Sales and Distribution

Continioued focus on improving penetration, increasing product availability and re alignment of the
distribution framework were the key highlights of the company’s sales and distribution strategy 2008-
2009. Significant investment to strengthen market presence, through activation program targetd at key
urban channels and rural markets, was a major initiative aims at strengthening the sales and distribution
system, that today covers 25 lakhs retail outlets across the country.

Further the integration of Dabur foods with consumer care division gave the food portfolio access to
platforms of strategic channel activation programs created by CCD, besides providing scale and cost
benefit to enable greator reach and efficiency for food portfolio.

Going forward, the company is revamping it’s sales structure by dividing it’s foods soldiers in to three
focus groups of home and personal care, health care and foods. This division is being effected in 100 key
markets, which have been identified as high growth business market. This restructuring is aimed at
creating focus groups within the company’s sales force and sales personnel with the company’s
stockiest, to enable them to sale products more efficiently an effectively.

Wholesale sale trade plays a crucial role in ensuring that Dabur brands reach the most inaccessible
terrain in a highly cost effective manner during the year, the activation programme for wholesale trade
was extended to 350 towns covering almost 30% of the CCD business during the year, resulting in
increased brand availability across market.

Special market activation initiative, including “Dabur parivaar Programm” was ruled out for the grocery
trade during the year. Under the scheme, the company adopted and nurtured top 10,000 stores across
the country, providing a strong platform for building brand awareness and consumers activations. These
initiatives sought to build long term relation ship with grocery stores bu offering them special discounts
and rewards.

The company has also widened it’s presence in thr rural market which have been resilient to the
slowdown to further build on it’s already strong small town and rural franchise presence. The company
rolled out a special reral focused sales initiative across eight key states – UP, PUNJAB, MP,
CHHATTISGARH, BIHAR, WEST BENGAL, MAHARASHTRA, and GUJRAT – that contributes to
approximately 70% of the rural potential. The rural trade opportunity was also leveraged through
“Dabur Apnaao, Lakshmi Laao ” programmed for the sub stockiest network in thiese focus states.
 OPERATIONS

Dabur’s businesses have a strong back and support in procurement, manufacturing, research and
development and human resourse management, all of which witnessed several key initiayives to boost
the performance during the year.

R&D and Innovation

At Dabur, R&D lies at the heart of everything the company does. From strengthening the companies’s
presence in the herbal niche, to innovating on newer and differentiated herbal and natural products
spanning newer categories, from making a 3000 years old science contemporary to suit the needs and
aspirations of today’s modern and urban consumers through path breaking packaging and product
propositions to scientifically validating the widespread benefits of science for increasing acceptance of
the company’s product, R&D’s role is axiomatic.

In terms of product and packaging innovation, the company successfully developed new variants in
Hajmola, a new range of surface cleaners, new variants in shampoo, a range of natural conditionars and
light hair oils, new packaging for meswak toothpaste, amla hair oil in sachet format, new OTC product
such as Honitus chewable tablets and Antacid.

Upgradations of quality was anathor area and the companies thrust was on measuring an monitoring
quality end-to-end. Several products were repackaged and upgraded to better design and format during
the yar as part of this exercise. These included Odonil Gel, Chywan Junior Pack, Meswak, Gulabari, Light
Hair Oil (Amla Flower Magic and Vatika Enriched Almond Hair Oil).

HUMAN RESOURCE DEARTMENT

People always have been, and shell continue to be central to daburs growth story. Always at the
forefront in terms of employees engagement and HR Initiatives, the company is continually investing in
the development of it’s human resources though a series of employees friendly measures aimed at
talent acquisition, development, motivation and retention.

Dabur’s new rewards programs for employees-“ applause”- six to reward employees in various
categories like the Rising Star (Best New Comer),( Honors Club), (Employee of the year), Trail blazer
(Employee of the year) and Eureka (for the best Idea generation).

Besides, spot awards are also given to recognized employees at any time for demonstration of actions,
which are innovative, safe cost, promoting spirits, institute new initiatives and raise standered of
performance. The rewards presented at the annual Utsav Function, go beyond cash and includes goods
like LCD TV, I PODS, Music system, as well as Black Berry Handset. Employees are also given a citation
and other rewards.
With this system of employee rewards, the company’s game plan is to increase employees engagement
level and create more employee touch point and opportunities to recognize talent, both on a formal and
informal basis.

The company had also rolled out the “astra programme”. Besides a new programme is launched in
march 2010 to address the business complexities arising out of the increasing no of products.

Key HR initiative at Dabur is internal communication. Apart from intranet, each manufacturing facility
and regional office has its own news latter, with a local language component. Also annual scholarships
are given to children of employees under the Dabur Protsahan programme as a part of which 197
children were awarded scholarship.

In it’s overseas offices, the company achieved a significant milestone in the staffing of it’s RAS- al-
KHAIMAH factory, which was designed for two shifts but had to be expanded to include three shifts soon
after the operation started.

The company believes in total transparency and has put in place a no of formal and informal processes
to get employee feedback, along with the system of holding a biannual survey. The company also
practices performance appraisal system for their employees.

A vibrant culture, average employee age of 31 to 32 years, direct recruitment from some of the top B
Schools in the country under the Young Managers Development Program and Conduct of Competency
Development Centres for elevation is some of the other important HR initiatives of the Company.

As of 31st march 2010, the company employs 4222 people in various parts of its business.

Industrial Relations

The company has an excellent track record of industrial relation, which by enlarge remain good during
the year. Though events out side the company’s control impacted industrial relation in the Nepal facility,
this did not affect the performance, with the unique, infect, delivery good growth and output.

Financial Review

The company reported healthy growth and profitability during 2009-10. Table below provides the
Abriged P/L account for the company on a consolidated basis :-
 2009-10 2008-09 Change
Sales 2834.1 2396.3 18.3%
Other Operating 25.6 24.0 6.8%
Income
EBIDTA 517.3 443.3 16.7%
Depreciation 49.2 42.1 16.9%
Interest 23.2 16.8 38.1%
PVP 444.9 384.4 15.7%
PAT (after minority 391.2 332.9 17.5%
interest)

With the strategic and operational initiatives, the company increases consolidated sales by 18.3% to Rs
2834.1 Crore in 20009-2010 from Rs 2396.3 crores in 2008-2009. Company is able to mitigate the impact
of inflation and maintain its EBIDTA margin at 18.3% in 2009-2010 as compared to18.5% in 2008-2009.

2009-2010 2008-2009
EBIDTA / Sales 18.3% 18.5%
PAT / Sales 13.8% 13.9%
ROCE 38.8% 47.6%
RONW 48.4% 55.3%

During the year the company announce the acquisition of 72.15% of fem care pharma limited (FCPL) for
rupees 203.73 Crore n an all-cash deal. This amount has been deposited in an escrow account on which
the beneficial interest is accruing to the transferors. The acquisition process including the open offer for
additional 20% of FCPL’s equity is underway and post the completion of this process, FCPL will become a
subsidiary of Dabur India Limited. Therefore the Dabur India Limited financials for FY2009-2010 do not
include the sales and profitability of FCPL.As the funds have already been deposited in the escrow and
the corresponding returns are not yet accruing to the Company, the ROCE of the Company was
impacted. The ROCE will improve once the acquisition of FCPL gets completed and its profits get
consolidated with Dabur India Limited.

The ROCE was also impacted to some extent by the Retail Venture which has been set up under H&B
Stores Limited, a 100% subsidiary of Dabur India Limited. As the venture is at an initial stage, the
subsidiary incurred a loss of Rs 17.9 Crore during the year. Excluding the impact of Retail, the
profitability and financial ratios of the core FMCG were even better which is presented in Table below

2009-2010 2008-2009
EBIDTA/Sales 18.9% 18.8%
PAT/Sales 14.5% 14.2%
ROCE 42% 47.8%
RONW 50.6% 55.2%
The net working capital of the company was 18.4 days of sales as compared to 6.4 days in 2008-
09.However this increase was on account of surplus cash to the extent of RS100 Crore excluding which
the net working capital was at 5.5 days of sales.

The Company declared a total dividend of 17.5% for the financial year 2009-2010 which translates into a
payout ratio of 45% of consolidated net profit

ENVIRONMENT PROTECTION

A key thrust area at the manufacturing facilities is environment protection, with structured initiatives
undertaken to control carbon emissions. The Company after extensive screening of several agencies, has
tied up with a reputed consultant to study carbon greenhouse gas emissions at three of its sites, namely
Pantnagar, Baddi and Newai.

EFFICIENCY ENHANCEMENT

The Company continued to improve productivity at all its manufacturing locations through various cost
reduction and energy saving initiatives. In Baddi, the Company initiated Total Productivity Management
(TPM) principles through an external consultant, moving towards increased automation and multi-
operator concept.

A number of cost reduction and process improvement projects were undertaken to reduce costs in
manufacturing of a number of products. The Company also implemented alternate fuel technologies for
steam generation at its units at Sahibabad and Katni.

In future, the Company plans to set up new manufacturing facilities at Baddi, Himachal Pradesh to cater
to its future growth requirements I addition to expanding its facilities at other locations.

CAPACITY EXPANSION AND FACILITY UPGRADATION

During the year, the Company scaled up its operation in its Pantnagar facility and expanded sourcing in
both Pantnagar and Baddi. It increased capacity considerably for production of Oral Care,Sahmpoo, Hair
Oils, Creams and Lotions and Health Supplements. The Company is also in the process of expanding its
Glucose facilities at Uttaranchal.

In the fruit juice segment, the Newai (Rajasthan) facility, which was an acquired unit, has witnessed
doubling of volumes through increase in capacity of the sterilizer. Since water in the region was scarce,
the Company went in for extensive conservation and recycling of water and also got sanction from the
state government for drawing more water. De-bottlenecking of some of the manufacturing systems also
contributed in a big way to capacity enhancements at this facility.

MANUFACTURING

Dabur has 14 production facilities in India, out of which two main units are at Baddi (Himachal Pradesh)
and Pantnagar (Uttaranchal) and seven factories which are located at Sahibabad (Uttar Pradesh),
Jammu, Silvassa, Alwar, Katni, Narendrapur and Pithampur. The Foods business is serviced by
manufacturing facilities at Newai (Rajasthan) and Siliguri (West Bengal)