The Hindu Business Line : Dabur looks to overseas markets for growth

WITH the FMCG market remaining sluggish and competition getting even more aggressive on the price front, Dabur India Ltd has decided to focus on its international operations for growth this fiscal.

The company, which turned into a full-fledged FMCG company only last fiscal after demerging the pharmaceutical business, has found the going tough in the domestic market due to squeezed margins, drooping sales and a fierce price competition last year.

In fact, several well-known brands of Dabur have seen declining sales last fiscal despite the company restructuring business midway to focus on five key brands - Dabur, Vatika, Anmol , Hajmola and Real. Thus, sales of Hajmola Candy actually decreased last fiscal despite this being one of the brands the company continues to focus on. While hair care as a category grew by 4.7 per cent, Vatika Anti-dandruff shampoo recorded moderate growth while sales of Vatika Cream Conditioning Shampoo were stagnant.

Acknowledging that growth in the increasingly difficult domestic FMCG market is difficult, the Dabur India Chairman, Mr V.C. Burman, has outlined a multi-pronged strategy for the company to focus on international markets.

"In order to aggressively target international markets, Dabur has devised a mutli-pronged strategy, which varies from geography to geography. In West Asia, it proposes to build and rebuild brands and customise products for these markets. The focus on West Asia, including Egypt, will be mostly Dabur's personal care brands. Bagladesh will be catered to by both personal care and healthcare brands," Mr Burman said in the latest annual report.

He said Dabur International - the wholly owned subsidiary of Dabur India which conducts its international operations - sees considerable opportunities in the CIS countries where focus will be more on healthcare products whereas in Pakistan it will be personal as well as healthcare.

Already, international business contributes about 10 per cent to the company's consolidated sales and this share is expected to rise significantly this fiscal. Besides, Dabur has been consistently forging joint ventures across several countries to increase its grip over global markets. First, it acquired UAE-based Redrock Ltd, renaming it Dabur International Ltd. Through this acquisition, Dabur now owns manufacturing facilities at Sharjah; Dabur International has also taken charge of Dabur Egypt Ltd and its manufacturing facility at Cairo.

Besides, Dabur International has forged a joint venture in Bangladesh and is in the process of setting up similar JV operations in Pakistan and Nigeria.

"2004-05 and the future will also see Dabur International catering to the Asian diaspora and later to the mainstream population in the US, UK and Canada," Mr Burman said, adding there are over two million Asians living in these countries and represent an excellent market for Dabur's herbal platform in healthcare.

He said the company is already negotiating with some US retailers to set up "ethnic counters" for Dabur's healthcare products.

As per market research agency ORG MARG, all the five product categories Dabur operates in showed negative growth last fiscal with the steepest decline seen in shampoo market at 12.4 per cent followed by digestives (8.3 per cent), Chyawanprash (9 per cent), toothpowder (8.1 per cent), shampoo (3.8 per cent) and hair oil (0.7 per cent). So, Dabur has no option but to look overseas for growth.

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