Patanjali threat more sweet than sour; consumer healthcare will be our key focus:
Dabur Dabur India CEO Sunil Duggal welcomes Patanjali's growing prominence in the Ayurveda segment, saying it will help open up the market. Before Patanjali gained prominence, Ayurveda was primarily the domain of Dabur India. "Think Ayurveda, think Dabur" was pretty much the unadvertised tagline of the Ghaziabad-headquartered company, run by a professional CEO with the oversight of the Burman family. You would assume the ever-expanding empire of Baba Ramdev might have rattled the Dabur boardroom. On the contrary, Dabur is quite happy about the market being opened up. "Even at a lower share, we may be better than a higher share of a small market," Sunil Duggal, Chief Executive Officer of Dabur India, told Moneycontrol. "He (Ramdev) is growing the whole market for Ayurvedic products and it will be a big benefit to us in the long-run. If we play our cards well we can also improve our standing in that area. So, we are not really too bothered about any loss of market share Patanjali."Consumer Healthcare He said Dabur's primary focus would now be consumer healthcare, rather than getting into commoditised businesses like selling ghee and atta.
"It (focus) will really be into the highly branded items, highly valued items in personal care, food and beverages and particularly in consumer healthcare," said Duggal, a Dabur veteran of 20 years. "For example, we are incubating a lot of products through retailing. We have done 10 such products in this year, in liver control, in lipid management, in stress management, diabetes management etc." He said the company would approach consumers only after the business had attained a critical mass. "These are products based upon Ayurvedic formulations in a branded format. This is a big initiative which we will pursue. And it's very highly value-added," Duggal said. His confidence comes from the future-proofing of manufacturing supplies that the company has managed to achieve. Dabur incurred a capital expenditure of Rs 550 crore in the current financial year – a bulk of that amount going into setting up factories at Tezpur in Assam and Pantnagar in Uttarakhand.
While the Pantnagar unit was commissioned earlier this year, the Tezpur factory will be commissioned on Wednesday, ensuring future proofing of the manufacturing network for almost five years, Duggal said. The Rs 250-crore Tezpur factory will be Dabur’s largest and apart from juices and hajmola, the unit will be able to manufacture almost any product in the company’s vast portfolio. Duggal said a facility in Jammu was also a possibility. "We have a tract of a land, around 5-6 acres in Jammu," he said. "We will decide in the next six months or so whether we want to set up a facility there."
Duggal also discussed Dabur's Nepal plant, which produces half of the company’s juice supplies. The company has been forced to halt production a couple of times in the past owing to political unrest in the neighbouring country. Would Dabur consider shutting it0 now that it also sources juice from its plants Sri Lanka and Pantnagar? It’s a tough call, given that the Nepal unit is a fully depreciated plant and adds immensely to the profitability of the more than Rs 1,000-crore Real juice brand. "Market access to north India from Nepal is much better than say Sri Lanka, so there will be a profit impact," said Duggal. "A prolonged shutdown is very unlikely, sporadic shutdowns are never to be ruled out, but that will not impact our business in any significant manner."Cost Pressure Dabur's portfolio is diverse – honey, juices, hajmola, chyawanprash, hair oil, shampoo, toothpaste being its core - and hence cost pressures in the hundreds of commodities it sources for its products come up every now and then. Many of the segments are intensely competitive and hence it is not easy to pass on inflationary pressures in inputs. So, while Dabur is sitting on its lowest cost base in five years as far as honey is concerned, Duggal said coconut hair oil and juices were facing cost pressures.
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Dabur Dabur India CEO Sunil Duggal welcomes Patanjali's growing prominence in the Ayurveda segment, saying it will help open up the market. Before Patanjali gained prominence, Ayurveda was primarily the domain of Dabur India. "Think Ayurveda, think Dabur" was pretty much the unadvertised tagline of the Ghaziabad-headquartered company, run by a professional CEO with the oversight of the Burman family. You would assume the ever-expanding empire of Baba Ramdev might have rattled the Dabur boardroom. On the contrary, Dabur is quite happy about the market being opened up. "Even at a lower share, we may be better than a higher share of a small market," Sunil Duggal, Chief Executive Officer of Dabur India, told Moneycontrol. "He (Ramdev) is growing the whole market for Ayurvedic products and it will be a big benefit to us in the long-run. If we play our cards well we can also improve our standing in that area. So, we are not really too bothered about any loss of market share Patanjali."Consumer Healthcare He said Dabur's primary focus would now be consumer healthcare, rather than getting into commoditised businesses like selling ghee and atta.
"It (focus) will really be into the highly branded items, highly valued items in personal care, food and beverages and particularly in consumer healthcare," said Duggal, a Dabur veteran of 20 years. "For example, we are incubating a lot of products through retailing. We have done 10 such products in this year, in liver control, in lipid management, in stress management, diabetes management etc." He said the company would approach consumers only after the business had attained a critical mass. "These are products based upon Ayurvedic formulations in a branded format. This is a big initiative which we will pursue. And it's very highly value-added," Duggal said. His confidence comes from the future-proofing of manufacturing supplies that the company has managed to achieve. Dabur incurred a capital expenditure of Rs 550 crore in the current financial year – a bulk of that amount going into setting up factories at Tezpur in Assam and Pantnagar in Uttarakhand.
While the Pantnagar unit was commissioned earlier this year, the Tezpur factory will be commissioned on Wednesday, ensuring future proofing of the manufacturing network for almost five years, Duggal said. The Rs 250-crore Tezpur factory will be Dabur’s largest and apart from juices and hajmola, the unit will be able to manufacture almost any product in the company’s vast portfolio. Duggal said a facility in Jammu was also a possibility. "We have a tract of a land, around 5-6 acres in Jammu," he said. "We will decide in the next six months or so whether we want to set up a facility there."
Duggal also discussed Dabur's Nepal plant, which produces half of the company’s juice supplies. The company has been forced to halt production a couple of times in the past owing to political unrest in the neighbouring country. Would Dabur consider shutting it0 now that it also sources juice from its plants Sri Lanka and Pantnagar? It’s a tough call, given that the Nepal unit is a fully depreciated plant and adds immensely to the profitability of the more than Rs 1,000-crore Real juice brand. "Market access to north India from Nepal is much better than say Sri Lanka, so there will be a profit impact," said Duggal. "A prolonged shutdown is very unlikely, sporadic shutdowns are never to be ruled out, but that will not impact our business in any significant manner."Cost Pressure Dabur's portfolio is diverse – honey, juices, hajmola, chyawanprash, hair oil, shampoo, toothpaste being its core - and hence cost pressures in the hundreds of commodities it sources for its products come up every now and then. Many of the segments are intensely competitive and hence it is not easy to pass on inflationary pressures in inputs. So, while Dabur is sitting on its lowest cost base in five years as far as honey is concerned, Duggal said coconut hair oil and juices were facing cost pressures.
Read more for HNI Stock Tips- http://bit.ly/ace_services
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