Dabur's Duggal: Just double it

Some industry studies still classify it under the pharmaceuticals sub-head whilst a section of consumers and analysts perceive it as a herbal brand. But as far as Sunil Duggal is concerned, Dabur India is as much a fast-moving consumer goods (FMCG) player as a Hindustan Lever or a Procter & Gamble. Like many of the Indian consumer products companies that comprise the second tier of the FMCG sector-Marico and Godrej, to name two-the CEO of Dabur is keen to ride the revival in the industry. Growth in 2005-06 has been around 7 per cent, as against 5-5.5 per cent in 2004-05. The good news is that this momentum is expected to sustain for the next couple of years on the back of buoyant economic growth, rising per capita income and increasing consumer spends. For Dabur, the game plan for the next few years is clear-cut: Grow via acquisitions (both domestic and international), launch new products, and penetrate deeper into rural India.

"We intend to double our turnover and profits in the next four years with the help of expansions, acquisitions and innovation," says Duggal. "International business, foods, healthcare and homecare will be the main drivers." Dabur is expected to cross the Rs 2,000 crore mark in revenues in 2005-06. Net sales for the first nine months up to December 2005 stood at Rs 1,419 crore. Points out Ravi Sardana, Vice President, ICICI Securities: "All the business divisions have shown stupendous growth. And the new plans will help the company maintain the tempo."

In the years ahead, Dabur's growth will be fuelled by a quaint mix of international and rural growth. Whilst overseas operations will contribute some 16 per cent to the topline in four years (from 11 per cent currently), the villages will account for 55 per cent of the domestic market growth and that's clearly where the action will be. Acquisitions-in addition to the Balsara portfolio, which approximately contributed 10 per cent to the topline last year-will add their mite. Foods share will be up from 10 to 13 per cent by 2010, with Dabur Foods, a 100 per cent subsidiary, leading from the front. In the first nine months of 2005-06, the foods group, which includes brands like Real, Real Activ, Coolers and Homemade pastes, grew 48 per cent, and that momentum is expected to increase in the years ahead as Indian consumers get more health conscious.

Foods may be growing rapidly, but clearly the two planks of Dabur's growth in the medium term will be personal products and healthcare, which are expected to contribute 30 per cent and 27 per cent, respectively, to the company's revenues in four years. The consumer care division comprises hair oil, shampoos, toothpastes and toothpowder, with Vatika at the premium end a Rs 200-crore brand (Anmol at the lower end is worth Rs 30 crore). To boost its herbal healthcare business, which after an internal realignment of brands is pegged at Rs 1,200 crore, Dabur is now going the retail way by setting up Dabur healthcare clinics. Some 165 Ayurvedic clinics are already operational and the number is expected to go up to 1,000 by end 2006-07.

Somewhere down the line, though, Dabur will have to decide whether it wants to be known as a pure herbal brand or as a frontline FMCG player, neither of which it can with conviction say it is today.