Baba Ramdev alights swiftly from a white Mahindra Scorpio at his Gurukul Gaushala farm in Haridwar and strides into a small room, 22 armed security men - he enjoys Z class security - following him. "Noodles are very much Indian," he tells Business Today. "They are integral to the cuisine of many of our North-eastern states. In the rest of India too, eating seviyan, in both sweet and salted forms, is common." Ramdev is the moving spirit and brand ambassador of Patanjali Ayurved Ltd - though he does not own a single share in it - a company which has built its reputation on providing Ayurvedic and authentically Indian products. But its 101st product - launched in the country on November 16 - is noodles, traditionally associated with Southeast Asia. "Our noodles are made of atta," he adds. "Woh to Indian hain. Agar maidey se banaey toh Chinese. (That is Indian. If noodles are made of maida, they're Chinese.)"
Instant noodles are a Rs 5,300 crore market in India, according to Euromonitor, with market leader Maggi from Nestle India enjoying a 63 per cent share. Given the quality problems Maggi has lately been facing, the timing of the noodles foray may be just right for Patanjali, but the move has its share of critics. "It doesn't fit in with the Indian heritage of all the other products Patanjali offers," says brand expert Jessie Paul. "Also, instant noodles, however pure the ingredients, can't be said to be healthy. It is the first step to brand dilution." Ramdev's close associate, Acharya Balkrishna, who owns over 93 per cent of Patanjali Ayurved, however, insists the company has only catered to popular demand. "People started mailing us morphed images of Patanjali Marie biscuit wrappers with 'Maggi' written on them," he says. "The idea came to us only then. I told Swami Ramdev that people have been sending us such photos. He said, 'People want some such product from us. We should consider their demand'."
"Product development at Patanjali works on three basic principles," says Balkrishna. "They are: competitive pricing, purity of raw materials used and innovation." Take Aloe Vera juice, one of Patanjali's earliest offerings. Ramdev, in his yoga classes, had been recommending Aloe Vera juice for its health giving properties, but disciples kept complaining that, at Rs 1,200 a litre, it was way too expensive. "We reached out to farmers and found Aloe Vera leaves were being sold fairly cheap," says Balkrishna. "It's just that the juice manufacturers were reaping huge profits. We sourced the leaves from farmers in Rajasthan and Uttar Pradesh and were able to sell the juice for Rs 150 a litre in 2006. Even today, it costs Rs Rs 200 a litre."
Purity is a given for all products - Patanjali has ventured into categories such as desi ghee precisely because of complaints that most brands in the market were adulterated. Indeed, desi ghee has since become the most popular of Patanjali's products, bringing in Rs 442 crore - or 36.78 per cent of the company's total revenue - in 2014/15. As for innovation, Patanjali has displayed it with products such as amla juice and amla candies. "We found farmers in UP's Saharanpur district cutting down amla trees as there were no buyers for amla," says Balkrishna. "We convinced them not to do so and sell us the amla instead."
Big Is Beautiful
Patanjali claims to have earned revenues of Rs 2,007 in 2014/15, which puts it on par with some of the top players in the fast moving consumer goods (FMCG) sector such as Procter & Gamble (P&G) Health Care with Rs 2,409 crore, Jyothi Laboratories Ltd. with Rs 1,504 crore or Emami Ltd. with Rs 2,220 crore in the same year. This was almost double the revenue of Rs 1,195 crore in 2013/14. Near 100 per cent growth was also witnessed two years earlier - revenue rising from Rs 454 crore in 2011/12 to Rs 849 crore in 2012/13. "In comparison, rival companies such as Dabur and Marico are growing at about 18 to 22 per cent annually, while the overall FMCG market for daily use items has been expanding 15 to 20 per cent for the last 20 years," says Harminder Sahni, Founder and Managing Director of management consulting firm, Wazir Advisors. Not surprisingly, in August this year, global brokerage firm CLSA released a glowing report on Patanjali, titled Wish You Were Listed, estimating it to be bigger than Jyothi Laboratories and Emami. Ramdev and Balkrishna expect Patanjali's revenue to cross Rs 5,000 crore in this financial year, and at the rate it has been going, the figure does not seem fanciful. "Once revenues reach Rs 5,000 crore, its market cap would be around Rs 40,000 crore," says Sahni.
"We do not think about competition," says Balkrishna. But a little probing reveals that while Patanjali is happy to co-exist with indigenous companies, multinational ones are a different matter. "Humara ek simple funda hai: MNCs ko replace karna (We have a simple principle: we want to replace MNCs)," says Ramdev. "We don't want to put anyone down, but we would like to instil swadeshi pride so that Indian money does not go out of the country." He is aware that the competition is gunning for him. "The MNC mindset is such that whenever an Indian does anything, MNCs think we are competing with them," he says. "MNCs are creating special war rooms to combat Patanjali. We are not into any such war rooms. We don't analyse other companies' strategies or conduct market surveys and feasibility studies. It is only when people ask for cheap and healthy options that we try to respond." And as far as possible, he prefers to use indigenous machines at Patanjali's manufacturing units. "If there is no Indian alternative, we have to use whatever is best suited for the job," he adds. Ramdev recalls how his dream of Swadeshi goes back to his early days in the gurukul. "Our clothes slowly turned brownish as we didn't use Rin, but we were hurt that there was no Indian alternative available in the market." Patanjali has launched a premier detergent cake called Supreme.
Lure of National Pride
Every employee at Patanjali dresses in white - white shirt and trousers or white kurta-pyjamas. The aura of spirituality is further reinforced by small details, such as the prasad every Balkrishna visitor gets before departing - a saffron bag containing a couple of Patanjali products, books on Ayurveda, a list of Ayurvedic treatments and Patanjali's products to cure common ailments. Working hours are long, but no one seems to mind. The day Business Today visited, all senior managers were at work in the rooms even close to 11 pm. "If you work late hours in a corporate set up, HR thinks you are inefficient, unable to complete your work in the stipulated time," says C. P. Nagpal, Head of the Food and Juice Operations at Patanjali, who was formerly with Dabur. "Here it is different. Here we all know we are working for a cause."
Though Ramdev has no financial stake in Patanjali, his influence permeates every corner. His portrait - along with Balkrishna's - hangs in every room. Product decisions are taken by Ramdev and Balkrishna together and developed by a core team comprising Ramdev's younger brother Ram Bharat, another close Ramdev associate, Swami Muktanand, and the top management of Patanjali. Decisions about marketing strategy and advertising are usually left to Balkrishna, but here again Ramdev's relentless touring is a vital part of the strategy. He travels more than 200,000 km a year, and precisely for this reason keeps himself aloof from the company's day-to-day functioning. "My top priority is yoga and jan maanas sampark (meeting people)," says Ramdev. "A person touring so much cannot be part of an establishment. That requires one to have management and execution skills, and to be present on the premises most of the time." It is Ramdev's vision that has pushed Patanjali towards acquiring scale. "I believe, whatever we do should be done well," says Balkrishna. "Swamiji believes whatever has to be done, should be done big."
Post healthy instant noodles, many more new products are in the offing. Three more manufacturing units are being set up in Madhya Pradesh, Gujarat and Rajasthan. Nagpal says his team is working on herbal chocolates, rasgulla, idli and dosa mixes and an energy drink called Powervita to rival Bournvita, all of them expected to roll out shortly. But, however large Patanjali gets, it will never fulfil CLSA's hope of being listed on the bourses. "If we have shareholders and directors, they will want to run the company their own way," says Balkrishna. "It might clash with our goal of providing the best products at the cheapest prices."
Will Patanjali be able to achieve the scale it seeks? "It will need to command a large share of the counter at retail outlets," says Debashish Mukherjee, Partner and Co-head, Consumer and Retail Industries (India and Southeast Asia) at consulting firm AT Kearney. "Managing that for products doing well as well for those not doing so well, is something its competitors have mastered. Patanjali will need to do so too. It will also have to adapt products to different regions."
No doubt, Ramdev and Patanjali - and even Divya Pharmacy - have had their share of controversy. Ramdev's political involvement as well as his comments on matters as diverse as homosexuality and Shah Rukh Khan, have drawn flak. Patanjali also has several ongoing tussles with the Income Tax Department and with the Enforcement Directorate. But Balkrishna believes that the biggest crisis has been faced and overcome - that was when senior CPI (M) leader Brinda Karat accused Divya Pharmacy of using human and animal bones in its products. "Humne media aur investigating agencies ko apna unit dikhaya, khul key saare processes dikhaye aur sabkee aashanka door hui (We opened our unit to the media and investigative agencies, showed them our processes and removed their suspicions)," says Balkrishna. "People's trust in us increased rather than being reduced. It brought us a lot of attention and demand for our products shot up."
(Research Inputs by Niti Kiran)
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