FUTURE DABUR Chairmans Speech

Dear Shareholders,


I am pleased to write to you at the completion of fiscal 2016-17.


These are momentous times with many structural changes happening in legislation, economy and business environment. With the onset of GST, India will move towards a unified tax structure, greater compliance and more digitization. GST and other steps being taken to bring unorganized sector into the formal economy, will benefit the organized sector as it will be able to navigate the transition better and re-invent itself more quickly in the new environment.


Following demonetization of high-value currency notes, the FMCG sector faced poor consumer demand and massive destocking in retail and wholesale channels, which are more dependent on cash. Sales improved sequentially in the fourth quarter as currency came back in the system. The Company navigated these challenges and ended the fiscal 2016-17 with Sales at Rs, 7,680 crore and Net Profit at Rs, 1,277 crore. The Company''''s EBIDTA margins expanded to 23.5% as compared to 22.1% in the previous year.


Despite the tough times, our key brands performed well with Dabur Red Paste coming close to the Rs, 500 crore turnover mark and Dabur Anmol Coconut Oil all set to cross the Rs, 100 crore mark. Dabur Red Paste has, in fact, become the third largest toothpaste brand in the country today. The Foods business, which includes juices and culinary products reported strong growth almost touching Rs, 1,000 crore of sales in India.


As the millennial consumers embrace modern trends, habits and lifestyles, they are also increasingly going back to their roots and taking pride in tradition and are today more comfortable with their Indian-ness. This trend, which emerged in the last few years, gained momentum with the growing awareness about the benefits of Ayurveda and Ayurvedic products. To tap these opportunities Dabur strengthened its health care portfolio by introducing several time-tested Ayurvedic remedies in modern day formats to cater to the new generation.


The Company launched Madhurakshak Activ, an advanced product for effective management of Diabetes, developed by Central Council of Research in Ayurvedic Sciences (CCRAS) under the Ministry of AYUSH. Dabur also launched Honitus Hot Sip, an Ayurvedic Kadha (cough and cold remedy) in convenient tea-stick and sachet formats. Our initiatives and products backed by scientific validation have helped us attain leadership in the Ayurvedic healthcare space. Going forward too, the company has several such initiatives lined up to present Ayurveda in a modern, contemporary avatar to further consolidate its position in the market.


As consumers globally take to holistic well-being, we are investing in science and innovation to build new capabilities and engines of growth. The year saw Dabur file two new patent applications in 2016-17 and four of our patents were published bringing us a step closer to these patents being awarded. We also conducted 14 pre-clinical and three clinical studies, further establishing Dabur as the Science-based Ayurveda expert in the country.


As part of our go-to-market strategy, Dabur has revamped the sales structure by splitting the front-end sales force across portfolios and geographies to provide sharper focus on each of the three verticals of Healthcare, Home & Personal Care, and Foods. Our marketing mix was also revamped to better reach out to the millennial audience that spends a lot of time in the digital space. Special campaigns and influencer programmes were crafted for the social media to successfully target this consumer base and create awareness about the time-tested benefits and efficacy of Dabur products.


One of the most notable trends that we are witnessing today is the digital revolution. This is going to have a significant impact on consumer behavior and market structure in future. As more and more consumers access the internet, it is becoming a key channel for gathering information, arriving at purchase decisions and transacting online. Recognizing this as an opportunity, Dabur is pursuing an aggressive e-commerce and digital marketing strategy to promote, market and sell its products online. The Company is strengthening its online presence through partnership with large e-retailers and its own portals. Increasing focus on digital marketing, online campaigns and social media will help us access the millennials who are going to drive strong trends of consumption in the coming times.


At the same time, the rural consumers are not to be ignored as with improving farming technologies, modern irrigation methods and increase in other sources of employment, the rural economy is likely to grow and consumption of consumer products is bound to rise. Dabur has always had a good presence in rural markets and will build further upon its existing infrastructure to tap the opportunities that arise in the hinterland.


In the overseas markets, Dabur continues to focus on its natural range of personal care products that have been tailored to suit local tastes and aspirations across geographies. While Dabur''''s International business faced some pressure during the year in the form of sharp currency devaluation and demand deceleration due to geopolitical headwinds, we are hopeful of a revival riding on the growing global consumer preference for herbal and natural products, our initiatives to launch unique value-added offerings and enhanced distribution reach through new go-to-market platforms such as e-commerce. Investments have also been made in increasing localization of our manufacturing base, particularly in Africa to capture efficiencies and build localized supply chain.


Despite the tough environment, we have not lost sight of our responsibility towards the Environment and the Community. Several initiatives were put in place during the year to substantially reduce our raw water consumption, effluent generation, solid waste and hazardous waste generation, besides cutting down our Greenhouse Gas (GHG) emissions at all our manufacturing units across the country. The Company also undertook welfare programmes to contribute to the communities wherever we do business. Details of these activities are provided in other sections of the Annual Report.


At Dabur, our focus has always been on delivering superior returns and maximizing value for our shareholders. We are excited about what lies ahead and we will continue to tap some of the emerging opportunities to deliver industry-best growth. On this note, let me take this opportunity to thank our management team, our dedicated employees, suppliers, customers, partners and shareholders for their unabated support and faith in the company. Your support, through thick and thin, has been a great source of strength for us. We look forward to your continued support in the coming years.


Sincerely,


Dr. Anand C. Burman


Chairman


.

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