Dabur India Limited
India Limited
Morgan Stanley – 14th Annual India Summit, Mumbai
June 2012
Indian Economy
Annual disposable income Annual
disposable income
(US$ bn)
Real GDP Growth Rate – YoY (%)
2,000
1,800
1 600
1,600
1,400
1,200
1,000
800
600
400
200
0
Source: CSO and RBI estimates
2008
2009
2010
2011
2012
Source: Euromonitor
WPI Inflation – YoY (%) Overview
 Indian economy faced some slow down in
growth trajectory with Real GDP growth
at 7% for FY12
 Personal disposable income continued
upward trend
 Though inflation seems to be trending
down over the last few months, it
continues to remain volatile
Source: Office of Economic Adviser
2
FMCG Sector Overview
FMCG Industry Size (in Rs. bn)
FMCG Industry Urban (in Rs. bn)
FMCG Industry Rural (in Rs. bn)
Source: AC Nielsen
Overview
 FMCG sector in India continued on a strong growth path with both Urban and Rural
India contributing to growth. Rural India contributes to c. one third of FMCG sales in
India
 Growth driven by increasing consumption led by rise in incomes, changing lifestyles
and favorable demographics
 As per a study conducted by Booz & Company, FMCG sector is expected to grow in the
range of 12% to 17% upto 2020 and would touch a market size between of Rs. 4,000 to
Rs. 6,200 billion by 2020
3
FMCG Industry Growth Drivers
Shift from unorganised to organised
Rise in per capita category consumption
• Evidenced by growth in hair oils
• Current level of un‐
organised presence presence
is a key driver for future volume growth
• Level of per capita increase in consumption in the y
future is a key variable for future volume growth
• Demonstrated by recent strong growth in branded
growth in branded foods
Increase in penetration
Rural Consumption
• Category Category
penetration continues to be abysmally low in various categories like instant branded foods, OTC, skin creams, etc. indicating scope for g
volume growth through increase in penetration
• Driven by a Driven by a
combination of increasing incomes (MSPs, NREGS etc.) and higher aspiration levels there is an increased demand for branded products in Rural p
India
Above drivers aided by favourable demographics and rise in disposable incomes
indicate that India’s consumption story is robust
4
Strong Rural Growth
 Rural India Contributes to a third of the FMCG
sector in India
 Rural consumers’ wallet has expanded driven
by factors such higher MSPs (Minimum
Support Prices) for agricultural produce, loan
waivers and employment guarantee schemes
 Aspiration
p
levels continue to trend upwards
p
with rural consumers preferring branded
products
 Rural growth has clearly caught up and in
some periods, even exceeded urban growth
FMCG Growth Urban v/s Rural
MSPs for Paddy and Wheat (Rs. per quintal)
5
Category Penetration Levels
90%
80%
77%
80%
67%
70%
59%
57%
60%
50%
42%
Rural Penetration
37%
40%
Urban Penetration
32%
30%
26%
18%
20%
19%
18%
10%
3%
2%
5%
4%
0%
Toothpaste
Shampoo
Hair Oil
Skin Cream
Mosquito Repellants
Instant Noodles
Hair Dyes
Floor Cleaners
Source: Industry data
 Low penetration levels offer room for growth across consumption categories
 Rural penetration still lower but catching up with urban penetration levels
6
Per Capita Consumption
Skin Care – Per Capita Consumption (in US$)
9
2.7
3
7.7
7.4
8
Shampoo – Per Capita Consumption (in US$)
2.5
2.4
7
2
6
5
4
1.5
3.2
1.0
1.1
1
3
0.8
2
1
0.3
0.5
0.3
0
0
China
Indonesia
India
Malaysia
China
Thailand
Indonesia
India
Malaysia
Thailand
Toothpaste – Per Capita Consumption (in US$)
3.5
2.9
3
2.5
20
2.0
2
1.5
1
1.0
0.5
0.4
0.5
0
China
Indonesia
India
Malaysia
Thailand
Source: MOSL
 India has very low per capita consumption levels as compared to other
emerging economies
7
Dabur Overview

Established in 1884 - more than 125
Years of Trust & Excellence

Among top 4 FMCG companies in India

World’s largest in Ayurveda and natural
healthcare

Revenue of Rs. 53.2 billion and profits of
Rs. 6.4
6 billion
b ll
in FY2011-12
20
2

Strong brand equity

Dabur is a household brand

Vatika and Real are Superbrands

Hajmola , Real & Dabur ranked among
India’s Most Admired Brands

12 Billion Rupee Brands having turnover
of over Rs. 1 billion each

Wide distribution network covering 3.4
million retailers across the country

17 world class manufacturing plants
catering to needs of diverse markets

Strong overseas presence with c. 30%
contribution to consolidated sales
Twelve Billion Rupee Brands
Dabur has been
ranked as the Most
Trusted Leader in
the Healthcare
category in the
Brand Trust Report
2012
Dabur ranked
as No. 2 Most
Social Brand of
India, in the
Social Media
report launched
at Click Asia
Summit 2012
“Dabur has recently surpassed the US$ 1 billion mark in revenues”
Dabur ranked
the No. 2 Indian
Green Brand by
Green Brands
Global Survey
8
Performance At A Glance (5 years)
Sales (Rs. billion)
Net Sales
Net Profit (Rs. billion)
6.5
52.8
5.7
5.0
40.8
28.1
33.9
3.9
3.3
23.6
FY08
FY09
FY10
FY11
FY12
FY08
EBITDA (Rs. billion)
FY09
FY10
FY11
FY12
Shareholders Funds (Rs. billion)
9.5
17.2
8.3
13.9
6.7
5.2
44
4.4
8.2
93
9.3
6.2
FY08
FY09
FY10
FY11
FY12
FY08
FY09
FY10
FY11
FY12
9
Global Footprint
UK
Turkey
y
Canada
U.S.
Egypt
UAE
Nepal
B’Desh
Nigeria
Domestic Mfg.
Locations
Key markets
Manufacturing Facilities
Our strategy is to localize manufacturing,
manufacturing supply chain
and product offerings to suit consumer requirements
in each geography
10
Distribution Overview
Factory
Depot
Stockists
(Carry & Forward Agents)
Insti Stockists
Super stockists
Modern Trade
Stockist
Direct Dealer
Co‐operatives
Wholesalers
Retail trade Military / CSD
Sub stockists
Co‐Op Stores
Rural trade
Unit Canteens
Shoppers & Consumers
Insti customers Direct reach 0.7 Mln outlets
Direct + Indirect Reach is around 3.4 Mln Retail Outlets
11
Presence in FMCG Categories
Category
Position
Market Share
Key Brands
Hair Care
3
12%
Dabur Amla hair Oil, Vatika hair oil &
Vatika Shampoos
Oral Care
3
13%
Red toothpaste, Babool, Meswak, Red
toothpowder
Ayurvedic
Tonics
1
67%
Dabur Chyawanprash
Digestives
1
56%
Hajmola
Fruit Juices
1
52%
Real Fruit Juices, Real Activ
Honey
1
50%
Dabur Honey
Gl
Glucose
2
25%
Dabur Glucose
Skin Care
(Bleaches)
(
)
1
50%
Fem
Hair care includes Hair Oils & Shampoos; Oral care includes Toothpastes & Toothpowder; Digestives includes herbal
digestives; Market share is based on AC Nielson data and industry estimates
12
Business Structure
Dabur India
Li it d
Limited
International
Business (30.3%)
Domestic Business
(69.7%)
Consumer
Care
(56.0%)
Foods
(10.1%)
Retail
(0.8%)
Others*
(2.7%)
Dabur
International
(17.5%)
Hobi
Group
(2.6%)
Namaste
Labs. LLC
(10.3%)
Note: % figure in brackets indicate % share in Consolidated Sales for FY12
* Others includes Commodity Exports etc
13
Consumer Care Overview
Category‐wise Share of Consumer Care Sales
Oral Care
17%
Skin Care
6%
Home Care
6%
Hair Care
30%
Health Supplements
21%
Digestives
8%
OTC & Ethicals
12%
 Hair Care is the largest category and contributes to 30% of Consumer Care sales
 Health
H lth Supplements
S
l
t contribute
t ib t to
t 21% off Consumer
C
C
Care
sales
l
 Oral Care, comprising toothpastes and toothpowders contributes to 17% of Consumer
Care sales
Note: Percentage share based on revenue for FY12
14
Consumer Care Categories
Hair Oils
Key Brands
#2 player in
Hair Oils
Dabur Amla:
Largest brand in
the portfolio
Vatika: Value added
coconut oil
Shampoo
Key Brands
#4 player
l
in
i
Shampoos
Vatika range of shampoos
15
Consumer Care Categories
Oral Care
Key Brands
#3 player in
Toothpastes
#2 player in
Toothpowder
Dabur Red: Ayurvedic
Toothpaste & Toothpowder
Meswak: Premium
Babool: Herbal
toothpaste for economy herbal toothpaste
segment
Skin Care
Key Brands
#2 player in
Ski
Skin
Lightening
Gulabari range of rose
based skin care
products
Uveda: Range of
Ayurvedic Skin
Care
Fem range off
F
Bleaches
16
Consumer Care Categories
Health Supplements
Key Brands
#1 p
player
y
in
Ayurvedic Tonics
#2 player in
Glucose
#1 player in
branded Honey
Dabur Chyawanprash:
Largest selling health
supplement in the
country
Dabur Glucose:
2nd largest player
in the country
Dabur Honey: Largest
branded honey in the
country
Di
Digestives
ti
Key Brands
#1 player
l
in
i
Herbal
Digestives
Hajmola: Flagship brand for
Herbal Digestives
Hajmola tasty
digestive candy
17
Consumer Care Categories
Home Care
Key Brands
#1 player in Air
Fresheners
#1 player in
Mosquito Repellant
Creams
#2 player in Toilet
Cleaners
Odonil: Air freshner
range
Odomos: Mosquito
repellant skin cream
Sanifresh:
Toilet cleaner
Odonil became one of the Billion Rupee Brands during 2011-12
18
Consumer Care Categories
OTC and
d Ethicals
Ethi l
Description
 Repository of Dabur’s Ayurvedic Healthcare
knowledge
 Range of over 260 products
 Focusing on multiple therapeutic areas.
 Distribution coverage of 200,000 chemists,
~12,000 vaidyas & 12,000 Ayurvedic
pharmacies
 Focus on growing the OTC Health-Care
portfolio aggressively
CHD Structure
OTC (64%)
ETHICAL (36%)
 Generics
 Tonic
 Branded Products
 Classicals
 Branded Ethicals
Healthcare Focus
 OTC Healthcare is Rs.130 billion size industry
 Expected
E
t d to
t
grow att 14-15%
14 15% p.a. as
preference for Over-the-Counter products
accelerates
 Dabur to expand its presence by :
 Consolidating / expanding current
portfolio
 Launching new products in emerging
therapeutic areas
 Look at inorganic opportunities
 Acquired the energizer brand, Thirty Plus
from Ajanta Pharma in May 2011
Range of OTC products
19
Foods Business
 Foods portfolio comprises Fruit Juices and Culinary range
 Fruit Juices are under the brands – Real, Activ and Burrst
 Culinary range is under Hommade brand
 Foods business has surpassed the Rs. 5 billion mark in sales during FY2011-12
Foods
Key Brands
#1 player in
Fruit Juices
Real: Flagship
beverages brand
Real Activ: Range
off 100% pure juice
j i
20
Sales & Distribution Initiatives
Project SPEED
 Distribution structure re‐organised during 2011‐12 to build scale and maintain focus on 3
specialized categories : Health care, Home and Personal care, Foods
 Project
j completed
p
byy October 2011
– Distributor count rationalized to 3,600 as compared to 4,500 prior to project SPEED
– Stockist disengagement of 80% of FEM & 16% of CHD network; merged into
Consumer Care
 Exclusive stockists in metros and large cities; common in smaller towns
 Greater category focus among front end teams
 Aimed at enhancingg distribution efficiencyy and throughput
g p
Project DOUBLE
 Project Double initiated in FY2011‐12 to expand direct coverage in rural markets
 Pilots in UP and Maharashtra to test the feasibility
 Project being rolled out to 8 other states having significant rural potential : MP, Bihar, West Bengal, Assam, Karnataka, Rajasthan, Orissa, Punjab
 Deployment of field resources at local village level : addition of about 1600 2000 feet on street
addition of about 1600 ‐2000 feet on street
 Aimed at increasing rural penetration and driving growth of broader portfolio
Population in Mln
Rural
Urban
Total
Population
833.1
377.1
1210.2
Popln incr ‘01‐
’11
90.9
90.5
181.4
Increasing Urbanisation in the last decade, yet Rural population at 69%
l i
69%
21
International Business
 Started as an
Exporter
 Focus on Order
fulfillment through
India Mfg.
1980’s
 Set up a franchisee at
Dubai in 1989
 Demand generation
led to setting up of
mfg in Dubai & Egypt
 Acquired & renamed franchisee as
Dabur International Ltd
 Local operations further strengthened
 Set up new mfg facilities in Nigeria,
RAK & Bangladesh
Early 90’s
2003 Onwards
Highlights





Dabur’s overseas business contributes c.
30% to consolidated sales led by CAGR of
37% in last 7 years
Focus markets:
 GCC
 Egypt
 Nigeria
 Turkey
 Bangladesh
 Nepal
 U.S.
High level of localization of manufacturing
and sales and marketing
Leveraging the “Natural” preference among
local consumers to increase share in personal
g
care categories
Sustained investments in brand building and
marketing
 Building scalescale c.
c 30% of
Consol. Sales
 High Levels of Localization
 Global Supply chain
Today
High Growth in IBD*
in Rs. million
16,161
18000
16000
14000
12000
8,922
10000
8000
6000
4000
2000
2,258 2,917
1,281 1,807
3,760
4,770
6,025
0
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
International Sales Breakdown* (FY12)
* Including overseas acquisitions
22
Africa and Middle East Potential
Real GDP Growth Rates (YoY) in %
Source: IMF
Africa’s Bulging Base
Source: McKinsey on Africa
Africa, June 2010
 Middle East and Africa have witnessed stable GDP growth rates
 Total GDP of African economies is around US$ 1 trillion i.e. similar to India
 Between 2005 and 2015, it is estimated that in Africa, the share of individuals earning
above US$1,000 will grow from 39% to 55%.
 The rapidly emerging African middle class could number as many as 300 million, out of a
population
p
of one billion
total p
 The sheer volumes and the growth in the number of consumers with disposable income
creates huge opportunities for consumer products companies
23
Our Strategy
Three pronged Growth Strategy
Expand
Innovate
Acquire
Our differentiation is the herbal and ayurvedic platform
E
Expand
d
 Strengthening presence in existing categories and markets as well entering new geographies
 Maintain dominant share in categories where we are category builders like Health Supplements,
Honey etc.
etc and expand market shares in other categories
 Calibrated international expansion – local manufacturing and supply chain to enhance flexibility
/ reduce response time to change in market demands
Innovate
 Strong focus on innovation. Have rolled out new variants & products which have contributed to
around 5-6% of our growth p.a.
 Renovation of existing products to respond to changing demands (Toothpowder to Toothpaste)
Acquire
 Acquisitions critical for building scale in existing categories & markets
 Should be synergistic and make a good strategic fit
 Target opportunities in our focus markets
24
Acquisition of Hobi Group, Turkey
 A
Acquisition
i ii
off Hobi
H bi Group,
G
T k
Turkey
f
for
a totall
consideration of US$ 69 Million completed on
October 7, 2010
 Hobi manufactures and markets hair, skin and
body care products under the brands Hobby
and New Era
 Product
range
of
the
company
complementary
l
t
t our product
to
d t range
is
 Acquisition provides an entry into another
attractive emerging market and a good
platform to leverage this across the region
25
Acquisition of Namaste Laboratories
 Dabur India Limited through its subsidiary Dabur International Limited acquired 100% stake
in Namaste Laboratories LLC for $100 million, in an all-cash deal on January 1, 2011
 Namasté is a leading ethnic hair care products company, having products for women of
colour,
l
with
ith revenues off c. $95 million
illi
(CY2010) from
f
US E
US,
Europe, Middle
Middl East
E t and
d African
Af i
markets
 The company markets a portfolio of hair care products under the brand ‘Organic Root
Stimulator’ and has a strong presence in ethnic hair care market for women of colour.
 Acquisition to enable entry into Ethnic Hair Care products market valued at more than US$1.5
billion and tap into significant market opportunity in the fast growing, hugely populated (~1
Bn) yet highly underpenetrated consumer markets of Sub Saharan Africa
 Dabur would leverage its own network in Africa and Middle East to grow the business
aggressively in these markets
 We have commenced local manufacturing for Namaste at our RAK facility in UAE
26
Recent Performance: Q4 FY2011-12
Revenue (in Rs. Cr.)
EBITDA (in Rs. Cr.)
PAT (in Rs. Cr.)
 Consolidated Sales grew by 23.0% during
Q4FY12.
 Sales growth was a combination of volume
growth and price increases and marginal
translation gains
 Volume growth was at 12.4%
 EBITDA increased by 4.2% while EBITDA margin
was lower at 17.8% in Q4FY12 v/s 21.1% in
Q4FY11
 Material costs were at 50.2% of sales vis‐à‐vis
47% in Q4FY11
 Adpro during the quarter increased to 13.4%
13 4% as
compared to 11.5% in previous year
 Consolidated PAT reported growth of 16.0%
 This was despite severe input cost pressure
and increase in advertising and promotional
costs
27
Market Cap & Shareholding
Market Capitalization in Rs. billion
180
174
Shareholding Structure*
DIIs, 6.4%
Others, 6.4%
FIIs, 18.4%
Promoters, 68.7%
17
2001
2012
2011
*As on March 31, 2012
Dabur ranked as the organization that offers the best return to investors by
the 6th Social & Corporate Governance Awards, presented by the Bombay
Stock Exchange
28
Consolidated P&L
I R
In Rs. crores
Q4FY12
Q4FY11
Y Y (%)
YoY
FY12
FY11
1363.6
1108.2
23.0%
5,283.2
4,077.4
29.6%
9.0
5.9
53.7%
22.2
27.1
‐17.9%
Material Cost
684.9
521.3
31.4%
2,685.2
,
1,937.5
,
38.6%
% of Sales
50.2%
47.0%
50.8%
47.5%
Employee Costs
95.6
87.3
387.4
308.7
% of Sales
7.0%
7.9%
7.3%
7.6%
Ad Pro
182.0
127.4
659.5
534.6
% of Sales
13.4%
11.5%
12.5%
13.1%
Other Expenses
185.7
161.0
683.1
522.5
% of Sales
% of Sales
13 6%
13.6%
14 5%
14.5%
12 9%
12.9%
12 8%
12.8%
19.0
16.3
16.7%
57.4
32.1
78.6%
EBITDA
243.3 233.4 4.2%
947.6
833.4
13.7%
% of Sales
f
17.8%
21.1%
17.9%
20.4%
Interest Exp. and Fin. Charges
5.7
15.9
53.8
30.3
Depreciation + Amortization
29.3
29.1
103.2
95.2
208.3
188.4
10.5%
790.5
707.9
11.7%
37.7
41.4
‐8.9%
146.4
139.0
5.3%
170.5
147.0
16.0%
644.1
568.9
13.2%
0.0
0.0
‐0.8
0.3
PAT (After Extra ordinary item & Minority Int)
170.5
147.0
644.9
568.6
% of Sales
12.5%
13.3%
12.2%
13.9%
Net Sales
Other Operating Income
Other Non Operating Income
Profit Before Tax (PBT)
Tax Expenses
PAT(After exceptional Items)
Minority Interest ‐ (Profit)/Loss
9.6%
42.9%
15.4%
16.0%
Y Y (%)
YoY
25.5%
23.4%
30.7%
13.4%
29
Consol. Statement of Assets & Liabilities
Particulars (in Rs. crores)
(
)
A
1
2
3
4
5
B
1
2
EQUITY AND LIABILITIES
Shareholders’ funds
(a) Share capital
(b) Reserves and surplus
( )M
(c) Money received against share warrants
i d
i t h
t
Sub‐total ‐ Shareholders' funds
Share application money pending allotment
Minority interest *
Non‐current liabilities
(a) Long‐term borrowings
(b) Deferred tax liabilities (net)
(b) Deferred tax liabilities (net) (c) Other long‐term liabilities
(d) Long‐term provisions
Sub‐total ‐ Non‐current liabilities
Current liabilities
(a) Short‐term borrowings
(b) Trade payables
(b) Trade payables
(c) Other current liabilities
(d) Short‐term provisions
Sub‐total ‐ Current liabilities
TOTAL ‐ EQUITY AND LIABILITIES ASSETS
Non‐current
Non
current assets
assets
(a) Fixed assets
(b) Goodwill on consolidation *
(c) Non‐current investments
(d) Deferred tax assets (net)
(e) Long‐term loans and advances
(f) Other non‐current assets
(f) Other non
current assets
Sub‐total ‐ Non‐current assets
Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
((d) Cash and cash equivalents
)
q
(e) Short‐term loans and advances
(f) Other current assets
Sub‐total ‐ Current assets
TOTAL ‐ ASSETS
As at
((current year end) )
31/03/2012
As at ((previous year end) )
31/03/2011
174 1,543 ‐
1,717 174 1,217 ‐
1,391 3 4 727 27
27 ‐
658 1,412 717 19
19 ‐
578 1,314 347 859
859 120 164 1,490 4,622 303 661
661 109 141 1,214 3,923 869 799 89 ‐
433 72 2,262 732 799 2 ‐
340 101 1,974 393 824 462 448 154 79 2,360 4,622 418 709 355 280 127 60 1,949 3,923 30
Disclaimer
Some of the statements made in this presentation contain forward looking information that involve a
number of risks and uncertainties. Such statements are based on a number of assumptions, estimates,
projections or plans that are inherently subject to significant risks, as well as uncertainties and
contingencies that are subject to change. Actual results can differ materially from those anticipated in the
Company´s forward‐looking statements as a result of a variety of factors, including those set forth from
time to time in the Company´s press releases and reports and those set forth from time to time in the
Company´s analyst calls and discussions. We do not assume any obligation to update the forward‐looking
statements contained in this presentation.
presentation
No part of this presentation shall form the basis of or may be relied upon in connection with any contract
or commitment. This presentation is being presented solely for your information and is subject to change
without notice.
31