Ramdev’s Patanjali back on track after a rough patch
The great disrupter of Indian consumer goods market, Yoga guru Baba Ramdev's Patanjali Ayurved is likely on the road to recovery after a two-year bad patch.
- Republic Business
- 4 min read
The great disrupter of Indian consumer goods market, Yoga guru Baba Ramdev's Patanjali Ayurved is likely on the road to recovery after a two-year bad patch. The revenue for Patanjali was Rs 3,562 crore ($535 million) between April and September 2019-20, and its highest ever in the first half of any financial year, say reports.
Highlighting the turnaround the company's spokesperson S K Tijarawala said “This is the figure for Patanjali Ayurved and does not indicate figures for all the business. The firm has achieved the highest ever H1 figure in its history.”
On the outlook for the second half of 2019-20, Tijarawala said: "It would be almost double of what we have in H1." During the last fiscal, he said the company achieved a revenue of ₹2,388 crores in the third quarter and ₹3,698 crores in the last quarter.
Patanjali has consolidated and strengthened the supply chain, he said, adding that the group has come out from the negative impact of GST and demonetisation. "It took us some time to align with the GST system," he added.
Patanjali's bid on Ruchi Soya
Earlier on December 18, Patanjali made its first big acquisition when it paid ₹4,350 crores to take over soya food brand Nutrela-maker Ruchi Soya through an insolvency process. The acquisition will help Patanjali acquire edible oil plants as also soyabean oil brands such as Mahakosh and Ruchi Gold. Sources said Patanjali settled ₹4,350 crores of dues Ruchi Soya had towards financial creditors by infusing ₹1,100 crore equity and arranging another ₹3,250 crores via debt.
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Journey of Patanjali
Patanjali started its journey by debuting in 2009 and disrupted the FMCG industry with its ardent Ayurveda and swadeshi (homegrown) pitch. They flooded the market with toothpaste, hair oils, ghee (clarified butter), biscuits, flour, pulses, and more. Cashing in on Ramdev’s popularity, Patanjali hit the Rs100 billion revenue mark by 2017, becoming the first-ever FMCG brand to reach this figure within a decade of its launch. But after the company, which had seen a revenue jump of over Rs 10,000 crore between 2011 and 2017 on the back of an array of products suddenly seemed to have much less visibility. The reason for it could be that they could not sustain its success, tripped by reckless expansion and diversification, quality issues, and resurgent rivals.
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The FMCG upstart had literally shaken stalwarts such as HUL, Dabur and ITC with its disruptive products. Its Dantkanti toothpaste forced the likes of Colgate and HUL to innovate and spruce up their natural offerings. Next, it failed to manage its distribution system effectively following the rollout of goods and services tax in 2017. It affected the “costing and pricing of inputs and products,” the company said.
Patanjali Ayurved’s struggles reflected in numbers. In the financial year 2018, far from doubling its revenue as it had envisaged, the company struggled to hit the previous revenue mark of Rs 10,000 crore—it closed the year with Rs 8,100 crore.
Patanjali Ayurved reported 2.38 per cent growth in revenue at Rs 8,330 crore in the financial year 2018-19. While there surely is a marginal recovery after a steep fall in revenue from Rs 10,561 crore in 2016-17 to Rs 8,135 crore in 2017-2018, the company is still miles away from its erstwhile fairy-tale growth story.
According to reports, the firm continues to consolidate its operations and streamline its distribution network. They have been focusing on growing its existing big brands rather than announcing multiple launches. This single-minded focus has helped the company make gains by having better control over product quality, say experts. It has also been working on its distribution network.