Owners' decision to let employees run Dabur has transformed the company's fortunes
Shamni Pande June 23, 2011Tension suddenly crept in during a quarterly review meeting at Dabur in January 2009. A young manager walked up to the Chairman, Anand Burman, with a tray of new mint-flavoured Hajmola candies that would soon be launched. Burman popped one into his mouth, but spat it out within seconds. "It is awful. No one can eat this stuff," he said.
Complete silence followed. Plans for the launch were ready. What would happen now? Only CEO Sunil Duggal remained unfazed. "What do the research results show," he asked the manager who had brought the candies. The feedback had been positive, he was told. "We are launching it next month," Duggal announced. True to his word, Hajmola Mint was launched within a month, It went on to record Rs 8 crore in revenue within the first year.
Not a well-known story, but it is heard every time employees are asked why they stay with Dabur. "The cornerstone of our growth is the empowerment of employees," says Duggal. "We are allowed to take risks, innovate and sometimes even fail." Duggal himself, an alumnus of the Birla Institute of Technology and Science, Pilani, and IIM, Calcutta, has been with the company for close to 16 years.
PDN, who has a string of accounting degrees, chose Dabur over Ranbaxy. He already had a practice as a tax consultant in Chandigarh. Dabur was then just a Rs 40-crore company with profits under Rs 1 crore. There were barely four professionals working there. It was a calculated risk for PDN. "I liked their (Burmans') attitude.
They were involved and were open to views and innovation. I sensed an opportunity for growth," says Narang, who is today Group Director, Corporate Affairs, and the vital link between the professional management of the company and the owner family.
Since he joined, Dabur has grown into a 5,500-employee company, clocking revenues of over Rs 4,000 crore, a net profit of Rs 568 crore. It has five master brands and over 300 products including chawanprash, hair oils, toothpaste to bleaching creams.
So what makes it stand out in the ruthlessly competitive world of fast moving consumer goods? Dabur was set up in 1884 by Dr S.K. Burman, a physician by profession. It had just a handful of employees and Ayuvedic medicines in its portfolio. Till the 1990s, the company could not make the most of its potential. It was then that it hired consulting firm McKinsey for advice. McKinsey suggested Dabur do away with the family's involvement in the day-to-day functioning of the company. What followed was unheard of at the time and has since become part of Indian corporate history. "It was tough. For a barely Rs 40-crore company to cough up Rs 10 crore to pay a consultant to tell me that I must quit," says Ashok C. Burman, the 82-year-old patriarch, laughing.
ACB, as he is fondly called, still keenly listens to old-timers who call him regularly to give him office-related news. "It was hard to decide that none of my children or brothers would be allowed into the company," he says. The Burmans, as majority stakeholders, do have a say in the vision and direction of the company, but they do not interfere in day-to-day matters and do not draw salaries either.
In the first year of its assimilation in 2001, Dabur made its first foray in West Asia with a different set of products and set up a manufacturing base in the region. Many others have done the same since then. Similarly, the family supported the company's decision to buy the lossmaking Balsara in 2005. "The owners are open to bankrolling big bets and even risky ones where we feel there are opportunities," says Duggal, who had led the buyout that gave Dabur girth in the oral-care segment with brands such as Babool and Meswak. "We believe in nurturing talent.
There may be little buzz about the moves we make, but few know we are a poaching ground for the industry, like Unilever," says A. Sudhakar, Executive Director, HR, Dabur, who joined the group a decade ago. "The point is we do not believe in pushing what we like, but what our consumers like. Who cares about what my taste and belief is," says Anand Burman.