X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Company Analysis: Dabur India Limited - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 3, 1999

    Company Analysis: Dabur India Limited

    Background 

    • Dabur India Limited is a 115 year old FMCG company operating in the niche natural/ayurvedic products segment with a product folio of over 500 products. Its core competence lies in its ability to conceive, develop and market products based on herbs and natural resources. 
    • Its product portfolio includes major brands like Dabur Chyawanprash (health tonic/anti-infective-12% of total revenues), Hajmola (8%) and Pudin Hara (digestives), Lal Dant Manjan (tooth powder – 14%), Amla (14% of revenues) and Vatika hair oils, Dabur Honey, all of which rank #1 in their respective segments in the Indian market. 
    • Dabur is also a leading player in the anti-cancer segment and was the first company in India to have developed the anti-cancer intermediary DAB-10 and its associated drug paclitaxel (Taxol). 
    • Dabur outsources 50% of its products, therefore earning low margins as compared to other FMCG companies.  
    • Dabur has an extensive distribution of over 540,000 retailers in India. In a bid to widen its product range, expand its market reach and leverage its distribution strengths,Dabur has also set up five joint ventures in India and abroad and manufacturing subsidiaries in Nepal and Egypt. 
    • All of the above viz. presence in a niche industry of ayurveda products, strong brands, and diverse product portfolio, backed by strong research, serves as an entry barrier for new entrants. 
    Focus 
    • Currently,Dabur is in the transition phase as it is carrying out the recommendations of the Mckinsey Report. It is spinning off non-core businesses into separate subsidiaries. There is now an all-new professional management team as a result of these recommendations.  
    Strategic Business Units (SBUs): 
    • In line with the restructuring exercise undertaken in FY95, Dabur's operations were divided into seven SBUs:
    1. Family Products 
    2. Health-care products 
    3. Pharmaceuticals 
    4. Ayurvedic Specialities 
    5. Ayurvet 
    6. Food  
    7. Exports 
    Family Products Division (FPD): 
    • This is the largest division contributing over 40% to the revenues of Dabur. Dabur Amla Hair and Lal Dant Manjan (both grossing sales of more than Rs 1 bn each) belong to this division. FPD’s products include hair-care products, oral-care products, herbal powders and some foods. Dabur Honey, a Rs 300 m brand is a part of FPD. Dabur manufactures amla oil, pure coconut oil as well as value added coconut oils. Dabur introduced Vatika hair oil in FY95. This has grown into a Rs 200 m brand by FY98 and its strong brand equity has led to its being used as a mother brand by Dabur. It recently launched the Vatika range of shampoos.
      • Oral-care – Lal Dant Manjan, a red tooth powder (another billionaire brand) and Denta Care in the white tooth powder segment comprise this segment. Dabur plans to relaunch the Binaca range of toothpaste (acquired from Reckitt & Colman in FY96) in April 1999. 
       
      • Foods – This comprises of Dabur Honey in the highly fragmented natural honey segment, Sharbat-e-Azam (an Indian beverage), Gulabbari (Rose water) and Kewra water both used as food flavours.
    Health-care Products Division (HPCD): 
    • HPCD constitutes Dabur’s second largest division in revenue generation terms. The contributions of this division tend to be, on an average, 9-10% higher than the Family Products division since there is greater value addition in this division. Its major products include ayurvedics, digestives, and mother & childcare products. These products are in the nature of over the counter (OTC) products and not ethical or prescription based products. Within these, ayurvedics include health tonics and cough syrups.
    Pharmaceutical Division: 
    • This is the allopathic drugs division contributing around 8% to Dabur’s turnover. It makes branded formulations and generics (which it is planning to phase out as per Mckinsey recommendations). Therapeutic segments in which Dabur is operative are anti-cancer, anti-histamine, anti-fungal, antacid and anti-bacterial. It also makes contrast media.
    • Dabur is now focussing on Oncology (study of tumours). Though this business accounts for only 2% of revenues, it is extremely profitable and has been growing by 30% YoY since 1995. Dabur is one of the few companies in the world, which makes paclitaxel, an anti-cancer drug marketed under the brand name of Intaxel. The company has developed this drug through process re-engineering. Oncology business is slated to be transferred to its UK based 100% subsidiary in April 1999, on McKinsey’s recommendation.
    Ayurvedic Specialities Division: 
    • This division makes ethical or prescription based medicines/formulations, which are dispensed largely through ayurvedic doctors, contributing around 6% to Dabur’s turnover. In FY97, the company introduced branded products such as Stresscom and Rheumatil in this segment.
    Ayurvet Division: 
    • Ayurvedic veterinary products for cattle and poultry form the mainstay of this segment, contributing around 1% to Dabur’s turnover. In FY98, this division launched a range of pet care products under the brand name of Ayupet.
    Foods Division: 
    • The foods division, (1% of revenues), is non-profitable at present. Its products include Real brand of fruit juices and a range of ethnic pastes under the brand Hommade. In FY97, Dabur ventured into the cosmetics industry under the brand name Samara. (The management expects this division to contribute 3% of total revenues by the year 2000. This division is also slated to become a 100% separate subsidiary as per the Mckinsey recommendations).
    Exports Division: 
    • Dabur exports personal and health-care products, guar gum and bulk drugs. A large chunk of exports (37% in FY97) were merchant exports, which have been discontinued in FY98 as per the McKinsey recommendations. This will reduce the divisions revenue share to 8% by FY2000.
    Future Plans 
    • Dabur’s management is keen to implement the Mckinsey recommendations which implies
      • Exit from non-core businesses or spinning them off as 100% subsidiaries
      • Introducing new products and brands in ayurvedic category
      • Promoting its products in the West where its products will attract a premium
      • Working towards improving its working capital management
      • Increasing ad-spend on top brands (Rs 1 bn FY99E)
    Concerns: 
    • Since Dabur earns low margins as compared to other FMCG companies, increased ad-spend will put further pressure on margins
    • Dabur has been slow to react on some of Mckinsey recommendations and has faced some resistance from some members of the promoter family (namely, to exit from non-core businesses).

     

     

    Equitymaster requests your view! Post a comment on "Company Analysis: Dabur India Limited". Click here!

      
     

    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    Dabur: Premiumisation Efforts to Keep Competition at Bay? (Quarterly Results Update - Detailed)

    May 4, 2016

    Dabur announced its results for the quarter ended March 2016. The company reported a revenue growth of 11% YoY during the quarter, while profits moved up by 17% YoY.

    Dabur: Moving along... (Quarterly Results Update - Detailed)

    Nov 2, 2015

    Dabur announced its results for the quarter ended September 2015. The company reported a revenue growth of 9% YoY during the quarter, while profits moved up by 19% YoY.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    DABUR SHARE PRICE


    Aug 23, 2017 (Close)

    TRACK DABUR

    DABUR 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE DABUR WITH

    MARKET STATS