Can you Navigate through the challenges of the current

Business Environment?

NAVIGATOR 2006-07
National Case Study Contest
 NAVIGATOR

The case deals with Dabur’s strategy and business plan towards achievement of
its Vision 2010.

Introduction

On 29th March 2006, Mr. Sunil Duggal, CEO Dabur India Limited unveiled Dabur’s four
year strategy and business plan which envisions doubling the turnover and net profit by
the year 2010. Christened ‘Vision 2010’1, this announcement came on the back of
successful completion of the previous four-year business plan. “The timing marks the
end of our previous four year business plan that was crafted for the year 2002-06 and
comes to an end with this fiscal...We expect to double our sales and profits by the end of
fiscal 2009-10 with this plan” said Mr. PD Narang, Group Director2.

Background

The company traces its origins to 1884, when Dr SK Burman set up Dabur as a
proprietary firm for the manufacture of Ayurvedic drugs. Dr Burman set up the firm with a
goal of meeting the healthcare needs of poor Indians. Initially the company marketed an
allopathic drug, Plagin, to combat the then prevalent epidemic of plague. With growing
demand, Dr Burman established a manufacturing plant in Kolkata in 1896, and Dabur
became the first company to mass-produce Ayurvedic formulations under modern
scientific methods.

In 1940, Dabur entered the domain of personal care with the launch of Dabur Amla Hair
Oil. In 1949, the company introduced Dabur Chyawanprash, the first branded restorative
in a packaged form. The company expanded its product portfolio by adding oral care
products in 1970. The year 1972 witnessed a shifting of operations from Kolkata to
Delhi. Over the next decades, the company saw its portfolio expanding through
introduction of new products and categories. At the turn of the millennium, Dabur staged
a turnover of Rs.1000 crore.

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 Exhibit 1: Timeline of Key Events Exhibit 2: Snapshot of Topline Growth Since 1980
1884 Birth of Dabur

1896 First Production Unit

1940 Launch of Dabur Amla Hair Oil

1949 Launch of Dabur Chyawanprash

1994 Raises First Public Issue

1995 Launch of Vatika Range

1996 Launch of Real Juice

2000 Crosses Rs 1000 crore Turnover

Demerger of Pharmaceuticals Dabur Pharma was part of Dabur India
2003
Business till 2003;Pharma demerged into a
separate company in 2003-04
2004 Promotion of 5 Power Brands
Figures in Rs Crore
Acquisition of Balsara Group of
2005
companies

In the year 2002-03 Dabur laid down its long-term plan of transforming to a focused and
transformed FMCG player. Accordingly, a four-year strategy, Vision –I 3, was crafted,
which targeted sales of Rs 2000 crore by the year 2006.

Execution of Vision I: 2002-06

In order to operationalise and execute Vision-I, Dabur took a number of incremental and
transformational initiatives. One of the first moves by the company in its journey towards
becoming a focused FMCG player was to demerge its pharmaceuticals business as a
separate entity- Dabur Pharmaceuticals Ltd. Within the FMCG space, Dabur’s blueprint
involved developing and implementing marketing initiatives based on a clear strategic
plan with restructured brand architecture, continuously introducing a stream of new
products and creating a niche for the company in the FMCG segment based on the
“herbal and natural” products segment.

Brand Architecture

Dabur realized that whilst rejuvenation of old brands, innovations and new product
launches were key for achieving its growth targets, the immediate priority was

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streamlining the brand architecture. The flagship brand Dabur, actually operated at three
distinct levels- the company’s corporate brand identity, the mother brand for a whole
range of products and also percolated to individual product names. With the word having
several different meanings, the brand message was not getting clearly communicated to
the consumers. “Realizing that one brand cannot straddle so many categories, we
decided to adopt a key brand strategy”4, said Mr. Duggal.

This strategy, directed towards creating differentiation amongst products, lead to the
adoption of 5 master brands. It was decided that whilst Dabur, the flagship brand, would
stand for healthcare products, Vatika and Anmol would be the master brands for the
personal care portfolio. Most of the diversification into new product categories, such as
skin care, was planned under these brands. Vatika was positioned as a herbal beauty
brand with a premium image and Anmol was a mass market, value for money brand.
Hajmola was positioned as a tasty digestives brand, and Real was to be the umbrella
brand for juices and food, aimed at upmarket urban consumers. The company thus
rationalized its earlier portfolio of over 20 brands. Once the overall brand architecture
was established, a well-calibrated mix of products was placed under each brand.

However, Dabur’s brand equity had to become more cohesive and in sync with the new
brand architecture. In early 2002, Dabur had undertaken a study in association with
consulting firm Accenture, to understand its brand equity. The key finding: Dabur’s brand
perception was of a herbal specialist. The herbal segment was one of the fastest
growing in FMCG sector and could be leveraged across both, urban and rural markets.
However, in the past Dabur’s products had come to be associated with the 35 plus age
group. With almost half the country’s population in the below 30 years age bracket, the
company ran the risk of missing the next generation consumers.

These factors created the impetus for re-visiting

the corporate identity. According to Mr.Duggal,
“While the current logo has been with Dabur for
years, we now felt the need to contemporise it
Exhibit 3: Change in Corporate Identity and make it more relevant”5.

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At the same time it was also important to maintain continuity with the banyan tree that
was so closely identified with Dabur.

“The new identity modernizes the 100 year old equity of Dabur, both as a company and
as a brand” 6, said Mr. Devendra Garg, EVP Marketing. The new logo- the tree with a
younger look in form and colours – was also in sync with the new brand essence -
Celebrate Life. Each element of the identity was crafted to convey a relevant message.
The burst of leaves signified growth, vitality and rejuvenation. The dual colours reflected
the combination of stability and freshness. The form of the trunk mirrored three people
raising their hands in exultation. Whilst the broad trunk represented stability, the multiple
branches represented growth. The soft orange color of the trunk was selected for its
message of warmth and energy. Thus, through its form and colours, the new logo
combined stability and freshness and expressed a positive, proactive and progressive
brand.

Exhibit 4: Product Portfolio-CCD, 2006

Consumer Care Division
Category Products*
Amla Hair Oil, Amla Lite Hair Oil,
Along with the contemporary new Anmol Sarson Amla, Vatika Hair Oil,
Vatika Anti Dandruff Shampoo, Vatika
identity came other changes. One area Hair Care
Henna Conditioning Shampoo, Anmol
of change was the organization Natural Shine Shampoo, Anmol Silky
Black Shampoo
structure. Prior to 2003, Dabur operated Dabur Lal Dant Manjan, Dabur Red
Toothpaste, Dabur Red Gel, Babool
through two divisions- the family Oral Care Toothpaste, Meswak Toothpaste,
Promise Toothpaste, Binaca
products and healthcare products Toothbrush
divisions. However in 2003, considering Health
Dabur Chyawanprash, Dabur
Chyawanshakti, Dabur Honey, Dabur
the commonalities in marketing, Supplements
Glucose
distribution, retailing and sales, the Dabur Hajmola tablets, Hajmola
Candy, Hajmola Candy Fun 2,
Digestives
company decided to merge them as and
Hajmola Yumstick, Hajmola Mast
Masala, Anardana, Dabur Hingoli,
Confectionary
one. This division- now referred to as Pudin Hara Pearls, Pudin Hara Liquid,
7 Pudin Hara G
Consumer Care Division (CCD) -
Dabur Lal Tail, Dabur Baby Olive Oil,
Skin Care
consists of a diverse product portfolio Dabur Janma Ghunti, Gulabari, Vatika
and Baby
Fairness Face Pack, Vatika Honey
Care
and contributes the largest share to and Saffron Soap

Dabur India’s top line. Home Care Odonil, Odomos, Sanifresh, Odopic

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Having established the new brand architecture and logo, the Consumer Care Division
turned its focus on further growing the business. In the personal care product range, the
focus was to grow faster than the market, whilst in healthcare products, being the market
leader, Dabur decided to drive the market growth. One of the key strategies of the
company was to enter new categories and to innovate new product offerings. Over the
four years, the company entered a number of new categories such as toothpastes,
soaps and skincare. The strategic focus on new product development yielded benefits,
as new products contributed about 42 per cent of CCD’s growth during the period 2002-
06.

Exhibit 5: Category Contribution to CCD Portfolio, 2003-06

Throughout the period 2002-06, the CCD brands got sustained support from aggressive
advertising campaigns. The CCD brands adopted a successful strategy of
communication through focused positioning and celebrity endorsers such as Amitabh
Bachchan, Rani Mukherjee, Virender Sehwag and Vivek Oberoi. To support its

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marketing strategies, CCD needed to streamline and strengthen its sales and
distribution. In 2002, the company already had one of the largest distribution networks in
the country. However, it decided to further increase its penetration, reach and efficiency.
This was achieved by covering towns where the company did not previously have a
presence and by increasing direct coverage in present coverage towns.

An analysis of the region-wise sales data revealed a significantly low contribution of the
southern region (7 per cent) to the CCD portfolio. This was in contrast with the 25-26 per
cent contribution of southern states to the overall FMCG market. The company viewed
this comparatively low contribution as an opportunity. As Mr. Duggal later said, “A clear
way to grow for us was to focus on the southern states” 8. With this background, in 2004,
a separate south India focused, marketing team was established with the mandate of
increasing contribution from south. Considering Dabur’s traditional focus on north and
east regions, coupled with the high level of FMCG competition in the southern states,
this was a challenging task. To meet this challenge, the south marketing team adopted a
phased approach. Its initial focus was on improving ground level practices such as point
of sale promotion and better stocking practices. The second phase was to involve
customized packaging and commercials; and the third stage envisioned customized
product launches. Though all the phases of implementation were not completed within
Vision I timeframe, the dedicated efforts and implementation of the first two phases
resulted in increasing the contribution of south markets from 7.1 per cent in 2003-04 to
more than 10 per cent in 2005-06.

Consumer Healthcare Division

In 2004, second phase of organizational restructuring was undertaken and another

division -Consumer Healthcare Division (CHD) 7- was created. This division housed the
Ayurvedic healthcare products of Dabur. The increasing consumer preference for
holistic, Ayurveda-based, health remedies indicated high growth potential for this
business. Further, the business was woven around the Ayurveda platform and therefore,
given the strong Ayurvedic origins of Dabur’s brand equity, it constituted a major focus
area for the company.

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Dabur realized that there was a growing trend towards self-medication. The inadequate
healthcare facilities, absence of public health cover and low regulatory control lead to a
higher propensity for self-medication amongst Indian consumers. Looking at this
opportunity, it was decided that in addition to the prescription based ayurvedic
medicines, the over-the –counter (OTC) business would be included in CHD. Advertised
OTC and value added OTC products were envisioned as key growth drivers for the
division. Several categories, such as pain relief, stress management, cough and cold,
were identified as high opportunity OTC categories.

However, to operate in this segment, the division needed to enhance its product portfolio
as well as its OTC capability. The division had a varied product portfolio, comprising
pure grantha based products, which can be broadly classified into OTC products,
branded ethicals and generics, including Asavs and Classicals. The company added
brands such as cough and cold brand Honitus (acquired from Dabur Pharmaceuticals
Ltd), isabgol brand Nature Cure and memory enhancer Shankhpushpi. To build OTC
capability, the division decided to focus on pharmacy distribution, selling &
merchandising, healthcare professional endorsement, media and trade promotions- all
aiming at taking Ayurveda to the patient.

The business expanded its distribution network to cover urban pharmacy outlets and
restructured its sales organization to optimize sales and productivity. Developing strong
trade relations with retail pharmacists, promoting merchandising, creating in-shop
promotion and stressing on pharmacist education supported the distribution network.

The division also decided to aggressively pursue the healthcare professional

endorsement route. This strategy was based on two key reasons. Firstly, healthcare
professionals play an influencer role, which has a significant impact in driving consumer
choice for self-medicated brands. Secondly, a large part of the OTC sales are repeat
self-medication purchases, based on earlier prescription history. In addition to supporting
the OTC products, this endorsement supported classical and branded ethical products
as well. CHD adopted the route of seminars, exhibitions, events and health camps to
build healthcare professional endorsement.

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 Sales
The renewed focus yielded results by the end of 2006. In Year
(Rs Crore)
the year 2005-06, CHD registered a 37.8 per cent growth in 2003-04 95.9
sales. This was a milestone achievement when compared 2004-05 107.8
with a CAGR of 8 per cent in the previous five years. 2005-06 148.6

Dabur Foods

Dabur Foods, a wholly owned subsidiary of Dabur India Limited operates on the naturals
platform with a product portfolio consisting mainly of fruit juices, cooking pastes, sauces
and items for institutional purchase. The business has separate sales and marketing
teams, while most other functions are shared with its parent concern.

In 2002, the company’s flagship product, the Real range of juices had emerged as the
leader in the natural juices market. The marketing and packaging strategy of the Real
brand, primarily targeted at mothers and children, was based on the concept –‘tastes like
eating a fruit’. Over the next four years, a continuous growth thrust was provided to the
brand through new variant launches. As a result, by the end of March 2006, 9 different
flavours were available under the brand.

During 2004, the company realized a need to clearly position its offerings and put in
place a well-segmented product strategy. This resulted in three distinct brands across
the fruit juice category-Real, Activ and Coolers- with each occupying a distinct
positioning.

Exhibit 6: Competitive Profile-Juices

The Real brand of juices offered a
sweetened product range. This product
offering did not allow the company to
reach an important section of
consumers- the health conscious young
adults. To cater to these consumers,
Foods launched an unsweetened juice,
Real Activ.

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According to Mr. Sanjay Sharma, GM Sales and Marketing, Dabur Foods, “We wanted
to tap the fitness crazy young consumers”9. This product was positioned as a premium
product. The entire marketing mix was customized for Real Activ, helping it secure a
niche in the juices market, distinct from its parent brand Real. The product saw constant
innovations to support its growth. In 2003, the range of Real Activ was enhanced by the
introduction of fruit –veggie range, a mixture of fruit and vegetable juices. Further, in
2004, a 330ml pack was also introduced. Traditionally the smaller, single serving pack
size in this category is 200ml. However, taking into consideration the target group of 18-
35 year olds, the management realized that 330 ml would be a more appropriate
quantity to derive the nutritional value from a single serving.

Similarly, innovations were also seen in the Real Brand. In 2004 the company introduced
Real Junior- 125 ml packs targeting school going children, and in 2005 Mango Twist- a
mango based drink was launched. The various marketing initiatives helped Real
maintain its market leadership at 57 per cent of the branded juices market (Apr –Dec
2005). However, both Real and Activ were not catering to the economy segment of the
market. Accordingly, a new product, Coolers was launched. The Coolers range
consisted of drinks based on traditional Indian formulations, which have a cooling effect
on the body.

In 2003, Dabur Foods recognized an important channel of sales, namely institutional

sales. This channel catered to institutions such as hotels, restaurants and airlines. In
addition to the existing products, a separate brand -Nature’s Best, consisting of products
such as corn powder and ketchup, was launched specifically for this channel. A
dedicated organization, Food Services, was also set up to cater to the institutional
channel and by the end of financial year 2005, this division was already contributing 25
per cent of Dabur Foods turnover.

In 2004, the company realized the need of streamlining manufacturing and procurement
processes to improve efficiencies and maintain margins in foods- a competitive, tight
margin business. At the close of March 2006, the company had three manufacturing
facilities: Nepal- its traditional supplier, Siliguri- to process fruit pulp and Jaipur- for
blending and packaging.

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Notes:
1. Vision 2010 refers to Dabur’s four-year strategy and business plan for the period 2006-
2010.
2. Press Release, March 29, 2006
3. Vision-I refers to Dabur’s four-year strategy and business plan for the period 2002-2006.
4. ‘Power Brands: It pays to stay with your core, marginally’, Economic Times, November
15, 2004
5. ‘What Dabur Does’, Business Line –Catalyst, December 2, 2004
6. ‘Power Brands: It pays to stay with your core, marginally’, Economic Times, November
15, 2004
7. Dabur India Limited operates through two strategic business units-Consumers Care
Division (CCD) and Consumer Healthcare Division (CHD)
8. ‘Dabur’s elixir’, Strategist, September 14, 2004
9. ‘Dabur Foods to Hike Ad spends for Real brand by 40%’, Business Standard, January 14,
2002
10. ‘Dabur to enter personal care segment’, Economic Times, November 11
11. ‘Dabur’s Garuda project to conclude in 2005’, Financial Express, October 7, 2004
12. ‘Dabur Snaps Balsara in an Rs 143 cr Deal’, Business Standard, January 28, 2005
13. ‘The Integration of Balsara’, Business Line, May 21, 2006
14. ‘Dabur targets Rs 4000 crore Sales by ‘09-10’, Business Standard, February 24, 2006
15. ‘FMCG show is one of the best on the bourses’, Economic Times, January 20, 2006

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In addition to the domestic markets, Dabur Foods decided to look across borders for
business opportunities. In 2005, DFL made a major foray into international markets,
exporting bulk products (primarily to Middle East and Europe) and branded products
(primarily Australia and also Middle East). The business recorded a turnover of Rs 14.7
crore and received one star export house certification.

International Business

In 2003 the company decided to re-look its strategy with a global perspective. According
to the management, the company was well positioned to develop existing markets and
enter new markets, by leveraging the herbal platform. In order to aggressively target
international markets, the international operations were reorganized and an umbrella
organization, Dabur International Limited, based at Dubai, was created to provide focus
and structure.

Exhibit 7: Overseas Contribution to Financials

In 2004, the company formulated a
Domestic Overseas
structured strategy for its international
2005-06 2004-05 2005-06 2004-05 foray. Firstly, it identified 20 focus
Sales
1683.5 1355.7 216.1 181.2
countries- where it would set up
(Rs.Crore)
manufacturing and/or marketing
% of total 88.6% 88.2% 11.4% 11.8%
presence. This group included
Net Profit countries such as Pakistan, Egypt and
208.0 148.5 18.6 8.5
(Rs.Crore)
Bangladesh. Just as the strategy was
% of total 91.8% 94.6% 8.2% 5.4%
multi pronged and varied across
geographies, so was the performance.
For instance, in 2005-06, while Egypt and Bangladesh recorded sales growths of 49 per
cent and 54 per cent respectively, the performance of USA, also a focus market, was
below expectations.

By the end of 2006, Dabur had established 7 manufacturing units overseas. The
business registered a significant presence in the Dabur stable by contributing 11 per
cent of sales for the period 2005-06.

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Leveraging Internal Efficiencies

While Dabur was undertaking a number of initiatives directed at topline growth, it could
not afford to neglect the bottomline’s health. According to Mr PD Narang, “We are a
bottomline-driven and not a topline-driven company”10.

In 2002, Dabur identified supply chain management as a critical area requiring attention.
Supply management integrates a wide range of functions encompassing procurement,
production scheduling and primary distribution. The range and complexity of Dabur’s
business posed a challenge for efficient supply chain management. The company
marketed over 600 SKUs through 2100 stockists and over 6,00,000 retail outlets. The
complexity was exacerbated by the seasonal nature of some products. On the
procurement side, the company was purchasing raw material worth around Rs.500 crore
from a wide base of vendors.

As a first step, the company consolidated its sourcing base to benefit from economies of
scale. The company engaged FreeMarkets (now Ariba), a leading e-procurement service
provider to leverage e-sourcing. By 2004 the company had moved more than 50 per
cent of its procurement to e-sourcing. In the year 2004, a supply chain program, Project
Garuda, was also undertaken to reduce raw material and finished good inventories,
improve service levels and optimize network efficiencies. According to Mr. Duggal,
“Project Garuda is expected to improve business and capital efficiency and will reduce
working capital requirements”11. Dabur also leveraged information technology to drive
supply chain efficiencies. Initially the company was working on two ERP systems-Baan
and Mfg Pro, in production and distribution respectively. However, after the acquisition
of Balsara, the company realized it was using a multitude of IT platforms for storing and
analyzing information. Towards the end of 2005, the company decided to move
operations to a user friendly and cohesive system. With this objective the company
adopted SAP ERP system. To improve manufacturing efficiencies the company
implemented various programs such as automation, debottlenecking, Kaizen and
wastage control. A major boost to the bottom-line was provided by setting up production
units in locations providing tax holidays.

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The sustained emphasis on improving manufacturing and operational efficiencies
resulted in Dabur’s ability to maintain a negative working capital while improving on
service levels.

Inorganic Growth

Dabur had been looking to develop the oral care market as 30 per cent of the population
in India does not use toothpaste or toothpowder, but relies mainly on ash. Dabur
anticipated that this consumer segment will switch to toothpowder and then toothpaste.
Dabur Lal Dant Manjan and Dabur Red Toothpaste have been targeted at this segment.
The company also extended the Dabur Red Toothpaste brand to gel toothpaste. Dabur
scanned the toothpaste market for a possible acquisition and in early 2005, acquired
Balsara Hygiene and Home Products.

This gave Dabur access to Balsara’s oral care products like Babool, Meswak and
Promise. “The Babool and Meswak products will be good strategic fit with Dabur as they
too, are positioned as herbal products”, said Mr. Duggal12. The acquisition pushed
Dabur’s market share in the Rs 1980 crore toothpaste market, which is dominated by
Colgate and Hindustan Lever, from 1.8 per cent to 8 per cent.

The acquisition was largely funded through internal accruals- out of the Rs 140 crore
investment, only Rs 20 crore was funded through debt.

In addition to the oral care business, Balsara brought with it certain well-entrenched
brands in the Home Care category. The portfolio included: Odonil –an almost generic
name in the air freshener category; Odomos –a personal application based insect
repellant, enjoying a dominant market share; Sanifresh -the second highest selling toilet
cleaner in India; Odopic- a dishwashing and surface cleaner with strong brand equity in
western India. The category market size is estimated at Rs 2000 crore and has
extremely attractive growth opportunities looking at the low penetration levels.

True to its potential, the home care portfolio showed a growth of 63 per cent in 2005-06
over the previous year. To further tap this growth potential, Dabur has identified key
brands and is looking to add new products/ formats. For instance, Odomos has been

12
identified as a strong brand with significant latent equity and various products will be
offered under this brand with different delivery mechanisms like creams, gels and
lotions, coils, mats and liquid vapourizers.

The success of any acquisition lies in the integration. For Dabur, smooth operational
integration was achieved within the first six months, and the success of the Balsara
integration is reflected in the financial turnaround. Balsara posted a turnaround and the
erstwhile loss making entity generated profits of Rs 14.9 crore in the financial year 2005-
06. “The integration of Balsara with the company has resulted in better economies of
scale and enhanced distribution. We have also been able to better our efficiencies in
various areas as it gives us better bargaining power”, said Mr. PD Narang. 13

Given Dabur’s ambitious target of growth, acquisitions are likely to remain an essential
part of its growth strategy. “We have an inorganic growth strategy in place to acquire
businesses and brands that provide a good strategic fit and synergies,” says
Mr.Duggal14. With debt still a speck on its balance sheet and substantial cash at its
disposal, acquisitions of the Balsara kind are well within its reach.

Recognition

The effect of planned implementation of Vision I strategy by Dabur’s management, was

not restricted to the balance sheet- rather it had an organization-wide impact. Over the
four years, as the results of execution started bearing fruit, numerous external agencies
also began acknowledging this. The depth and expertise of managerial expertise was
recognized through various awards, for instance, in 2005-06, Mr. Sunil Duggal featured
amongst top 25 world-class managers (Smart Manager magazine) and Mr. Rajan
Varma, amongst the top three CFOs of India (Business Today). Prior to this, Mr. Jude
Magima, EVP Procurement, had received the Chief Procurement Officer Award from
Indian Institute of Materials Management.

In addition to implementation of Vision- I strategies, the management adopted some

other agenda as well- recognition of people as key constituents of organization and
conscious efforts towards strengthening corporate governance. The conscious efforts
towards becoming an employee friendly organization resulted in Dabur ranking 10th in

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the ‘Great Place to Work‘ survey conducted by Grow Talent and Great Place to Work
Institute (published in Business world). Notably the company ranked first in the FMCG
sector. As a result of the strong thrust towards embracing high standards of corporate
governance, the company was rated at GCV (Governance and Value Creation), level
two by CRISIL. In 2006, Dabur won the ICSI (Institute of Chartered Secretaries of India)
National Award for excellence in Corporate Governance.

Exhibit 8: Recognition for Dabur, 2005-06

The Path Ahead

The year 2005-06 witnessed a revival in the FMCG industry, after a prolonged period
(2000-2004) of low rates of growth. Factors such as growth in rural and urban demand,
return of pricing power and product innovations came together to stage this revival.
Notably, the growth was higher in categories innovating the most, for instance, biscuits
grew at 13 per cent and shampoos at 16.3 per cent. Also new categories with relatively

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lower penetration levels, such as batteries, hair oils, scourers, shampoos and mosquito
repellants, recorded higher growth rates15.

The changing Indian demographic profile clearly shows the emergence of the ‘youth’ as
dominant consumers. Currently, 75 per cent of consumers are under 35 years of age,
and of this 54 per cent are less than 25 years old. Liberalization and opening of the
economy has contributed to higher global awareness amongst consumers. Additionally,
sustained economic growth has translated into increase in income levels and affluence.
In the last ten years (1996-2006) the Rich and the Consuming classes have grown by
416 per cent and 179 per cent respectively. At the same time, there are now more
competitors such as telecom, lifestyle and entertainment, which are vying with the
FMCG sector for gaining a share in the consumers’ wallet. The rural markets continue to
retain their importance as they represent over 50 percent of India’s consuming class.

The Indian retail trade scenario is witnessing a growth of the modern format retail stores.
Shoppers at these stores have a higher propensity for trial and experimentation, making
them early adopters for a host of products. These stores offer better shopping ambience
and a more scientific approach to displays and promotions. Also, experience has shown,
that for certain niche products, modern trade formats are a better retail option. However
despite the fast paced growth of modern formats, they form a minuscule proportion of
retail market. Another trend is the emergence of a varied set of formats- across both
over the counter and self-service stores. Each format constitutes a different customer
segment, having its own peculiar set of expectations.

In Vision 2010, Dabur clearly outlines its target of doubling sales and profits in four
years. To achieve this target the company has decided to adopt a three-pronged
strategy - Expansion, Acquisition and Innovation. This is based on the company’s
projections of the various challenges and opportunities each business expects to face in
the coming future, coupled with the strengths and capabilities the company has
developed and strengthened over the past years.

The Objective:
Dabur now requires a business plan to implement its three-pronged strategy
for achievement of Vision 2010.

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Annexure 1: Market Share, by Category,

Hair Oil Market

Shampoos Market

Chyawanprash Market

17
Annexure 2: Key Financials over 2002-06

18
 Net Working Capital (No of Days Sales)

70
No of Days of Sales

60 61
50
40
30
20 12.6
10 1.6 6.7
0
2002-03 2003-04 2004-05 2005-06
Year

Return on Equity

50
46.1
40 43.5
38.1
30 34

20

10

0
2002-03 2003-04 2004-05 2005-06
Year

EBIDTA Margins (%)

18
16 16
14
12 14.2
10 12.6
11.8
8
6
4
2
0
2002-03 2003-04 2004-05 2005-06
Year

19