Will Patanjali beat HUL? How Baba Ramdev’s company rose to become India’s major FMCG challenger

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Updated: January 18, 2018 12:49:46 PM

With Baba Ramdev-led Patanjali Ayurved eyeing to pip HUL’s turnover by the end of next year, the competition for the Haridwar based company just got tougher, after a 4.1% rise in revenue reported by HUL in the latest quarter. We take a look at company's rise in the last five years.

baba ramdev, patanjali ayurved ltd, patanjali to over take unilever, hindustan unilever, unilever revenue, patanjali revenue, patanjali unilever conpetitionHindustan Unilever Ltd.’s revenue climbed 4.1 percent in the third quarter as India’s largest consumer-goods company widened the gap with competition including from yoga guru Baba Ramdev’s Patanjali Ayurved Ltd. (Image: Reuters)

With Baba Ramdev-led Patanjali Ayurved eyeing to pip HUL’s turnover by the end of next year, the competition for the Haridwar based company just got tougher, after a 4.1% rise in revenue reported by HUL in the latest quarter, widening the gap even further. Interestingly, Baba Ramdev-founded Patanjali’s FY17 sales amounted to Rs 10,561 crore, a third that of the listed HUL, which reported sales of Rs 34,487 crore.

While the gap may seem to large, the yoga guru seems to be confident. Interestingly, Patanjali, said it’s partnering with e-commerce companies including Amazon and Flipkart to sell its products online, and expects to double revenue to about Rs 20,000 crore in the year ending 31 March. “We are in talks with big e-commerce players. We have signed Mous with all major e-tailers,” Patanjali Ayurved’s CEO Acharya Balkrishna told ET Now earlier this week.

In the last five years, the company’s turnover has increased exponentially from Rs 453 crore in FY12 to over Rs 10,500 crore in FY17. Most notably, the sales have seen rapid rise over the last two years, from Rs 4,807 crore in FY16 to Rs 9,346 crore in FY17. The company had reported revenue of Rs 9,346 crore from its FMCG business for 2016-17. The rapid rise has helped the company to leave behind older and experienced rivals such as Godrej, which first launched a soap in 1918, and Nestle India, the local unit of the Swiss giant that set up its first India factory in 1961. Total group revenue including sales from Divya Pharmacy, the Ayurveda medicine division, touched Rs 10,561 crore. This is marginally higher than ITC’s revenue at Rs 10,337 crore as at the end of FY17.

“Patanjali will grow at a faster pace this year as compared to last year. Hopeful that Patanjali will beat HUL’s turnover in next 3-4 years,” Acharya Balkrishna, CEO, Patanjali Ayurved told ET Now. In less than a decade Patanjali, is now the country’s second-largest FMCG company after HUL.

As the company goes digital, Baba Ramdev said that Patanjali crossed Rs 10 crore in online sales in December, and is targeting more than Rs 1,000 crore this year itself from ecommerce. “We began a trial of online sales and did the highest online sales by any FMCG (fast-moving consumer goods) brand in a month,” Baba Ramdev said.

The CEO, Acharya Balkrishna told ET Now this week that the company does not have any plans for an IPO now. “We have no plans for an IPO yet, we will continue to sell products at low cost. We have been operating the company as a trust. We have not taken as profits or dividend. The bank loans taken will be used for expansion. We will be resorting to bank loans instead of the stock market tio raise funds.”

Outlining Patanjali’s ambitious plans, Baba Ramdev said at a recent event organized by the All India Management Association, “Patanjali’s revenue will be more than HUL’s (Hindustan Unilever Ltd) in 2018-19. To support this growth, we’ll need to borrow over a period of time,” adding that his dream is to emerge as the “largest packaged goods company in the world by 2020-21.”

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