Patanjali Group at a Glance

and rollout a new product. The Patanjali team says that before rolling out a product they first test it on their employees. “If you make products that you can give your family members or kids, then you can serve it to anyone in the world,” points out Balkrishna. He also says that since they have an Ayurvedic hospital on their premises, developing the right kind of product becomes easier as they have closer access to consumers.

Other companies in the Ayurvedic/natural products space wonder how the company has sourced the raw material to scale up so fast. This is primarily because the ingredients that go into these products are most often difficult to source and are quite expensive. This explains why a bulk of the pure Ayurvedic brands – such as Biotique, Forest Essentials and Kama – play only in the luxury space. “When I make a product using four or five herbs it doesn’t mean that it is Ayurvedic. Patanjali has very few classical Ayurvedic products. That’s the reason they are able to sell them at mass prices,” points out P.R. Krishna Kumar, CMD, Arya Vaidya Pharmacy Coimbatore.

Ayurvedic and natural products also need a lot of research and development, which could take anywhere between one to four years. Ayurvedic brand, Biotique, for instance, has only 200 SKUs since its launch 20 years ago. In comparison, Patanjali already has over 1000 SKUs across categories within a decade of launch. “One can’t run an Ayurveda business at a mass level,” says Vinita Jain, Chairman, Biotique. The bulk of Patanjali's growth has come from the FMCG business. Barring Dant Kanti toothpaste, it’s hero products are ghee and honey, which are not really Ayurvedic. In fact, Patanjali’s Ayurvedic medicine business is now a relatively low key business. It’s just a ` 850 crore business, while the lion’s share comes from its ` 9,000 crore FMCG business.

Challenging Times

The doubts raised by rivals does not faze Balkrishna. He is all set to steer Patanjali to the next level. His target is a revenue of ` 20,000 crore in FY17/18. In fact, Ramdev has recently claimed that it will exceed the revenue of the ` 34,487 crore HUL, around for over a century, by 2019. However, Balkrishna does agree that the going won't be as easy. “The first ` 5,000 crore was organic growth, as we sold to people who knew us. Now we have to work hard. We have to plan our supply-chain, marketing and distribution. We are mapping demand and accordingly planning our production capacity.” The company has recently set up manufacturing facilities in Tezpur, Indore, Nagpur, Noida and Vizainagaram. “We have also set up 30 smaller units for atta and oil,” he says.

A major challenge for the company is ensuring its availability in general trade. With biggies such as HUL (which is present in 7 million retail outlets) sharpening their focus on the natural/Ayurvedic space, it becomes crucial for Patanjali to strengthen its distribution. Today, Patanjali products are mostly available through its 15,000 stores, 200-odd mega stores, modern retail stores such as Big Bazaar and D'Mart and just about a million general trade stores. The plan now is to increase its reach to three million general trade stores. Patanjali has managed to get exclusive retail space in most modern retail stores. The company, says the CEO of a modern retail store, doesn’t pay a penny for the branding given the demand for its products.

“We have appointed 10,000 distributors in order to reach out to every corner of the country. Earlier, we sold only through 50-odd super distributors,” says Balkrishna. The company has even increased its sales force to over 5,000 people, which comprised just about 250-odd people a year ago. “We have started hiring from business schools this year. All this while we needed experienced people, now that we are going to further scale up, we need freshers too,” says the Acharya. The company in the last few years has hired senior talent from HUL, P&G, Kellogg, Godrej, Marico and Emami. The FMCG upstart has also jumped on to the e-commerce bandwagon. It is targeting sales to the tune of ` 1,000 crore by selling Patanjali products on Amazon, Flipkart, Paytm, Netmed, Grofers and Big Basket

However, FMCG veteran A. Mahendran, MD of Global Consumer Products, believes that Patanjali will have to take a serious re-look at its product portfolio. “The company has to select high growth rate and high margin segments and focus on them. Being present across so many categories can backfire in the long run.” Technopak's Singhal agrees. “If you notice, most of the successful consumer product companies across the globe focus on limited categories so that they can make the most out of them,” he says. In fact, among the 1,000-odd SKUs that Patanjali is present in, it is only in toothpaste (`940 crore) that the company has a reasonably high market share of 5 per cent. The other hero product, apart