barriers High competitive intensity requires large investments in brand building which deters small players Huge investments in setting up distribution networks

Threat of substitution: High Multiple brands with narrow product differentiation

Ankit Goel Roll No.-120 PG- Finance

Bargaining power of customers: Low to moderate Customer does not have bargaining power in case of branded products but intense competition within the FMCG companies results in value for money deals for consumers. High brand loyalty for certain products discourage consumer product shift. Low switching cost Aggressive marketing strategies induces customers to shift Bargaining power of suppliers: Moderate Prices are governed by international commodity prices Due to long term relationship with suppliers, companies are able to negotiate better rates Rivalry among competitors: High Competition is faced from domestic unorganized players and established MNCs More MNCs entering the country Price wars are a common phenomenon Advertising expenses continues to grow Strategies are becoming more aggressive

Opportunities for Improvement Rural markets are going to be the growth drivers for the SBU. So a fresh look at rural marketing strategies and strengthening distribution reach is necessary. need to move beyond the traditional media options like radio, television and cinema, and enter into a direct engagement with rural consumer Differentiated products tailored to the needs of specific group of customers connect with key opinion leaders from among the doctor fraternity Better IT systems SBU distinctive competencies In terms of resources Human resource involved in research and development. Patents of products In terms of core competencies Development of Herbal products In terms of core capabilities Marketing strategies to attract to rural customers Good relations with customers

Ankit Goel Roll No.-120 PG- Finance

Develop new variants products very fast creating a network of medical professionals, both Ayurvedic and Allopathic and disseminating information regarding various Ayurvedic and health care products from Dabur

Tetra Threat Framework Barriers to imitation: Private information:- Patents about products prevent imitation Relationship with customers:- Dabur is very good at building and maintaining relations with customers and medical practitioners who promote Dabur. So even if imitations are available people do not get to know about them or use them. Size economies:-Dabur has size economies and economies associated with learning by doing. Dabur has enormous marketing budget and an extensive distribution network. Matching this would require very high capital investments which in not possible for small players. Dabur is a 128 years old company. Its product has been developed over a large period of time. New players cannot develop products which would meet customer needs. Upgrading:- Dabur is very efficient in upgrading its existing products and add new features very fast. So when a competitor tries to imitate a product dabur comes up with a better product

Barriers to Substitution: The raw materials for natural products such as honey and oil are non substitutable. So they dont need to worry about substitution.

Barriers to Holdups: Integration:- The SBU has backward integration with suppliers which prevents Holdups Developing trust:- The SBU develops trusts among its suppliers which prevents Holdups.

Barriers to Slack: Moderate profit margins:- Profit margins are not very. So inefficient processes will lead to losses. Quality employees which prevents slack themselves.

Ankit Goel Roll No.-120 PG- Finance

SWOT Analysis Strengths: Moderate operating costs Extensive distribution networks in both rural and urban areas Well known brands

Weakness: Certain niche products have low economies of scale

Opportunities: Growing rural market Increasing purchasing power of consumers High export potential

Threats: Entry of MNCs Tax and regulatory structures Counterfeit products

Strategic challenges for the company: Dabur works on the lines of Think Global, act Local. But with its increasing global presence Dabur will need to rethink its strategy. Dabur needs to work on its rural strategy. Remain in the same business or diversify into distinctive businesses.

Strategic challenges for the SBU:-

Ankit Goel Roll No.-120 PG- Finance

Rural marketing Different products for Rural and Urban or same products for both market