DABUR INDIA LIMITED

Name of the Company: DABUR INDIA LIMITED

Founder: Dr. S. K. BURMAN (Ayurveda Physician)

History: Dr.S.K. Burman set up Dabur India Ltd in 1884 at Calcutta to mass produce his Ayurveda formulations; later on in 1896, Dr. Burman set up a manufacturing Plant for mass production of formulations, in the Calcutta Plant. In 1986, Dabur become public limited company and with increasing demand of its products it raised its first public issue. Due to market confidence in the company, shares issued at a high premium was oversubscribed 21 times. By 1995 Dabur India had extended its global business and had partnerships with Osem of Israel for food and Bongrain of France for cheese and other dairy products. Today, the fourth and fifth generation members of the Burman family run the various business.

The Burman’s were among the first business families in India to separate ownership from management when they handed over the management of the company to professionals in 1998.

Business: Ayurveda Pharma products, health care, family products. FMGC, the popular brands in its portfolio include Vatika, Hajmola, Real fruit juices, Chawanprash etc.

Turnover enue – Rs. 76.80 Bn USD 1.1 Bn (2016-17)

Dabur is one of India’s leading FMCG companies with sales of more than $1 billion and a market capture of more than $ 9.5 billion. Building on legacy of quality and experience of approx. 135 –years old Dabur is today the world’s largest Ayurvedic and natural health care company. It is one of the 3rd largest century old family businesses in corporate sector in India.

Reasons behind the success/longevity of the company -

  1. Early recognition of and putting in place of governance system and strict implementation.
  2. Formulation of Family Constitution and Family Councils forums.
  3. Separating ownership from management and professionalizing.
  4. Continuous communication through formal and informal mechanisms.
  5. Strong culture and value system

The group engaged McKinsey and Co. to design their family business governance in 1998. As per McKinsey’s recommendations, Dabur India is perhaps the first Indian company that has separated ownership from management. The family members resigned from management positions and had handed day-to-day operations to professionals. They also reduced the number of family members in the board from 10 to 4. A new non-family CEO Sunil Duggal was appointed in initial period. (Mr. Duggal retired in 2018 and was succeeded by Mr. Mohit Malhotra)

As part of Governance system, the family formed a Family Council. The family council comprises all family members who are above 25 yrs. There are 4 members of the Family council who are part of the Board of Dabur and actively participate in all quarterly board meetings and are involved in major family businesses also. After each board meeting, the Family Council has its own meeting where it reviews the strategy of Dabur and discusses the performance and risk of various independent business ventures periodically run by family members and offer suggestions too. The family council also operates a family fund, used for activities that contribute to the overall well-being of the entire family. Any conflicts within the family are dealt under the aegis of the Family Council. It also provides guidance on issues related to Values to the Business Council. It is also responsible for supervising the training and education of younger family members. It is responsible for managing the entry of family members into the family business or on the Governing Councils. A formal plan for succession and the induction of family members into the business in a governance role was formulated by the Family Council.

Family Business council was also formed to approve business proposal to set up new ventures by various independent business and offers strategic guidance. The Business Council decides on the appointment of Board of Directors and the CEO and Independent non-family members on the Board in a non-executive capacity.

Annual meetings of the Family and Business Councils are held wherein all the issues are discussed threadbare in a free and frank manner in a cordial atmosphere. There are regular and prompt communication as well as progress on the decisions taken in the past.

Inspired by Sonu Bhasin ‘s book ‘The Inheritors’-given the large number of family members and the long history of operating business, it would perhaps have not been surprising if the management decided to take back operating control. It says a great deal about the family’s maturity and cohesion that they have continued to stick to their decision. The ability to detach from the ego and give up control is uncommon and probably an essential ingredient to ensure long term sustainability.