Questions & Answers with CEO

We are committed to reducing the impact on environment, contributing towards conservation of resources and be a well-governed organization that strives towards the highest standards of ESG.

Mohit Malhotra
CEO

COVID came into our lives towards the end of FY20 but a significant part of its impact was felt across the world in FY21. Despite the headwinds that we faced, both personally and professionally, the Company showed true resilience and converted this crisis into an opportunity. In spite of a sharp downturn in the first quarter, Dabur delivered 10% growth in Consolidated Revenue for the year along with 17.2% growth in Consolidated Net Profit. India business reported 15% increase in sales, with 12.4% underlying volume growth. International Business also staged a comeback in the second half to record 3.4% growth for the full year. In my view FY20-21 was a watershed year for Dabur as it changed the Company into a more agile and responsive organization and strongly accelerated the pace of innovation and growth.

The rapid spread of the COVID-19 pandemic led to a surge in demand for immunity-boosting Ayurvedic Health Care products in India. Ayurveda, with its time tested remedies and benefits, gained prominence in the minds of consumers who were seeking natural remedies to fight against the illness. Dabur leveraged this opportunity by aggressively increasing the awareness and visibility of our products and enhancing their availability on ecommerce platforms as well as kirana stores which were the preferred channels during the lockdowns. We also went a step ahead by providing immunity at the doorstep of our consumers through our Immunity Van program. Penetration of Ayurvedic products like Chyawanprash increased significantly during the year with a growing number of younger consumers adopting this time-tested remedy to build their immunity.

For FY21, our Healthcare vertical reported a strong growth of 31.9%. The year also saw a rapid expansion of Dabur’s Healthcare portfolio with the introduction of a range of new products like Health Juices, Tulsi and Haldi drops, Immunity-boosting Herbal Tea, single herb tablets, herb-induced honey etc.

We will continue to invest strongly behind our healthcare brands, increase distribution footprint, Dabur India limited Annual Report 2020-21 Corporate Overview Board & Management Reports Financial Statements pursue aggressive marketing strategies to gain market shares and increase portfolio and penetration through innovation. We are firm believers that health and well-being will continue to gain prominence in the consumers’ minds, which should drive strong growth of Healthcare vertical in medium to long term.

Innovation is the cornerstone of our strategy. While we already had an innovation pipeline, the consumer need which arose on account of the pandemic drove us to accelerate our efforts and shorten the lead time to launch the products. COVID also acted as a catalyst for bringing together all functions seamlessly and made us into a stronger, more agile, and fearless organization. We have set up an Innovation Cell which is responsible for driving innovation across the verticals and nurturing new ideas for future.

The pandemic also led to a shift in shopping behaviour of consumers with the propensity for online shopping increasing. In the post-COVID world, e-commerce has emerged as the most-preferred contactless method of making purchases, among consumers and this trend is likely to stay. Targeting this emerging trend, Dabur launched a series of new products exclusively for online markets. Some of these products, co-created with online retailers, continue to be exclusively available only in the e-marketplaces while some others have been introduced in Modern Trade outlets as well during the year.

Our contribution from the innovation portfolio for FY21 was around 4-5% and going forward we would like to sustain revenue from new products at a similar pace.

Our Power Brand strategy focusing on the top 8 brands is enabling us to drive robust growth and market share gains inthese brands. Allocation of appropriate resources and investments is helping build these brands to the next level and capture more growth opportunities through portfolio expansion and consumer connect. One of the examples of success of this strategy is Dabur Red Paste which has touched a 1,000 Crore mark in fiscal 20-21. We are also doing innovation under the Power Brands to keep them contemporary and relevant for millennials and Gen Z. We are enhancing our distribution reach which is likely to increase from 1.3 million retail outlets to around 1.5 million in the next two years. Dabur has a significant distribution reach in rural markets with direct coverage of around 60,000 villages. Our objective is to increase this to 80,000 villages over the next 2 years. Project RISE is also yielding good results with sharper execution focus on various regions helped by local consumer insights. All our three verticals of Healthcare, HPC and Foods have significant headroom for growth, and we see lot of opportunities for expansion within these verticals. Our focus will be to gain market share across our portfolio through right investments, great execution and driving consumer centric innovations.

In the last quarter of FY21, we saw inflation emerging in the 5-6% range. This trend of high inflation appears to be continuing into the current fiscal driven by higher crude price and inflation in agri commodities. While we have already taken price increases to the tune of 3%, we will be considering more price increase if required, albeit in a calibrated manner. We are also evaluating other ways to bring in more efficiency and reduce costs in the system, as part of Project Samriddhi. We are hopeful that the second half of the current fiscal will see some moderation in inflation. Our goal remains to drive revenue growth and increase market share across categories while maintaining our operating margins.

As the second wave hit us, our first priority, as always, was to ensure the health and safety of not just our employees but even members of the extended Dabur family. We rolled out a special insurance scheme for our 3,200 frontline workers, who are not on our rolls. We also offered 650 C&FA employees Mediclaim coverage to meet any COVID-related emergencies.

We re-affirmed our commitment to the safety and well-being of our employees with the decision to support the family of any employee who succumbs to COVID, with continued monthly salary for one year. We also implemented several initiatives towards protecting their health and being with them in their hour of need. From procuring Oxygen cylinders, Oxygen concentrators, COVID-relevant Allopathic and Homeopathic medicines to organizing hospitals beds, ICU kits, nursing staff and ambulances, we have been providing all possible support to members of the Dabur family during these tough times.

Moments of extraordinary challenge that we have faced in the past 18 months tested our collective will, and I am proud and inspired by the way our invaluable employees – from the factories to supply chain and the frontline salesforce – have risen to this challenge, across the globe. Their commitment has been critical to maintain business continuity and has helped us report industry leading revenue growth.

ESG is evolving across the world and becoming an important aspect of our sustainable future. Our performance on ESG parameters can be found in the ESG section of this report. Some key points are:

  • 25% Reduction in fresh Raw Water consumption since 2017-18 base year
  • 18% Reduction in Effluent generation since 2017-18 base year
  • 33% Reduction in Hazardous Waste generation from 2017-18 base year
  • 58% SOx Emission reduced from 2017-18 base year
  • Zero use of Ozone Depleting Substances in operations
  • Recycled 27,396 MT of post-consumer plastic waste since base year
  • We expect to become plastic waste neutral in FY22

During the year, we have taken steps to reduce the usage of paper being used for printing invoices for goods, and in our packaging material. During the year, we have reduced consumption of 95 tons of Paper (including paperboard) in addition to tying up with mills to recycle 40 tons of label liner stock. These efforts have helped us save a total of 135 tonnes of paper, equivalent to saving 4,900 trees from being cut.

We have also launched initiatives within the Company and with our brands to reduce use of paper in our operations and packaging. Recently, the Company has started removing outer paper cartons from the packaging of Dabur Red Paste as a pilot project. The innovative carton free packaging has been rolled out in key modern trade outlets. A similar initiative is being launched in rural markets to remove outer paper carton from low unit price (LUP) packs of Dabur Red Paste. The paper saved from the outer cartons will be used to create notebooks for 1,20,000 underserved children in collaboration with CRY.

We are committed to reducing the impact on environment, contributing towards conservation of resources and be a well-governed organization that strives towards the highest standards of ESG.