Vol. 3 :: No. 2 January, 2001 (poush-Magh)

Corporate

Dabur Nepal Geographical Expansion

A case example of how a corporate business unit is expanding itself across Nepal and changing the economy wherever it is present.

From Mustang to Bara and Jumla to Dolakha. Dabur Nepal has spread its presence very wide across Nepal. And the expansion is gaining momentum. But, unlike in case of other business units that measure expansion in terms of sales volume in the particular location, Dabur measures it in terms of the quantity of raw material the location is to provide.

The situation is such that people in very remote villages have started feeling proud to be associated with Dabur as supplier of raw material. The changes that Dabur has brought about in rural Nepal where it is present can be illustrated by two examples : A wild plant, the leaves of which were used as fodder for animals became a cash item to the farmers of high hills. In lower elevations, the fields with mustard plants can earn additional money as rental for ‘grazing’ honey bees on mustard flowers.

So much so that Dabur’s activities are attracting research scholars from domestic and foreign universities. One such study submitted by Susan Howard to University of Hawaii at Manoa in November 1999, records cases of Khawa in Dolakha district and Sandhu in Lamjung district where the villagers are highly enthusiastic in their association with Dabur.

Both the villages are situated at altitudes in excess of 7500 feet. In both of them Dabur had initially begun a scheme for collection of taxus baccata leaves, and now has begun a cultivation scheme. Howard’s study reports that the participants of the collection scheme have improved their living standard and want to participate in the cultivation scheme as well. Most importantly, the other villagers also want to join in, looking at how their neighbours have fared with the Dabur association.

When this subsidiary of Dabur India Ltd. commenced operation here in 1992, the practice it followed was to get the raw material collected through some contractors who in turn would contract local villagers for the job. The result was that many of the medicinal plants brought to the company were from the forests. As this posed the risk of some rare herb species becoming extinct, the company decided for an alternate strategy – to get the plants cultivated. Despite being a transnational, Dabur had no alternative. For genuine Ayurvedic products, majority of the inputs must come from nowhere else, but the foot hills of the Himalayas.

Movenent of Dabur's medicinal plants: (From the top down) In the Banepa greenhouse, on board the ariplane, on mule back and finally at the farm.

Now having set a modern greenhouse and support facilities at Banepa with a capacity to produce 3-4 million saplings per annum, Dabur Nepal has started cultivation of medicinal plants at various locations of 11 districts in the country. The greenhouse has 20 species of medicinal plants of which eight are said to be on the list of endangered species.

The farmers have been enthusiastic about the project, say Dabur executives but complain of lack of support from the government and NGOs. The support is expected in financing one part of the project– i.e. providing the saplings to the farmers, who are convinced of the economic benefits in participating in the project, but lack the finance to procure the saplings. "In many instances, we are getting their help (NGO and government). But they have not been supporting us fully", says T.K. Gupta, Director and CEO of the company.

Giving example of medicinal plants inside apple farms in Marpha (Mustang district), Gupta informs that the farmers received better apple harvest, because the weeding, fertilizing and irrigation done for the medicinal plants also helped the apple.

The solution to the problem of initial financing for procuring saplings perhaps lies in providing micro-finance to the farmers, and that needs NGO support. But, while NGOs are providing help in many fields, Gupta says, the Dabur’s overtures are not receiving the expected response. "We are in dialogue with a number of NGOs, but nothing concrete has materialised as yet, except with AEC and CECI", he clarifies. Agro-Enterprise Centre (AEC) is a unit under FNCCI and CECI is an INGO from Canada working in Nepal.

Interpreting the reluctance of NGOs, Gupta suspects that they are not forthcoming because Dabur is a private sector organisation working for a profit. But as the benefits of the plantation project are to be shared with the farmers, there is no reason why the NGOs should shun cooperation with a corporate, wonders Gupta. While micro-financing and NGO activities are encouraging farmers also to such activities that suffer from marketing problems, Dabur is offering a buy-back guarantee. Whatever is produced from the plants provided under the scheme, Dabur is committed to buy that all.

Despite the constraints, Dabur has so far helped to farm annual medicinal plants in some 50 hectare of land at various locations. This is in addition to one million medicinal plants of other species cultivated (see box).

But Dabur’s activities are not limited to medicinal plants cultivation, collection and processing. "We have already invested Rs. 84 crores and are to expand further by investing Rs. 10 crore more", he says. The expansions envisaged are in increasing fruit juice packing capacity, with the additional capacity expected to be commissioned by February. Then is the plan to add facility for additional stages of extraction from taxus baccata leaves. That is to go on stream by April. "We are gradually going to have all the stages done here", says Gupta.

At present the resin is processed by Dabur only up to three stages. Taxus baccata (common name Pacific Yew Tree, Loth Sallo in Nepali) extraction is used in preparing medicine for some forms of breast cancer. And it is high in the list of plants cultivated in high altitudes of Nepal under Dabur’s scheme.

Another area of expansion is the apiary line. Dabur has been rearing queen bees, using such modern techniques as artificial insemination, at its apiculture research centre at Jugedi, Chitwan. It has also developed a "lightweight and economical" apiary box which is being replicated for export to countries like USA, Australia and Europe. "We’ve already started multiplication of the apiary boxes", says Gupta. Of them 2000 will be with Dabur for demonstration to farmers who will replicate them. Right now, Dabur has been providing queen, bees and boxes as a package to the farmers, again with buy-back guarantee for the product – honey, wax, propalis, pollen and royal jelly.

"Location wise, we’ve taken western Nepal", says Gupta. And for apiary, Dabur has received support from the government. For instance, the company has entered into agreement with the Department of Forest to use some of the forest area.

By Business Age Reporter

Dabur Nepal's Operational Highlights

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