dabur

Title of Project A Summer Training Project Submitted in partial fulfillment of the requirements for the Award of degree of Bachelor of Business Administration 2008 ± 2011 Submitted by Guided by (Internal Guide) Bharati Vidyapeeth University School of Distance Education, Academic Study Center - BVIMR, New Delhi An ISO 9001:2008 Certified Institute ³A´ Grade Accreditation by NAAC 1 Certificate from the Company/Organization (On Company Letter head) This is to certify that (Name of the student) son/daughter of (name of the father) pursuing the degree of Bachelor of Business Administration of BVU, SDE, Academic Study Center BVIMR, New Delhi has successfully completed Project Report in our organization on the topic titled, ³Title of the Project´ from ________to _______ 2010. During his/ her project tenure in the organization/ company, we found him/ her hard working, sincere and diligent person and his/ her behavior and conduct was good during the project. We wish him/her all the best for his/ her future endeavors. (Name and designation of the Industrial Guide) Comments of Guide 1. 2. 3. 2 Student Undertaking This is to certify that I ____________________________ had completed the Project titled ³ title of the project´ in (name of the company) under the guidance of Mr./Ms. (Faculty guide) in the partial fulfillment of the requirement for the award of degree of Bachelor of Business Administration of BVU, SDE, Academic Study Center BVIMR, New Delhi. This is an original piece of work & I had neither copied nor submitted it earlier elsewhere. Student Name and Signature Dated - 3 Certificate (on Academic Center Letter Head) This is to certify that the project titled ³________________________________´ is an academic work done by ³________________________´ submitted in the partial fulfillment of the requirement for the award of the Degree of Bachelor of Business Administration from BVU SDE, Academic Study Center BVIMR, New Delhi under my guidance and direction. To the best of my knowledge and belief the data and information presented by him/her in the project has not been submitted earlier. Name and signature of Faculty Guide Comments of Faculty Guide 1. 2. 3. 4. Comments of Viva Team 1. 2. 3. 4. 4 Certificate (on Academic Center Letter Head) This is to certify that the Project titled ³_________________________________´ is an academic work done by ³________________________´ submitted in the partial fulfillment of the requirement for the award of the Degree of ³Bachelor of Business Administration´ from ³BVU, SDE, Academic Study Center BVIMR, New Delhi´. It has been completed under the guidance of Mr. /Ms. _______________ (Internal Guide) and Mr. / Ms. _______________ (Corporate Mentor). We are thankful to (Name of the Company) for having allowed our student to undergo project work training under the guidance of ___________________(Corporate Mentor). Dr. Sachin S. Vernekar (Director) 5 Acknowledgement Name & signature of the student 6 Preface Name & signature of the student 7 Index Chapter 1 : Introduction y About the Company (Formation, Vision, Mission, Objectives, Functions, Organizational Structure, SWOT Analysis) y Industry Analysis (Growth of Industry, Players in Industry, PESTEL Model, Porters five forces model of competition) Chapter 2 : Research Methodology y y y y y y Statement of the Problem Objectives & Scope of Study Managerial usefulness of study Type of Research and research Design Data Collection Methods Limitations of Study Chapter 3 : Conceptual Discussion y Review of Literature (Discussion about the work done by others on similar issues and published in articles/books etc) y Current Issues (From Newspaper, Journals ±For Company and Industry) y History and Developments of Company and Industry Chapter 4: Data Analysis ± y Methods and techniques of data analysis (Questionnaire, Graphs, Statistical Methods, SPSS etc) y y Primary Data Analysis Secondary Data Analysis 8 Chapter 5: Findings and Recommendations Appendices Here sample Questionnaires, FAQ (Frequently Asked Questions) and any other relevant documents may be included. Bibliography Reference Books, Journals, Newspapers, Web Sites, Reports etc are to be listed out here. Books Kotler Philips, Marketing Management Analysis, Planning Implementations & Control Edition, 1998. Prentice Hall of India Ltd. New Delhi. Magazines Journals & Newspaper. Name of the articles, Business Today: 15-22 May 2000 Name of the articles, The Times of India. Mumbai: 21st May 2000. 9 10 Chapter 1 INTRODUCTION 11 1. COMPANY PROFILE The story of Dabur began with a small, but visionary endeavor by Dr. S. K. Burman, a physician tucked away in Bengal. His mission was to provide effective and affordable cure for ordinary people in far-flung villages. Dr. S.K Burman started Dabur in 1884 as a small pharmacy. Initially, he prepared Ayurvedic medicines to treat diseases like malaria, plague and cholera that had no cure during that period. It was his dedication, commitment and empathy that made Dabur a renowned name among the masses. And today, after more than 120 years, Dabur is known for its trustworthiness more than anything else. During this passage of time, Dabur went through several structural and strategic changes to maintain its market strength. The real mass production started in 1896. Early 1900¶s saw Dabur emerge as the first company to provide health care through scientifically tested methods. 12 It achieved significant improvements after setting up Research and Development centers and manufacturing automation. The launch of Dabur¶s Amla hair oil and Chyawanprash was a boon to the expanding business. To keep up with the times, Dabur computerized its operations in 1957. It¶s Dant Manjan and digestive tablets were widely accepted as well. However with a large product portfolio in the market, Dabur had to maintain operational efficiency. To make sure it adjusted to the business environment it became a public limited company in 1986 followed by diversification in Spain in 1992. A major change came when Dabur came up with its IPO in 1994. Because of its position, Dabur¶s issue was 21 times oversubscribed. Dabur further divided its business into three separate groups: y y y Health Care Products Divisio n Family Products Divisio n Dabur Ayurvedic Specialt ies Limited Dabur India Limited is a consumer care and health care products company. Product portfolio offered by the company includes personal care products, health care products, home care products and foods. Dabur also offers ayurveda-based healthcare products. It markets its products in India as well as in International markets as Middle East, SouthEast Asia, Africa, the European Union and America. The company operates through four divisions namely Consumer Care Division (CCD) that deals in FMCG products across a wide spectrum of market segments; International Business Division (IBD) that focuses on developing Dabur's business abroad; Consumer Healthcare Division (CHD) that deals in the classical and OTC range of products which are grantha based and which follow strict Ayurvedic formulations; and Retail Division which is currently in the development phase. The company is headquartered at Ghaziabad, Uttar Pradesh, India. In 1998, for the first time in the history of Dabur, a non-family member took charge. Dabur handed over the operations to professionals. Successful implementation of procedures, timely changes and maintaining its essence, Dabur achieved its highest-ever sales figure of Rs 1166.5 crores in 2000-01. 13 As FMCG sector was struggling with the slow growth in the Indian economy, Dabur decided to take numerous strategic initiatives, reorganize operations and improvise on its brand architecture beginning 2002. It decided to concentrate its marketing efforts on Dabur, Vatika, Anmol, Real and Hajmola to strengthen their brand equity, create differentiation and emerge as a pure FMCG player recognized as a herbal brand. This was chosen after a study with Accenture, which revealed that Dabur was mainly perceived as a Herbal brand and connected more with the age group above 35. Also, larger retailers were making their foray into the FMCG market. Apart from HLL, P&G, Marico and Himalayan, ITC was also posing a challenge. The supply chain of Dabur was becoming complex because of the large array of products. Southern markets share in the sales figure was negligible. These factors posed a threat to Dabur and hence small changes were not enough. Company Detail of Dabur Date of Establishment Revenue Market Cap Corporate Address Management Details Business Operation Company Secretary Bankers 1975 478.61 ( USD in Millions ) 137295.4575975 ( Rs. in Millions ) 8/3 Asaf Ali Road, , New Delhi-110002, Delhi Chairperson - Anand Burman Household & Personal Products Ashok Jain ABN Amro Bank, Citi Bank, HDFC Bank, HSBC Bank, IDBI Bank, Punjab National Bank, Standard Chartered Bank, State Bank of India, United Bank of India 14 1.1 COMPANY HISTORY OF DABUR INDIA 1884 1896 Early 1900¶s 1919 1920 1936 1972 1979 1986 1992 1993 1994 1995 1996 1997 1998 2000 Birth of Dabur. Setting up a Manufacturing plant. Ayurvedic Medicines. Establishment of research laboratories. Expand further. Dabur India (Dr. S.K. Burman) Pvt. Ltd. Shift to Delhi. Sahibabad factory/ Dabur Research Foundation. Public Limited Company. Joint Venture with Agrolimen of Spain. Cancer Treatment. Public Issues. Joint Ventures. 3 Separate divisions. Food Division/Project STARS. Professional to Manage the Company. Turnover of Rs. 1000 crores. 15 1.2 VISION & MISSION OF DABUR INDIA VISION OF DABUR After the successful implementation of the 4-year business plan from 2002 to 2006, Dabur has launched another plan for 2010. The main objectives are: y y Doubling of the sales figure from 2006 The new plan will focus on expansion, acquisition and innovation. Although Dabur¶s international business has done well ² growing by almost 29 per cent to Rs.292 crores in 2006-07, plans are to increase it by leaps and bounds. y Growth will be achieved through international business, homecare, healthcare and foods. y Southern markets will remain as a focus area to increase its revenue share to 15 per cent. y With smoothly sailing through its previous plans, this vision seems possible. Time and again, Dabur has made decisions that have led to its present position. However, if Dabur could be more aggressive in its approach, it can rise to unprecedented levels. MISSION OF DABUR Dabur believes in the mission of being a leader in the Natural Foods & Beverages Industry. Dabur aims in offering quality products and distributing higher returns to stakeholders. "Real" and "Real Active" are the two fruit juice brands of Dabur, which are packaged in different flavors like ± Mixed Fruit Cucumber Spinach Juice and Mixed Fruit Beetroot Carrot Juice. 16 Apart from food, Dabur Health Care offers wide range of ayurvedic and Health care products. Dabur Consumer Health is the department that deals with the marketing of Ayurvedic medicines worldwide. Dabur offers 350 Shastriya (Classical) ayurvedic treatments and solutions. After a lot of market research Dabur Foods came up with a new brand named as ³Nature's Best´, which was the initial brand of Dabur Food Services Network. The 1kg Nature's Best Tomato Ketchup was successfully launched after that. 17 1.3 OBJECTIVES OF DABUR INDIA The Objectives of Dabur India Limit ed are as fo llo ws:- y Focus on growing core brands across categories, reaching out to new geographies. Within and outside India, and improve operational efficiencies by leveraging technology. y Be the preferred company to meet the health and personal grooming needs of target consumer with safe, efficacious, natural solution by synthesizing deep knowledge of ayurveda and herbs with modern science. y Be a professionally managed employer of choice, attracting, developing, and retaining quality personnel. y y Be responsible citizen with a commitment to environmental protection. Provide superior returns, relative to our peer group, to our shareholders. 18 1.4 BOARD OF DIRECTORS OF DABUR INDIA Dabur has an illustrious Board of Directors who is committed to take the company to newer levels of corporate governance. The Board comprises of: Chairman Dr. Anand Burman Vice-Chairman Mr. Amit Burman Whole Time Directors Mr. P.D. Narang Mr. Sunil Duggal Mr. Pradip Burman 19 1.4 SWOT ANALYSES OF DABUR INDIA The following SWOT analysis looks at Dabur India which is operating in fmcg industry. The analysis shows Dabur India¶s Strengths, Weaknesses, Opportunities and Threats. The SWOT analysis will give you a clear picture of the business environment Dabur India is operating in at the present time. STRENGTH The strengths of a business or organization are positive elements, something they do well and is under their control. The strengths of a company or group and value to it, and can be what gives it the edge in some areas over the competitors. The following section will outline main strengths of Dabur India. y y y Dabur India Ltd. is the century old company. Well established brands in Dabur India. High quality machinery, staff, offices and equipment ensure the job is done to the utmost standard, and is strength of Dabur India. Leader in Herbal Digestive where the product has 90% of the market share. Ayurvedic / Herbal Product line. Product development strength Strong Distribution Network. Extreme Supply chain. IT initiatives. 20 y y y y y y WEAKNESS Weaknesses of a company or organization are things that need to be improved or perform better, which are under their control. Weaknesses are also things that place you behind competitors, or stop you being able to meet objectives. This section will present main weaknesses of Dabur India. y A serious weakness for Dabur India is the fact their products/services are of low quality, meaning people will have better-quality substitutes. Not reducing costs in the same way as their competitors\' means Dabur India is outlaying more of their profits. Having higher costs than competitors is a major weakness. Over pricing, setting too high prices for Dabur India products/services makes them uncompetitive, which is a major weakness. Seasonal Demand (like Chayawanprash in winter and Vatika not in winter). Low penetration (Chayawanprash). y y y y OPPORTUNITIES Opportunities are external changes, trends or needs that could enhance the business or organization¶s strategic position, or which could be of a benefit to them. This section will outline opportunities that Dabur India is currently facing. y y y y y Extends Vatika brand to new categories like Skin Care & Body Wash segments. Untapped Market (Chayawanprash). Market Development. Southern India Market. Innovation. 21 THREATS Threats are factors which may restrict damage or put areas of the business or organization at risk. They are factors which are outside of the company's control. Being aware of the threats and being able to prepare for them makes this section valuable when considering contingency plans and strategies. This section will outline main threats Dabur India is currently facing. y y y Competition in the FMCG sector from well established names. Substitute products available on the market present a major threat to Dabur India. Consumer lifestyle changes could lead to less of a demand for Dabur India products/services. Existing Competition (like Himani, Baidyanath and Zandu for Dabur Chayanwanprash and Marico, Keo Karpin, HLL and Bajaj for Vatika Hair Oil). New Entrants in the market. y y 22 2. INDUSTRIES ANALYSIS OF FMCG SECTOR The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the foodprocessing industry. WHY INDIA Large domestic market India is one of the largest emerging markets, with a population of over one billion. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million. 23 Rural and urban potential Rural-urban profile Urban Population 2001-02 (mn household) Population 2009-10 (mn household) % Distribution (2001-02) Market (Towns/Villages) Universe of Outlets (mn) 53 69 28 3,768 1 Rural 135 153 72 627,000 3.3 Around 70 per cent of the total households in India (188 million) reside in the rural areas. The total number of rural household¶s is expected to rise from 135 million in 2001-02 to 153 million in 2009-10. This presents the largest potential market in the world. The annual size of the rural FMCG market was estimated at around US$ 10.5 billion in 200102. With growing incomes at both the rural and the urban level, the market potential is expected to expand further. India - a large consumer goods spender An average Indian spends around 40 per cent of his income on grocery and 8 per cent on personal care products. The large share of fast moving consumer goods (FMCG) in total individual spending along with the large population base is another factor that makes India one of the largest FMCG markets. Consumption pie Consumer expenditure on food (US$ billions) 24 Change in the Indian consumer profile Consumer Profile 1999 Population (millions) Population < 25 years of age Urbanization (%) 846 480 26 2001 1,012 546 28 2006 1,087 565 31 Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of age and the young population is set to rise further. Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a latent demand with more money and a new mindset. Demand-supply gap Currently, only a small percentage of the raw materials in India are processed into value added products even as the demand for processed and convenience food is on the rise. This demand supply gap indicates an untapped opportunity in areas such as packaged form, convenience food and drinks, milk products etc. In the personal care segment, the low penetration rate in both the rural and urban areas indicates a market potential. 25 FMCG Category and products Category Household Care Products Fabric wash (laundry soaps and synthetic detergents); household cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents, metal polish and furniture polish). Health beverages; soft drinks; staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates; ice cream; tea; coffee; soft drinks; processed fruits, vegetables; dairy products; bottled water; branded flour; branded rice; branded sugar; juices etc. Oral care, hair care, skin care, personal wash (soaps); cosmetics and toiletries; deodorants; perfumes; feminine hygiene; paper products. Food and Beverages Personal Care 26 2.1 GROWTH RATE OF FMCG INDUSTRY IN INDIA The fast moving consumer goods (FMCG) sector would witness over 40 per cent growth in the semi-urban and urban areas, according to an analysis carried out by the Associated Chambers of Commerce and Industry of India on `Future prospects of FMCG'. The size of the sector would go up from the present Rs 38,500 crore to Rs 50,000 crore by 2010, says the analysis. In urban India alone, the sector would witness over 100 per cent growth with its size increasing to Rs 35,000 crore by 2010 from the present Rs 16,500 crore, says the analysis adding that the overall size of the sector, which would include the rural and semi-urban market, would grow to Rs 85,000 crore. In the year 2003-04, the size of the FMCG sector stood at Rs 47,500 crore, which increased to Rs 55,000 crore by December 15 of this year, registering an increase of 16 per cent. Currently, the urban market for FMCG is growing at an annual growth rate of around 20 per cent while the growth for semi-urban and rural areas is less than 10 per cent, says the analysis. Though the semi-urban and urban market for FMCG would grow larger, according to the analysis, it is bound to put a severe pressure on the margins of manufacturers of FMCG products due to intense competition. 27 2.2 PLAYERS IN FMCG INDUSTRY IN INDIA Company Last price Market Cap.(Rs. Cr . ) 60,810.73 17,999.08 12,532.65 12,361.07 8,853.50 6,214.45 6,140.85 1,770.68 5,974.54 Sales Turnover 17,725.33 2,874.60 1,267.88 1,770.82 2,030.85 904.46 852.48 579.87 1,006.86 Ne t profit 2,202.03 433.15 248.12 290.22 235.02 179.76 137.10 80.05 165.40 Total Assets HUL 281.60 103.40 387.30 908.95 144.10 1,914.45 1,884.55 219.60 394.85 2,583.52 855.45 839.87 330.70 948.58 534.65 570.99 399.10 874.02 Dabur India Godrej Consumer Colgate Marico P And G Gillette India Jyothy Labs Emami 28 2.3 PESTEL ANALYSIS OF FMCG INDUSTRY IN INDIA 29 2.4 PORTER¶S FIVE FORCES OF FMCG INDUSTRY IN INDIA Porter's five forces analysis is a framework for the industry analysis and business strategy development. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry 30 profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition". This framework consists of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models have been able to make a return in excess of the industry average. 1) The threat of substitute products: The existence of close substitute¶s product increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). y y y y Buyer propensity to substitute. Relative price performance of substitutes. Buyer switching costs. Perceived level of product differentiation. In case of Dabur since it is in major areas of FMCG and health care products so it need not fear threat of substitute products in the recent future. But it has to constantly re invented its existing product lines in order to cope up with the innovations of its competitors. 31 2) The threat of the entry of new competitors: Profitable markets that yield high returns will draw firms. These results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level. y y y y y y y y The existence of barriers to entry (patents, rights, etc.) Economies of product differences. Brand equity. Switching costs or sunk costs. Capital requirements. Access to distribution. Absolute cost advantages. Government policies. Dabur India is in business for more than 100 years. Dabur India Ltd. made its beginnings with a small pharmacy, but has continued to learn and grows to a commanding status in the industry. The Company has gone a long way in popularizing and making easily available a whole range of products based on the traditional science of Ayurveda. And it has set very high standards in developing products and processes that meet stringent quality norms. So all he advantages of first mover, learning curve, brand loyalty, patents and economies of scale exist with Dabur India. 3) The intensity of competitive rivalry: For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. y Number of competitors. 32 y Rate of industry growth. y Diversity of competitors. y Level of advertising expense. y Economies of scale. Key players and competitors of Dabur India currently are Hindustan Unilever Ltd., Tata Tea, Nestle India Ltd., Britannia Industries Ltd., and Colgate Palmolive Ltd., Marico Ltd., Cadbury India Ltd., Reckitt Benckiser Ltd., Procter & Gamble. Since the industry is growing at a very rapid pace and so is the no. of players. So Dabur India has to constantly relook at its strategy in order to increase its global dominance. 4) The bargaining power of customers: Also described as the market of outputs. The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes. y y y y y y Buyer concentration to firm concentration ratio. Bargaining leverage, particularly in industries with high fixed costs. Buyer volume. Buyer information availability. Availability of existing substitutes products. Buyer price sensitivity. Bargaining powers of buyers have increased dramatically with the advent of Globalization. With increased presence of other players in the market as mentioned previously, suppliers have got wide range of choices. So Dabur India has to formulate strategy in such a manner to keep abreast with the increasing competition by improving the quality and reducing the prices over the period. 33 5) The bargaining power of suppliers: Also described as market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. y Supplier switching costs relative to firm switching costs. y Degree of differentiation of inputs. y Presence of substitute inputs. y Employee solidarity (e.g. labor unions). y Cost of inputs relative to selling price of the product. Due to its over 100 years presence Dabur does have a very strong bond with the suppliers. Also Dabur does follow the policy of having good relations with all the peoples with which it deals. This helps in having a good relation with the suppliers. Also the policy of being accountable to stakeholders be it customers, without whom it will not be in business, shareholders, who have an important stake in our business and the employees, suppliers who have a vested interest in making it all happen- are their stakeholders. 34 35