Merger Moves: Dabur Rationalises Organisational Structure

New Delhi: | Updated: Jun 11 2003, 05:30am hrs
In yet another restructuring drive aimed at reorganising its recently hived-off FMCG business, Dabur India Limited has merged its two major strategic business units (SBUs)the Family Products Division (FPD) and Health Care Division (HCD)into one.

Apart from cutting down layers in the structural hierarchy of the organisation, the move will also see a drastic rationalisation of Daburs stockists and distribution network. While the company refused to comment on the move, a company offical confirmed that the two divsions had been merged into the companys fold and the restructuring of distribution channel was currently on.

Daburs operations were hitherto split into 3 major strategic business units (SBU) Family Products Division (FPD), Healthcare Products Division (HPD) and Ayurvedic Specialities Ltd (ASL)created way back in 1996 with the aim to have better operations and management. Each SBU had multi-tier structure with a seperate SBU head at the top and a seperate sales team and distribution network.

In the new set up, the company will have a flatter structure with a single marketing head, a sales chief and a common sales and distribution team. So, the erstwhile SBU HeadHPD Mr Devendra Garg will now head the companys overall marketing function, while sales will be attended to by former SBU HeadFPD Mr S Raghunandan. It is however not known whether the sales team has been pruned or not.

According to a company offical, the initiative has been taken to reengineer its sales and distribution structure to make it more synergestic, and give it a better scale and reach. The move is designed to give better operating effeciencies to the company, bring business synergy which will in the long run help the company to improve its topline growth, says he.

The downside of the initiative though will be that the company will have to rationalise its stockists network and that may have a short-term negative impact on the distribution channel. Dabur currently has a wide and deep market penetration with 47 C&F agents, more than 5000 distributors and over 1.5 million retail outlets all over India.

For Dabur, the FPD is the largest SBU contributing 45 per cent (Rs 526.61 crore) sales of Dabur products related to hair care, skin care and oral care. It consisits of 3 leading brands - Vatika, Amla Hair Oil and Lal Dant Manjan with Rs 100 crore turnover each.

The HPD ranks second and accounts for 28 per cent (Rs 327.6 crore) in sales. Dabur Chyawanprash is the flagship brand of this division, with a 65 per cent (Rs 127 crore) market share. The Digestives category under HPD is a high-growth segment with 90 per cent share in the herbal digestives market. Dabur Lal Tail is also a market leader in the baby massage oil segment with 35 per cent of total share.

Daburs ASL deals with classical Ayurvedic medicine and has more than 250 products sold through prescriptions as well as over the counter. This range constitutes 7 per cent (Rs 86.25 crore) in Daburs total revenue. Some of the proprietary Ayurvedic medicines developed by Dabur include Nature Care Isabgol; Madhuvaani and Trifgol.

Daburs foods portfoliowhich includes products from Dabur Foods and the FPDfalls under the purview of Dabur Foods, set up in 1996 as a 100 per cent subsidiary. Apart from brands like Real Juices and Hommade cooking pastes, Dabur Honey of the FPD is the largest branded honey with over 40 per cent of the market share.