Case study

In fulfillment of the course of

MANAGERIAL ECONOMICS

Submitted by
Sudhanshu Shekhar
11802124
Roll No: A (21)
Section: Q1840

Submitted to
DR. Tushinder Preet Kaur
Associate Professor

Mittal School of Business

Lovely Professional University
 DABUR INDIA LIMITED GROWING BIG AND GLOBAL

 About Dabur company

Dabur India ltd. is the 4th largest fast-moving consumer goods (FMCG) company in India which
makes a revenue of over inr 8,454 crores (2015-16) along with market capitalisation of over inr
50,120 crore. The Dabur legacy is of 130 plus years. Being the most trusted name in India and
the world’s largest ayurvedic medicine manufacturer, Dabur today has over 381 trusted products
across 21 categories.It was founded by Dr.s.k.Burman, a physician in west Bengal. He designed
ayurvedic medication for diseases like malaria and cholera. The medicines soon travelled and he
came to be known as the trusted doctor or ‘daktar’ who came up with effective cures. The name
Dabur is derived from the devanagri rendition of ‘daktur burman’. Dabur has successfully
transformed itself from being a family-led business to a professionally managed enterprise.

1. Products of Dabur:-
Dabur India’s FMCG portfolio includes five flagship brands having distinct brand identities:

Dabur: master brand for natural healthcare products.

Vatika: premium personal care.

Hajmola: digestives.

real: fruit-based beverages.

fem: facial bleachers and skin care.

In economics, profit maximization is the short run or long run process by which a firm may
determine the price, input, and output levels that lead to the greatest profit.
Those organizations which has it's eye on profit stands on par as business units.
Without profits growth maximization is not possible .Both are interdependent.
growing organization in terms of its sales, market share, profits etc will automatically
lead to improved returns or maximization of wealth of the investors. Similarly, for the
managers, it will be able to provide better job security, good and growing salaries at the
pace of organization’s growth. At the same time, the credit of taking the organization at
such levels will bring them status and prestige in the market as well as society.
Two growth rates are interpreted as two utility functions viz.

Manager’s Utility Function (Um) = f {salaries, status, power, job security, prestige etc)

Owner’s Utility Function (Uo) = f {sales, capital, profit volumes, market share, etc)

By this we can say that with returns on capital employed ,a huge growth from pharmaceutical
business to 4th largest FMCG company is possible.
 The
Ayurvedic company has a wide distribution network, covering six million retail outlets
with a high penetration in both urban and rural markets. dabur's products also have huge
presence in the overseas markets and are today available in over 120 countries across the
globe. its brands are highly popular in the middle east, SAARC countries, Africa, US,
Europe and Russia .Dabur's overseas revenue today accounts for over 30 per cent of the
total turnover.

2. Business objectives: -
The objective of Dabur is to fully leverage the potential of the online world and
incorporate digital strategy for brand visibility and rebuilding. Growing customer base
and making wider marketing strategies. The aim is to become a “young, modern, and
socially conscious organization”.

3.1. Strategies adopted

1. Presence on online grocery stores
Amidst of Amazon, Flipkart, and Snapdeal, FMCG, titan, dabur recognized a new
platform for reaching out a wider customer base. They marked their presence on online
grocery stores like grofers and big basket.

2. Focus on their own websites

They also started focusing more on their own websites. This is evident from the fact that
a year ago, dabur launched three websites to serve the mother brand. Also, after six
months of efforts, the website was re-launched a month ago which proved to be a single
window to the world of dabur. This means that the customers can reach the content
websites directly from the homepage. There are channels started by dabur like newu and
daburuveda.com for reaching a wider set of customers.

3. Future ideas:
 over the upcoming 2017-20 period, Dabur is expected to witness 17 per cent earnings per
share (EPS) CAGR (compound annual growth rate) and its domestic and international
revenue are expected to show 12 percent CAGR each. Better revenue growth, stable
inflation and favorable product mix would expand EBITDA(Earnings before intrest
,taxes, depreciation and amortization) margin by 180bps over this period. The company is
backed by strong revival in volume off take and improving market share. The current
fiscal year 2018 would see strong innovations. dabur commands a high operating margin
of more than 19 per cent, along with return on capital employed (ROCE) of more than 45
per cent.

3.1. Acquisitions:
Hobi Kozmetik: set up in 1974, Hobi Kozmetik sold a range of hair care and skin care
products under 'hobby' and 'new era' brands across 35 countries, including the middle east
and north Africa. Making its first ever overseas acquisition, dabur international acquired
turkish personal care firm hobi kozmetik group for $69 million as part of its strategy to
strengthen its presence in the middle east and north africa.

Namaste laboratories: Namaste laboratories, a leader in African American hair care based
out of Chicago, us was the second acquisition.This acquisition marked dabur
international's entry into the fast-growing us$1.5-billion african american hair care
market across us, Europe and Africa founded in 1996.

4. Dabur business:
4.1. Dabur’s future plans
To launch more products in the next one year, dabur is planning to launch more products
across all categories. however, none will be launched exclusively on digital mediums.
The main medium for marketing will be TV which will be leveraged upon in order to
reach out to customers in tier 2 cities and above.

4.2. will dabur surface on social media channels?

Talking about social media, dabur has been very agnostic. Archan says “the organic reach
of the brand via twitter or Facebook is null. The FMCG giant has been building
communities since 2012, by engaging with the consumers on a regular basis.That gives
us lifetime value. But on Facebook, once they change the algorithm, you can’t reach out
to your customers unless you pay them.”

4.3. Will they be giving discounts?

Dabur has stayed away from the most famous trick to win customers like giving
discounts. The only options of ‘buy now’ or ‘try now’ are available on their website.
However, dabur company cannot control marketplaces giving discounts, although there
are agreements on how much they will sell it for.
  Domestic FMCG business
Dabur’s domestic business, which contributes 66 per cent of sales, de-grew by five per
cent, with decline of 4.4 per cent in volume growth owing to channel destocking.
Although the primary sales dipped five per cent, on the other hand, the secondary sales
grew 2 percent . The growth in mt was 5.8 per cent .The consumer care segment has seen
a delay in recovery. The domestic consumer business was heavily impacted by channel
destocking. In the month of May and June, the company witnessed very high promotional
intensity. Overall destocking was of Rs 100Crore. Netting off pipeline reductions, volume
off take was in positive territory .From second quarter of 2018 onwards, with GST roll
out, optically sales may look lower by six per cent since vat, which was earlier added in
top line, will not be added . The nature of promotions may change in GST owing to the
way laws have been framed. The off invoice will become 14 to 15 per cent more
expensive. Hence, promotions will shift from off invoice to on invoice. Going forward,
50 per cent of off invoice promotions will move to on invoice.

 International business :
The international business of dabur remained under pressure, owing to geo-political
issues and unfavorable currency movements. The business declined by 2.2 per cent in
constant current terms; it was impacted by the slowdown in middle east and north Africa
(mena). The growth in local currency in much geography was healthy. Nepal saw double
digit sales growth followed by 15 per cent in SAARC. Turkey witnessed seven per cent
growth in and Egypt posted three per cent. The gulf countries de-grew by 13 per cent.
There are several geographical expansion opportunities in North Africa, Turkey and Iran.
Dabur is focusing on increasing product lines, range selling and penetration of its brands.
Dabur’s namaste business is seeing some steady pick up; however, the company believes
that their naturals portfolio will be recalibrated and bring growth in North America
geography. This business is expected to improve led by recovery in namaste business,
though overall geopolitical conditions in the Middle East need to be closely monitored.

 When compared to the features of joint stock company and sole proprietorship,
Dabour from a small pharmacy to a large multinational company is an indicator of
the advantages of joint stock company against propreitory form because it is a
company whose stock is owned jointly by the shareholders .There will be
mobilization of huge financial resources and limited liability. There will be
enormous possibilities of growth and expansion. This point clearly states that
dabur is a having an advantages of joint stock company against sole
proprietorship form. Also a lot of consumer acceptance of dabur products leads to
positive social benefits. Dabur has great significance in rural areas too. Lastly
efficient management of Dabur India ltd. leading the company in a profitable and
 efficient way. The company business is generally a large scale business.
Therefore, it enjoys all the economies of large scale production, internal and
external factors. e.g, Economies arising from the use of specialized labour and
machinery, economy of space, of buying and selling, publicity, research or
experiments,etc. The only disadvantage of dabur compay is delay in decision
making.

5. Results
Dabur online sale is a complementary but a huge effort. Online grocery stores have
worked very well for them giving them good ROI (return on investment) if one does not
go with the volumes. Since FMCG’s main feature is regular consumption, therefore, it
makes them a favorite thing in horizontal marketplaces. Amazon, an e-commerce giant,
has launched a ‘subscribe and save’ offer for daily essentials. They offer a 10% discount
on the entire order to people having at least three subscriptions on a monthly basis.
According to Archan, this model provides them great opportunity to pitch the other
products in their platform just like they are doing in offline platforms like big
bazaar.despite having operational issues, dabur still had 13% growth in 2015-16.

6. Learnings
Though the revenue from online sales for dabur is not very substantial, yet the
opportunity for brand rebuilding and visibility is crucial. Considering retail sector
accounts for just 2% for the e-commerce, it is estimated that it will grow to almost 11%
by 2019.
Seeing the trends of online sector, offline giants will have to join the online mediums
sooner or later. For instance, the reliance group, which started selling FMCG (in 2009),
launched an online version of ‘reliance fresh’ called reliancefreshdirect.com last year and
‘ajio life’, a fashion portal this year.The FMCG sector is worth $65 billion in India which
by 2020 is expected to digitally influence over 150 million consumers.Dabur is iconic in
nature but it is crucial to adopt online modes for pitching their products.

7 . Reference
1. https://www.dabur.com/
2. https://economictimes.indiatimes.com › Markets
3. https://www.dabur.com/in/en-us/product