The rise of Patanjali Ayurved as a serious contender in the Indian fast moving consumer goods (FMCG) sector has shaken the well-rooted FMCG majors. Acharya Balkrishna, the MD and the primary stakeholder of Patanjali, tells Sonal Khetarpal how people's trust is the reason behind their phenomenal success. Edited excerpts
Patanjali has been rolling out a range of products in health care, hair care, dental care and others at breathtaking speed. What is the basis of such fast product innovation?
We essentially focus on what people in rural areas need. That would be things they need in day-to-day life such as soap, edible oil, spices, etc. The idea is to get them access to good quality products at the right price.
The basis of such fast innovation is the people of the country. We have several direct touch points. We are connected to them through our sangathan. Across the country, we run more than one lakh free yoga classes and have network in 600 districts and more than 10 lakh teachers who are in constant touch with us. We also have a hospital, apart from 1,500 chikitsalayas and 5,000 seva kendras. So, we get direct feedback from the whole country. So, whatever is in demand, we analyse it, and make a plan around it. It is because of our quality that even rich people have started seeing value in our products.
Patanjali has also launched some products that aren't really Indian such as jeans and chocolates. What was the premise behind their launch?
Traditions have to change to suit the modern day context. Chocolate is very much a part of today's life. It is something that children will continue to consume. But it also leads to obesity. So, we thought we will add grains and nuts to it so that it becomes healthy and has no side effects. That way we can give both taste and health.
Similarly, we will make loose jeans, for Indian climate. We will use cotton so that farmers benefit. Most farmers who commit suicide are cotton farmers and the reason is use of BT cotton and dependence on MNCs for seeds. If we use organic cotton, we can grow it from their own seeds. This will revive our traditions and improve our health. We want to bring natural and organic back into people's lives.
One of the value propositions of Patanjali is its competitively priced products. What are your profit margins like?
The right price is a direct benefit to consumers. There are also indirect benefits. Big MNCs that are well-established have reduced prices of some of their products and have started giving more offers. They have also brought out new variants of Ayurved products that are competitively priced. This shows the big profit margins they have.
So, people who use Patanjali get benefit from our products, while those don't use our products get the benefit of lower prices.
Swamiji doesn't believe in making profit on everything. Some of our products are sold at par, some even at a loss. One of the products that we sell at a loss is our ayurvedic chai. It is sold at a loss because our karyakartas drink it and it is in high demand in villages. Wheat flour was also being sold for a loss initially, but as volumes increased, we stopped making losses on it. Food items such as flour and pulses are a game of volumes. Profit usually ranges from two per cent to 20 per cent. Highest profit is on items such as soaps and shampoos. On average you can say we make 10 per cent profit on our products.
Are there any specific markets or areas where you are looking to expand?
Our focus is not on any specific location. We are trying to expand wherever we can as we have product shortage and are gradually increasing our capacity by setting up new units. We have expanded capacity at our facility in Haridwar and are also putting up new facilities in Nagpur, MP, Noida and Assam. In Nepal, our unit will start soon. So, the focus right now is on setting up more units, launching new products and expanding the market.
We look at three things before deciding the location of the unit. One, where we can help farmers the most. When we heard about problems in Vidarbha in Maharashtra, we went there. I myself travelled there, roamed around in the farms and jungles there. We thought we should build a unit there so that we could buy the produce from farmers and process it there. Second is availability of raw material. So, in MP, we will focus on wheat because it is present in abundance. For mustard oil and aloe vera it will be Rajasthan.
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