Serving India’s Rural Supermarket RURAL MARKETS HAVE EMERGED AS AN IMPORTANT GROWTH ENGINE IN INDIA’S CONSUMPTION STORY. Housing some 70% of India’s 1.2 billion population, the hinterland can be best termed as a vast ‘supermarket’ that is ushering in a new impetus into India’s overall economic progress. Thrust on rural development and infrastructure; an increased rural investment scenario; farm-loan waivers and growing disposable income in the pockets of Rural Indians - are all key factors in stimulating overall rural consumption. As demand for everyday products gains momentum in the hinterland, rural consumers are climbing up the value chain, with the result that incremental consumption expenditure in rural India is signifi cantly ahead of urban India. In fact, with an increase in income and awareness levels, consumption in rural India is converging with the larger, more affl uent towns. MOREOVER, RURAL CONSUMERS ARE EXHIBITING AN INCREASED PROPENSITY TO SPEND ON HIGH- QUALITY BRANDED PRODUCTS THAT ARE BACKED BY STRONG VALUES, SIGNALING CONTINUED BUOYANCY IN INDIA’S CONSUMPTION STORY. As a leading FMCG player with a wide portfolio of brands, robust distribution network and deep-rooted understanding of consumer behavior, Dabur India is well-positioned to penetrate the immense rural supermarket. WE ARE TAKING A FRESH LOOK AT OUR RURAL MARKETING STRATEGIES; STRENGTHENING OUR DISTRIBUTION REACH; SHARPENING OUR MARKETING TOOLS; AND CHARTING OUT FRESH COMMUNICATION PLANS. We intend to take continuous proactive measures for optimising our portfolio, products and channels. We aim to synchronise this goal with our broader aim of connecting with the rural masses through affordable price points and relevant product offerings. By touching the lives of India’s 800+ million rural consumers, we are activating a powerful growth engine for our company and creating long-term sustainable value for our stakeholders. 01 CONTENTS CONTENTS Corporate Information 3 Performance Indicators 4 Our Master Brands 6 Sustainable Growth through Rural Activation 8 Chairman’s Message 10 Leadership Development@Dabur (LEAD) 12 Awards & Recognitions 13 Performance at a Glance 14 Strategic Business Units 16 10-Year Highlights 18 Management Discussion & Analysis 19 Report on Corporate Governance 40 Directors’ Report 61 Financial Statements 74 Consolidated Financial Statements 102 Business Responsibility Report 127 Notice 137 2 Dabur India Limited 02 CORPORATE INFORMATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 CORPORATE INFORMATION BOARD OF DIRECTORS SR. GM (FINANCE) & CORPORATE OFFICE Dr. Anand Burman COMPANY SECRETARY Dabur India Limited Chairman Mr. A. K. Jain Dabur Tower, Kaushambi, Sahibabad Mr. Amit Burman Ghaziabad – 201 010 (U.P.), India Vice Chairman AUDITORS M/s G. Basu & Co. Tel: 0120 – 39412525, 3982000 Mr. Saket Burman Chartered Accountants Fax: 0120 – 4374935 Director Website: www.dabur.com Email: [email protected] Mr. Mohit Burman INTERNAL AUDITORS Director PriceWaterhouseCoopers Pvt. Ltd. REGISTERED OFFICE Mr. P. D. Narang BANKERS 8/3, Asaf Ali Road, Director Punjab National Bank New Delhi – 110 002, India Tel.: 011 – 23253488 Mr. Sunil Duggal Standard Chartered Bank Director The Hongkong & Shanghai Banking Corporation Ltd. Mr. R. C. Bhargava Director The Royal Bank of Scotland Citibank N.A. Mr. P. N. Vijay HDFC Bank Ltd. Director IDBI Bank Ltd. Dr. S. Narayan Director Mr. Albert Wiseman Paterson Director Mr. Sanjay Kumar Bhattacharyya Director Dr. Ajay Dua Director ANNUAL REPORT 2012-13 3 03 PERFORMANCE INDICATORS PERFORMANCE INDICATORS GOOD GROWTH MOMENTUM WAS WITNESSED ACROSS CATEGORIES AND GEOGRAPHIES WITH THE DOMESTIC FMCG BUSINESS REPORTING STRONG VOLUME-DRIVEN GROWTH. SALES ` 6,146.4 crores UP 16.3% PROJECT DOUBLE RETAIL FOOTPRINT 30,000 + 5.8 million villages outlets 4 Dabur India Limited PERFORMANCE INDICATORS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 NET PROFIT ` 763.4 crores UP 18.3% ROBUST PROFITABLE GROWTH TRANSLATED INTO SUPERIOR SHAREHOLDER RETURNS WITH DABUR’S MARKET CAP TOUCHING AN ALL TIME HIGH. MARKET CAPITALISATION crossed US$ 5 billion mark FIELD RESOURCES TOTAL EMPLOYEE COUNT over 2-FOLD 6,154 increase employees ANNUAL REPORT 2012-13 5 04 OUR MASTER BRANDS OUR MASTER BRANDS MORE THAN 25 NEW PRODUCTS AND VARIANTS WERE INTRODUCED ACROSS CATEGORIES AND GEOGRAPHIES, BASED ON OUR DEEP-ROOTED UNDERSTANDING OF EVER-CHANGING NEEDS AND ASPIRATIONS OF CONSUMERS. 6 Dabur India Limited OUR MASTER BRANDS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ANNUAL REPORT 2012-13 7 SUSTAINABLE GROWTH 05 THROUGH RURAL ACTIVATION SUSTAINABLE GROWTH THROUGH RURAL ACTIVATION RURAL CONSUMERS ACROSS INCOME SEGMENTS ARE EXHIBITING MARKED PROPENSITY TOWARDS SPENDING ON HIGH QUALITY PRODUCTS BACKED BY STRONG BRAND VALUES. Gone are the days when the rural consumer was content brands is the key factor for growth in rural India. Dabur with using mustard oil and plain soap on her hair and skin. rolled out Project Double, an initiative to double its rural Today, she seeks special branded products for her daily skin footprint and increase direct reach to villages of 3,000 plus and healthcare needs. Aided by a steady growth in income, population. This initiative has been rolled out across 10 key the rural consumers today have more disposable income states that account for 72% of India’s rural FMCG potential. in their pockets, which is fuelling demand for branded consumer products. Companies need to move beyond the traditional media options like radio, television and cinema, and enter into While the steady growth in income has surely improved their direct engagement with consumers. With this in mind, affl uence and standards of living, bringing the aspirations Dabur rolled out initiatives like Dabur Amla Asli Amla of rural consumers closer to their urban counterparts, the Star beauty & talent hunt, Dabur Chyawanprash Immune market still behaves differently. Last mile availability of India School Challenge and Dabur Lal Dant Manjan 8 Dabur India Limited SUSTAINABLE GROWTH THROUGH RURAL ACTIVATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 School Dental Health Camps across rural and semi-urban The activities at our stalls at these melas serve twin pockets of India, to not just engage the consumer, but pursposes: also give her an opportunity to touch, feel and experience 1. Educating consumers about key attributes of the the products. brands. 2. Product sampling as there is no substitute for The various haats, nukkad nataks and Kumbh Mela held experiencing the functional benefi t of a product. across the country offer another key window to reach out to the rural consumers. Over 25,000 melas are held every These activations, coupled with our rural distribution year and a majority of them are held during October- enhancement initiative Project Double, have resulted in November or January-April period, which coincides with the demand from the hinterland growing much ahead of Kharif and Rabi harvest season when the purchasing power urban India. of rural population is at the highest. Dabur participates actively in these melas to build awareness for its products and induce trials, thereby effectively capturing the rural consumer mindspace. THANKS TO A SPURT IN MINIMUM SUPPORT PRICES AND PLETHORA OF SCHEMES ANNOUNCED BY THE GOVERNENT, RURAL CONSUMERS TODAY HAVE MORE DISPOSABLE INCOME IN THEIR POCKETS. ANNUAL REPORT 2012-13 9 06 CHAIRMAN’S MESSAGE CHAIRMAN’S MESSAGE WE ARE TAKING PROACTIVE MEASURES IN PORTFOLIO, PRODUCT AND CHANNEL OPTIMISATION TO OVERCOME HURDLES POSED BY A CHALLENGING EXTERNAL ENVIRONMENT. Dear Partners in Growth, section of this Annual Report. I would like to take this opportunity to talk about a major initiative that your It gives me immense pleasure to write to you at the end of Company undertook during the year, a move that helped another successful year at Dabur. beat the recessionary trends and emerge stronger. I am pleased to inform you that your company has closed While a lot has been written about the potential that rural fi scal 2012-13 with a strong 16.3% growth in Net Sales which India offers for consumer products makers, your Company touched Rs 6,146.4 Crore. Net Profi t for the year recorded decided to tap this potential and put in place an initiative 18.4% growth to reach Rs 763.4 Crore. Your company was to drive deeper into the hinterland. During 2012-13 Dabur able to drive strong volume led growth across its markets extended its direct distribution network to villages of 3,000 in India and overseas in spite of economic headwinds and population and also used information technology as the political challenges in many of these geographies. big enabler for this growth strategy. This initiative has been rolled out across 10 states that account for about 70% of Sustained investments behind our brands and distribution the rural FMCG potential in India. enhancement initiatives have been the key growth enablers during the year. More than half of our portfolio was re-staged and renovated with new packaging and communications. Many of our iconic brands such as Dabur DABUR CONTINUES TO Amla Hair Oil and Dabur Chyawanprash assumed a more IDENTIFY SIGNIFICANT GROWTH contemporary look and continue to be market leaders in their respective market segments. Our newer categories OPPORTUNITIES BOTH IN such as fruit juices and home care products witnessed INDIA & ABROAD AND HAS strong momentum and gained share in highly competitive segments. INVESTED IN ESTABLISHING Details of our growth strategies and your Company’s NEW FACILITIES TO MEET THE performance during the 2012-13 fi scal have been BURGEONING DEMAND. elaborated in the Management Discussion & Analysis 10 Dabur India Limited CHAIRMAN’S MESSAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 This initiative has not just helped us report higher growth in promoting awareness of health and hygiene among the for the staple consumer products, but also capture demand communities with whom we work.