Patanjali Ayurved, the FMCG venture promoted by yoga guru Baba Ramdev, on Tuesday said that it had clocked a turnover of Rs 5,000 crore during FY16 and aims to double it to Rs 10,000 crore during the current fiscal. The Rs 5,000-crore revenue in FY16, which is a 150% growth from a year earlier, is in line with estimates drawn up by some foreign brokerage firms that analysed the company’s products and business model and the challenges it throws before established FMCG players.
While Patanjali declined to give numbers relating to its profits and margins, it said it will invest over R1,150 crore in the current fiscal to set up six processing units and one R&D centre.
“We will invest R1,000 crore to set up five to six processing units in various parts of the country. Apart from this, we will invest R150 crore in research and development (R&D). We are looking at doubling our turnover to R10,000 crore in the current fiscal,” Ramdev said.
These units will come up in Assam, Madhya Pradesh, Rajasthan, Maharashtra, Haryana and Uttar Pradesh.
The rise of Patanjali in a short time has been captured by analysts. “Indian consumers are returning to their roots and increasingly buying natural products,” Nomura wrote in its report released in February.
Nomura added: “The Indian ayurvedic market, as it is commonly known, has seen a 10.7% CAGR in revenue over 2010-2015 and we expect a 15% CAGR from 2016 to 2020. Several companies in the industry are now attacking this space, eg, HUL (Hindustan Unilever), Emami, through acquisitions, while GCPL (Godrej Consumer Products) and Dabur are introducing new products. However, a major beneficiary of this growth has been Patanjali Ayurved with 60% revenue CAGR (sector average 14%) placing it, as of FY15, ninth in terms of consumer company revenues.”
Nomura has attributed the rise of Patanjali to factors like a loyal client base that the company puts at 10 million middle-class urban consumers; a low-cost advertising strategy that relies on mass appeal, with savings reinvested in the business; simple packaging and ayurvedic positioning that has caught the imagination of consumers; and expanding its distribution network.
In FY12, Patanjali’s revenues stood at Rs 446 crore, which went up to `850 crore in FY13, `1,200 crore in FY14 and Rs 2,006 crore in FY15. Between FY12 and FY16, it has clocked a more than 10-fold growth in revenues.
Patanjali on Tuesday also said that it has laid out its strategy for entering online retail and export to other markers as well. The company is optimistic of its online retail plans with 5,000 search hits online. According to Acharya Balkrishan, Patanjali’s managing director, the company will roll out is e-commerce operation in the next couple of months either through a partnership with existing online retailers or as a pure-play platform. New categories such as Saundarya (beauty segment), Power Vita (a health drink) and whole milk powder are going to be important focus areas that will help Patanjali achieve its target of `10,000 crore turnover during the current fiscal.
It will focus specifically in drought-hit areas such as Vidharbha in Maharashtra and Bundelkhand in Uttar Pradesh to produce amla and aloe vera juice. Currently, Patanjali is procuring produce of 1,000 tonnes of amla, aloe vera, and wheat, and seeks to increase the procurement to 10,000 tonnes, according to Ramdev.
It will also be developing categories such as dairy products, animal fodder and apparel. Patanjali has a network of 4,000 distributors, 10,000 Patanjali stores and 100 mega stores that will sell Patanjali products under four major categories — home care, natural cosmetic and healthcare, natural food, and beverage and health drinks.