Dabur India appoints external consultants to help cut costs
Dabur India is looking to cut up to Rs.100 crore to navigate the Covid-19 crisis as well as to save for new investments in the future. The fast moving consumer goods (FMCG) giant has brought consultants on board to help with the process, according to The Hindu Business Line.
The media outlet reports that Dabur has refrained from naming the advisors who have come on board, although it has revealed its plans. Costs of between Rs. 80 crore and Rs. 100 crore will be cut, through a cost-optimisation strategy of squeezing non-essential spending and reviewing variable expenditure. The cost-cutting measures have been bundled under the 'Project Samridhi' name.
The company reported an estimated impact of more than Rs. 350 crore from the Covid-19 crisis in the last quarter, although Chief Financial Officer at Dabur India Lalit Malik indicated that the initiative is by no means a reflection of its financial situation, which remains stable.
“We have launched Project Samriddhi in India with an eye on cost optimisation and value enhancement across various levers of the business. This is based on zero-based budgeting.While we have a strong balance sheet with healthy levels of cash reserves, we are exploring all avenues to manage costs in the new-normal scenario to transform Dabur into a more resilient company,” he said.
Dabur also plans to examine areas of cash generation. Consumer demands are shifting under Covid-19-induced conditions, and FMCG brands will have to adapt their offerings to make the most of this scenario. Dabur’s response is to focus more on “preventive healthcare and hygiene products,” according to Malik.
Hand sanitizer is among this new suite of products. According to The Hindu Business Line, Dabur aims to generate Rs. 100 crore from hand sanitizer sales alone in the first quarter of the current financial year. Other new products include air sanitizers, disinfectants, and natural remedies such as herb-based cough drops and lozenges.
The goal is to generate cash and maintain liquidity, to which end Malik reports that the company has also been exploring deferment options where possible.The money saved will tide the firm through the crisis, while also supporting Dabur’s expansion plans.
Expanding the product suite aside, the firm plans to continue its expansion drive into rural areas across the country. “With the lockdown easing now, we plan to restart the expansion of our rural footprint to cover 60,000 villages by the end of 2020-21. We also achieved out target to increasing our direct coverage to 1.2 million outlets in 2019-20. We have now decided to grow this to 1.5 million outlets over the next 2-3 years,” said Malik.
According to recent research by Bain & Company, India’s booming consumer market, with a considerable share of growth coming from rural consumption.
