Page 42 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Unit 1: Share Capital – Issue of Shares

Notes
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Case Study Share Capital and Issue of Shares

Dabur Over the Years: The Dabur Story

A classic case of a family owned business being handed over to professionals, a company
making timely strategic interventions to adapt to the business environment and
maintaining its brand equity over the years.
Dabur India Limited (DIL) is the third largest FMCG Company operating in India with a
turnover of more than 2,233 crores. It operates under three business categories namely
Consumer Care Division (CCD), Consumer Healthcare Division (CHD) and Dabur foods
Limited (in July 2007, Dabur announced the de-merger of DFL with DIL).
Background

Dr. S.K Burman started Dabur in 1884 as a small pharmacy. Initially, he prepared Ayurvedic
medicines to treat diseases like malaria, plague and cholera that had no cure during that
period. It was his dedication, commitment and empathy that made Dabur a renowned
name among the masses. And today, after more than 120 years, Dabur is known for its
trustworthiness more than anything else.

During this passage of time, Dabur went through several structural and strategic changes
to maintain its market strength. The real mass production started in 1896. Early 1900’s saw
Dabur emerge as the first company to provide health care through scientifically tested
methods. It achieved significant improvements after setting up Research and Development
centers and manufacturing automation. The launch of Dabur’s Amla hair oil and
Chyawanprash was a boon to the expanding business. To keep up with the times, Dabur
computerized its operations in 1957. Its Dant Manjan and digestive tablets were widely
accepted as well.
However with a large product portfolio in the market, Dabur had to maintain operational
efficiency. To make sure it adjusted to the business environment it became a public limited
company in 1986 followed by diversification in Spain in 1992. A major change came when
Dabur came up with its IPO in 1994. Because of its position, Dabur’s issue was 21 times
oversubscribed. Dabur further divided its business into three separate groups:

 Health Care Products Division
 Family Products Division
 Dabur Ayurvedic Specialties Limited
In 1998, for the first time in the history of Dabur, a non-family member took charge. Dabur
handed over the operations to professionals. Successful implementation of procedures,
timely changes and maintaining its essence, Dabur achieved its highest-ever sales figure
of 1166.5 crore in 2000-01.
As FMCG sector was struggling with the slow growth in the Indian economy, Dabur
decided to take numerous strategic initiatives, reorganize operations and improvise on
its brand architecture beginning 2002. It decided to concentrate its marketing efforts on
Dabur, Vatika, Anmol, Real and Hajmola to strengthen their brand equity, create
differentiation and emerge as a pure FMCG player recognized as a herbal brand. This was
Contd...

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