Patanjali Ayurveda: The biggest desi FMCG
Patanjali Ayurveda has scripted a success story in a short time though it had its own share of controversies pertaining to quality. Patanjali Ayurveda was instituted by Baba Ramdev and Acharya Balkrishna in the year 2006 and has become the fastest growing FMCG (Fast Moving Consumer Goods) Company in India. In last 5 years it has grown 10 times in terms of revenue. They have over 4000 distributors, more than 10,000 stores and 100 mega- Marts.
Acharya Balakrishna who heads the company is equally well versed in Yoga and Ayurveda and has been an able collaborator in all the projects and ventures launched by Swami Ramdev, ever since their chance meeting in the Gangotri caves.
He is gifted with excellent managerial, administrative and engineering knowledge, heading 34 companies and several trusts associated with Patanjali. Right from the inception of a product to its marketing everything requires his primary approval.
This chief architect of Patanjali products is a simple person, a visionary. Talking to Hans India about the success of the FMCG, Acharya said the initial days were quite difficult for them. They hardly had money to pay for the registration of Divya Pharmacy. For the first three years, till 1998, they distributed the medicines free. From buying the raw materials to grinding and mixing, everything is done by themselves as they could not employ staff because of the lack of money.
Now, according to Balakrishna it has emerged as biggest desi FMCG and people are showing more and more faith in their products for two main reasons. One they don't compromise on quality and second, their price is lowest. That is why none of the allegations made against the quality of their products could be proved.
He said they have the best research and innovation centre with latest technology where every product undergoes rigorous test batch wise. Batch wise quality tests are not conducted by any other competitor, he claimed. In fact, extreme care is taken from the time of sourcing raw material to releasing the final product in the market. Assisting him in his research is a team of 70 physicians from the Department of Medical Science in Yoga & Ayurveda at Patanjali Yogpeeth.
Explaining about the Patanjali's success story, he said they have now tied up with Future Group and Reliance Retail. The company has more than 350 products from soap to Toothpaste and from Oats to Health Drinks.
Though they had planned to enter textile segment and sell jeans as well, this project has been slowed down for the present. The focus is more on expanding the retail network.
The Acharya said they were working on further strengthening the retail chains in North and focus on South where the retail outlets are less. In north the products are available everywhere from local grocery shop to exclusive retail outlets and franchisees. They are also available through online platforms like Amazon and big basket.
According to Acharya, their hard work and the policy of no compromise on quality had helped them create a strong loyal customer base both in rural and urban areas who strongly believe in Ayurveda and Yoga. Added to that they follow the price sensitive strategy hence the prices of Patanjali's products are lower than the key competitor's prices.
Asked how they could keep the prices low, Balakrishna said they don't depend on heavy advertising budget. They focus on bulk procurement, bulk production and mouth to mouth publicity. He said they do not believe in hiring top business managers to push the product in market or use popular celebrities to promote their products through advertisements. The product should speak for itself. Mouth publicity is the best publicity. The interesting part is that many people from major companies like Bisleri and other MNCs were keen to join the company.
"The secret of success is maintaining high quality and reducing production cost and ensuring 100% purity of its products. This certainly is a big challenge, but we have created systems to ensure quality and purity," Acharya Balakrishna added.
Even when some products like rice, home cleaning products etc are outsourced to a third party, quality and purity control is never compromised," he said.
Another factor that had helped in maintaining low cost is to have single brand for most of the products and then associate them with generic names. Patanjali is Image driven brand which is associated with Baba Ramdev and Acharya Balkrishna. That is why it had emerged as the biggest FMCG and has turnover of around Rs 40,000 crore. Acharya said that it is likely to jump two to five times in next five years or so.
When asked if he was so sure about the quality of the products how is it that there was an RTI report five years back which said that Amla juice had failed quality test, Acharya said the real story was that they were supplying Amla juice to CSD and the quality tests for products purchased them are done in their own laboratories. But someone took the juice to a private testing centre which did not have the required facilities or knowledge to test ayurvedic products. But later when it was established that product was of good quality they apologised.
Similarly, there was controversy pertaining to Ghee. The allegation was that it is not Desi Ghee as claimed by the company. It was alleged that it was prepared from milk of Jersey cows? The acharya said that in this issue too all tests proved that the allegations were wrong. Such attempts to undermine the products is always there by competitors including MCNs and some political groups, he added.
Outlining the vision of Patanjali Group, he said the company will provide direct employment opportunities to 5 lakh people in the next five years.
Meanwhile Baba Ramdev who is the main brain behind promoting made in India health products said they propose to launch Initial Public Offerings (IPOs) of four other group companies over the next five years," These four companies are Patanjali Ayurved, Patanjali Lifestyle, Patanjali Wellness and Patanjali Medicine which owns Divya Pharmacy. Patanjali wellness runs chain of OPD and Hospitals in India.
Future plans include having 25,000 beds under Patanjali Wellness. We have around 50 such centres and have plans to take (it to) 100, including IPD and OPD, and gradually expand on a franchise model," Baba Ramdev added.