Dabur India Ltd – Leading in Ayurvedic Products

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(A) About Dabur India Ltd

Dabur India Ltd is an Indian multinational consumer goods company, founded by S. K. Burman and headquartered in Ghaziabad.

The Company name derives from the two Words “Da”ktar and “Bur”man which combined & formed the name Dabur.

It manufactures Ayurvedic medicine and natural consumer products and is one of the largest fast-moving consumer goods (FMCG) companies in India.

(B) Journey

(C) Family Tree

DAbur india ltd- Family tree

About the founder

Dr. S. K. Burman, a physician in Bengal. He had a mission to provide an effective and affordable cure for ordinary people in villages. Further, Dr. Burman undertook the task of preparing natural cures for the killer diseases of those days, like cholera, malaria, and plague after that Dr. Burman set up Dabur in 1884 to produce and dispense Ayurvedic medicines.

(D) Board Members of Dabur India Ltd

a) Amit Burman (Chairman)

Mr. Amit Burman is the Chairman of Dabur India Ltd, as well as is responsible for Dabur India’s foray into the processed foods business with the setting up of Dabur Foods Ltd.

In the first place, he obtained valuable experience at Colgate Palmolive, New York, USA where he worked in the Manufacturing Strategy Department.

He holds a B.Sc. degree in Industrial Engineering from Lehigh University, Bethlehem, PA, USA. after that an MBA degree from the University of Cambridge, an M.Sc. degree in Industrial Engineering from Columbia University, USA

b) Mohit Burman (Vice-Chairman)

Mr. Mohit Burman, son of Mr. V.C Burman and Mrs. Monica Burman, is the Vice Chairman of Dabur India Ltd.

He did his schooling at Highgate School, London, and graduated from Richmond College, London, in Business Administration and Economics after that he started his career with Welbeck Property Partnership London and then joined Dabur Finance ltd

c) Mohit Malhotra (CEO & Whole-Time Director)

Mohit Malhotra is currently the Chief Executive Officer of Dabur India Ltd.

He is a Management Graduate from Pune University and holds an Executive Masters’s in International Business from the Indian Institute of Foreign Trade, New Delhi.

After that, He joined Dabur in 1994 and handled key assignments in Marketing and Sales.

Mr. Mohit Malhotra received Rs 10.2 Crores as remuneration for FY21 i.e. 0.10% of Net Sales.

d) P.D. Narang (Whole-Time Director)

Mr. P D Narang is the Group Director, Corporate Affairs, Dabur India Limited.

Mr. Narang specialized in Finance and started his professional career in 1979 with his own practice.

In the first place, he joined the Dabur in 1983 as a Management consultant with a mandate to streamline the finance, accounts, and audit function of the company.

Mr. P.D. Narang received Rs 12.7 Crores as remuneration for FY 21 i.e. 0.13% of Net Sales.

Other Directorships Held

Dabur india ltd- Shareholding pattern

(E) Shareholding Pattern of Dabur India Ltd

Dabur India ltd- Shareholding

(F) Dabur India Ltd Business Segments

1. HPC (Home & Personal Care)

a) Oral Care

b) Hair Oil

c) Shampoo

d) Skin Care

e) Home Care

2. Health Care

a) Digestives

b) Over The Counter (OTC) & Ethicals

c) Health Supplement and Guar Gum

3. Food & Beverages

(G) Sales Contribution of Dabur India Ltd

a) Sales Contribution FY22

Dabur India ltd- Sales Contribution

Out of the total revenue segment, most of its revenue comes from home and personal care which is 47% accompanied by Healthcare which is 36%, and the Food & Beverage segment which comprises 17% of the total revenue.

b) YoY Sales Segment wise

Dabur india ltd- yoy sales segment wise

The healthcare segment revenue got increased by 5.2% from the year 2021 to 2022 with a CAGR of 17.8% in the last 2 years.

Revenue in Home & personal care increased by 12.7% and growth with a CAGR of 11.1% in the last 2 years.

Food & Beverages revenue declined in 2021 due to the effect of lockdown but bounced back with a growth of 47.7% from 2021 to 2022 with a CAGR of 18% in the last 2 years.

c) Sales Contribution of FY22 Globally – Dabur India Ltd

Dabur india ltd- Sales contribution

Dabur revenue from the International market such as Turkey (EU), Egypt COMESA), UAE (GCC+GAFTA), Nigeria (ECOWAS), South Africa (SADC), Nepal, Bangladesh, and Sri Lanka contribute 28.3% of its total market share

(H) Cost Structure of Dabur India Ltd

Dabur india ltd- Cost structure

Employee Cost as % of Net Sales of Dabur India Ltd

dabur india ltd- employee cost

The cost of the employee as % of Net Sales has increased in past 10 years, it is also on the higher side as compared to its peer.

Sales & Advertising Cost of Dabur India Ltd

Dabur india ltd- Advertising & publicity cost

Cost of sales & advertising has decreased over the past decay from 16.3% to 11.17% company has increased its advertising cost in e-commerce is up by 12.7% from a year ago.

(I) Manufacturing Facilities of Dabur India Ltd

Dabur has 17 manufacturing facilities out of which 9 are located in India and the rest 8 are located overseas.

Dabur india ltd- manufacturing facilities

Currently, Dabur India Ltd has its manufacturing facilities in 9 states and 12 cities and also planning to build one more plant in Madhya Pradesh.

(J) Overseas Manufacturing Plants

Dabur has been following a localized supply chain policy in the overseas markets, having established manufacturing bases across the globe to develop and manufacture a range of products catering to the needs and preferences of the local populace. It has manufacturing plants in:

  • Turkey (EU)
  • Egypt COMESA)
  • UAE (GCC+GAFTA)
  • Nigeria (ECOWAS)
  • South Africa (SADC)
  • Nepal
  • Bangladesh
  • Sri Lanka

(K) Competitors

(L) Subsidiaries and Joint Ventures

DAbur india ltd- subsidiaries
dabur india ltd- joint venture

(M) Financial Parameters of Dabur India Ltd

DAbur india ltd- Financial trend

Companies operating income increased from Mar,20 to Mar,21 but FMCG companies have seen an operating income decreasing in rural areas due to a decline in consumption amid raise in prices.

It is showing consistent growth in its profits from Rs 644.11 Cr to Rs 1,695.96 Crore in past decay. The company has reduced its debt in the past 10 years.

DAbur india ltd- yoy performance
dabur india ltd- yoy performance of last 4 quarters

The company is showing growth in sales both quarterly as well as yearly.

(N) Management Discussion & Concalls

Management Discussion

  • The company’s consumer care business sales contribute 62%, food business to 9.3%, and International Business at 26.4% together while other businesses contribute 2.3% of the net sales.
  • Its E-commerce business has grown to almost 3x in revenue from 2.4% to 6% in 2020-21.
  • The company is in the process of setting up a new manufacturing unit in  Madhya Pradesh to cater specifically to the overseas market meanwhile, the company has added 50 new products within a few months of the COVID outbreak.
  • Moreover distribution network of the company raised from 52,298 to 59,217 villages within a year.

Concall Highlights – Q4FY22

  • In FY2021-22 revenue from operation crossed Rs 1,000Cr which is growing at around 14% moreover, its operating profit grew by 12.5%.
  • Its distribution reached to 1.3Million outlets and to 90,000 villages.
  • Company revenue decreased by 14.4% on a quarter-on-quarter basis due to a fall in sales of healthcare products by 30.7% which was in high demand in Q3 due to the Omicron wave as people were a lot more conscious about their health.
  • Its EBITDA margin reduced from 21.3% in the third quarter of FY22 to 18% in the fourth quarter of FY22 due to high material costs. Meanwhile, its profit after tax reduced from 17.1% to 11.7% as the effective tax rate for console business increased from 16.5% to 20.1%.
  • When it comes to the company’s segment-wise growth its home and personal care products grew by 12.7%, health care grew by 7.4% and health supplements posted a growth of 10%.
  • Meanwhile, in its international portfolio Sub-Sahara grew by 25%, Egypt by 12%, Namaste to double digits growth, and Turkey by 47%.
  • The company is seeing a slowdown in the rural sector as a result its money cycle increased from 12 to 20 days.

Capex

The company is planning for a capital expenditure of around Rs 400 Crore in FY23 which include a Greenfield plant in Indore to cater overseas market and some ancillary capex.

(O) Strength & Weakness

Strengths

  1. Strong position in India’s FMCG industry- In the natural healthcare, personal care, and food products segments. It has ~63% market share in the health supplements segment (Chyawanprash), ~16.5% in the oral care (toothpaste) segment, and 15% in the hair oil segment. It is the market leader (around 60% share) in the fruit juice segment, with its Real and Active brands.
  2. Healthy financial risk profile- The financial risk profile is supported healthy cash accrual of Rs 1100-1200 crore.

Weakness

  1. Exposure to intense competition- The company faces competition from players in organized and unorganized sectors. Because of the growing popularity of herbal and natural products.

Drop us your query at – info@pawealth.in or Visit pawealth.in

References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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