Sunil Duggal Revamped Dabur

Sunil Duggal Revamped Dabur

 

"Indian industry is going through a marketing metamorphosis. It is a hunting ground for marketing talent and a testing hub for global product launches."

 

Smart Achievements

 

v      Takeover of Balsara Home and Hygine Products for Rs 1,430 mn

 

v      Demerged pharmaceutical and FMCG entities, consolidated entire international business of foods division under a single subsidiary after buying out Dubai based franchisee RedRock for $ 5 mn

 

v      Developed a new corporate identity and a new logo

 

v      Rationalized manufacturing processes to get benefit of scale by concentrating on only three plants instead of five, reduced working capital costs by Rs 1 bn

v      Assigned cross function teams to work on each key SKU to increase the gross profit margins by 1.5% in three years, invested Rs 300 mn on dealer networking to connect 30% of the dealer network through two ERP programs

 

v      Has targeted Rs 3 bn turnover from overseas businesses by 2007, plans to set up an export oriented unit for Rs 2,300 mn, plans to tap the $8bn herbal nutritional supplements market in the US, plans to start manufacturing hair oils and shampoos for FMCG market in Pakistan

 

Summary

 

When Duggal pushed Dabur India out of its comfort zone to announce that the company was on the prowl for FMCG brands in September 2004, it left most of the industry slightly bemused. Which company was he hinting at? And why after many years of chugging along at fourth position in the FMCG sector, was this herbal "specialist" products company suddenly considering acquisitions? The matter became clear three months later in January 2005. Duggal ushered in the new year with a new addition to the company's fold - the takeover of Balsara Hygiene and Home Products businesses in an all cash deal for Rs1,430mn. With this takeover, Dabur acquired control of all three Balsara group companies; Balsara Hygiene Products, Balsara Home Products and Besta Cosmetics.

 

Duggal quickly initiated the restructuring and virtual demerger of Dabur's Rs 1,629 mn pharmaceutical business. Under the new setup the pharmaceutical business would continue to remain under the ambit of Dabur India but would function as a separate business unit internally with a separate business heads and functional heads, and a separate book of accounts.

 

Following this in November 2004 Duggal decided to undertake another restructuring, aimed at enhancing focus on brands and Dabur's healthcare business. The Family Products Division (FPD) was merged with the Healthcare Products Division (HCPD) to form the Consumer Care Division (CCD) while a new division was created for the traditional Ayurvedic medicines business - Consumer Healthcare Division (CHD) - separate from the FMCG business. This division was set up to look after the prescription based ayurvedic medicines under Dabur's fold and over-the-counter (OTC) products.

 

It allowed Duggal to foray into several new products via the new division such as pain relief, stress management, cold relief products and even antacids. The new brand architecture categorized Dabur brands within five master brands that were formed with distinct offerings, "Earlier, the brand Dabur was all encompassing and meant everything to everybody.

 

To drive these core brands in the market, Duggal then sanctioned an increase in advertising expenditure. Like other FMCG companies, over the past five years, Dabur had steadily improved its procurement and distribution systems to achieve a significant reduction in material costs. Duggal ploughed most of these savings into brand building efforts, increasing the ad spend-to-sales ratio. Dabur has also adopted global marketing techniques to promote his food products and allocated an ad budget of Rs 100 mn for mass media advertising and promotions.

 

The brand building thrust led to the development of a new corporate identity for the group in 2004. According to Duggal, Dabur's brand equity had to become more cohesive and in sync with its brand architecture and therefore a change was required. The new identity, while retaining the characteristic banyan tree, presented it in a 'younger' look in form and color. Duggal also earmarked a budget of Rs 50 mn on communicating the new identity.