Companies

Dabur India ropes in external consultants to help achieve cost optimisation

Meenakshi Verma Ambwani New Delhi | Updated on June 03, 2020 Published on June 03, 2020

A Dabur India product   -  Bloomberg

To ramp up distribution of products in health and hygiene space

Dabur India has roped in external consultants to embark on a cost-optimisation exercise, in a bid to achieve cost-savings of ₹80-100 crore. The move is part of the company’s broader strategy to respond to the new realities in Covid-19 times, which includes enhancing focus on preventive health and hygiene space.

With the gradual lifting of the lockdown, the FMCG major will also ramp-up distribution and production capacity for new products. The company’s management in an earnings call recently said that it intends to sell nearly ₹100 crore worth of sanitisers in the first quarter of this fiscal.

Lalit Malik, Chief Financial Officer, Dabur India, told BusinessLine, that given the fluid nature of the ongoing Covid-crisis, the company will review non-essential and non-critical expenditure, variable expenses as well as all areas of cash generation.

Project Samriddhi

“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. The company did not divulge details about the external consultants.

However, the FMCG company said it will continue to invest in its brands and in new product development, while keeping a sharp focus on preserving liquidity. “We are not just looking at cost reduction but also deferment, wherever possible. We expect to bring in cost savings to the tune of ₹80-100 crore through this project. Some of the savings would be ploughed back into business expansion. We would also be investing in capacity enhancement to meet the growing demand for our preventive healthcare and hygiene products,” Malik said.

In a BSE filing, the company estimated the pandemic impact of about ₹360 crore on revenue from operations in Q4 FY20.

Rural distribution

Dabur India will continue to ramp up its rural distribution network. “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,” Malik added.

In recent times, the company has launched hand sanitisers, air sanitisers and disinfectants. It has also launched immunity boosting products such as Tulsi Drops, Haldi Drops, Giloy-Neem-Tulsi juice, among others.

Published on June 03, 2020
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