DSIJ Interview with ,Lalit Malik,CFO, Dabur India Ltd
CFO, Dabur India Ltd
"Ensuring sustainable and profitable growth is both a challenge and opportunity for CFO"
Mr. Lalit Malik is the CFO at Dabur India Ltd. A Finance professional with over three decades of experience in India and abroad, Lalit oversees the Accounting, Business Support, Financial Planning and Analysis, Mergers & Acquisitions, Internal audit and Tax functions at Dabur globally. He is a strong proponent of good Corporate Governance Practices and believes that transparency is the key ingredient for success of any organisation.
Lalit is part of the core strategic group at Dabur. As Dabur's Joint Chief Risk Officer, he has helped the company successfully navigate the emerging risks and the several structural changes in India's Regulatory Environment.
Lalit has been conferred with several prestigious awards like: Most Influential CFO's of India — from CIMA.
CFO Award for Excellence in Contribution to the World of Finance from — CFO India in 2016 and 2017.
Ranked among the Top 3 Best CFO's by Business World Magazine in the consistent Liquidity Management Category.
As CFO of Dabur, what are your top three strategic priorities?
CFO's responsibility covers the 5 's of the business: Cost Control, Compliance, Consistency, Continuous Improvement and Effective Communication. In a highly volatile environment where strong external headwinds and regulatory changes are the order of the day, a CFO has to be forward thinking to not just manage the emerging challenges but also ensure sustainable growth for his organisation. For me, the top three priorities will be: a. Being a partner in ensuring sustainable, profitable growth for Dabur b. Ensuring complete statutory compliance and corporate governance c. Ensuring control and cost savings
What are the growth drivers for your company? Which product segment are you expecting to show maximum growth?
There are three key pillars to Dabur's growth strategy:
a. New product development
b. Expansion into new geographies
Dabur has been witnessing a highly secular growth across all its key categories, which has been reflected in the performance in Q1 of FY2018-19. Despite an increase in the level of competitive intensity, our brands reported a robust performance during the quarter, growing ahead of the market and delivering strong double-digit growth across all our key categories like health supplements, hair care, oral care, skin care, home care and foods. Our business has performed well on all operating parameters. This strong performance reflects the robustness of our business model and our ability to efficiently manage the emerging challenges. We have put in place a prudent growth strategy and continued to invest heavily behind our brands to successfully tap the emerging opportunities.
The recent years have seen a marked increase in demand for Ayurveda and natural products. This trend has been gaining momentum with the growing awareness about the benefits of Ayurveda and Ayurvedic products. To tap these opportunities, Dabur strengthened its healthcare portfolio by introducing several time-tested Ayurvedic remedies in modern day formats to cater to the new generation. In a market that continues to grow and expand and is seeing increasing consumer awareness and government support, companies like Dabur -- with its traditional herbal positioning and strong R&D -- are likely to benefit disproportionately from this trend.
Can you throw some light on the outlook of your international business amid trade war situation?
The international markets have been witnessing high volatility in recent years due to geopolitical disturbances and currency fluctuations in some of our key geographies. Even in these challenging times, we identified opportunities ahead of competition, which is reflected in the strong constant currency growth that our international business has been reporting.
Your operating margins over the last few quarters have grown. Can you tell us which factors have contributed to margin improvement? Going forward, what kind of operating margin are you looking for?
Our margin improvement has primarily been on account of cost-saving initiatives and synergies. Despite the growing inflationary pressures, our intent is to maintain margins through proactive measures.
Dabur is one of the pioneers in the Ayurvedic segment. How do you plan to leverage this position amid rising awareness for Ayurvedic products?
The recent years have seen a marked increase in demand for Ayurveda and natural products. The consumers today, particularly the youth, are increasingly shifting to natural and Ayurvedic products for both their healthcare and personal care needs. This is also reflected in the sudden increase in the number of players entering this category and the general increase in natural and Ayurvedic products offerings from mainstream players too.
Dabur has been pioneer in the Ayurveda and natural space in India. We are today the leading Ayurveda and natural healthcare company with a portfolio of products that are based on nature and natural ingredients. Dabur has always believed in the benefit of Ayurveda and has been spreading the goodness among our consumers in India with a range of Ayurvedic products. We have been, for the past 134 years, developing and successfully introducing products based on Ayurveda to cater to the ever-changing needs of the consumer. We continue to introduce new products, invest in enhancing our distribution network and effective communication with our consumers to spread awareness about the high quality of our products as also the benefits that they offer. Going forward too, we will continue to introduce a range of products that will be value-added and in the premium category, which will help us improve our market share.
Dabur maintains its edge over competitors with its herbal and Ayurvedic heritage of over a century. We remain true to our heritage and are continuously working to update our portfolio in line with changing consumer demands and aspirations.
Dabur India also has a strong in-house research wing that follows a ‘bush-to-brand' approach. We have our in-house nursery, which grows several rare herbs that go into various products. We have been growing quality rare medicinal herbs that are used in our products. Today, we grow rare herbs in over 5,000 acres of land across India. This in-depth knowledge about nature and natural ingredients is one of our big strengths in the market.
It has been one year since GST implementation. How has GST impacted Dabur?
The introduction of GST is, by far, the most important transformational tax reform introduced in India in recent years. Given the fact that GST has subsumed all other taxes, it not only improved the ease of doing business, but it also ushered in a degree of convenience and numerous benefits for consumers. The subsequent introduction of E-Way Bill further helped the supply chain.
While there were some disruptions in the initial period and a steep learning curve, we were fully geared up for the GST. We had engaged an external consultant and have been working on GST for over a year before its actual roll-out. We had completed all the groundwork regarding amendments in our IT infrastructure much ahead of the actual announcement to ensure a seamless transition. We had also supported our channel partners to help them become GST-ready.
The introduction of GST led to a downward revision in prices of several products across key consumer categories, which helped improve consumer sentiments. In the subsequent months since the roll-out of GST, we have seen consumer confidence improving, which has resulted in higher growth with consumer demand shifting from unorganised players to organised players.
What is the best part of being a CFO of Dabur?
As I mentioned earlier, we are living in a highly volatile environment today, marked by regulatory changes and geopolitical disturbances. Ensuring sustainable and profitable growth in these times of high volatility and complexity is both a challenge and an opportunity for any CFO. Being part of a team taking proactive measures and timely decisions while managing a complex portfolio would be the best part of being a CFO.