Exclusive | Baba Ramdev: FMCG companies are copying us

After the launch of Ruchi Soya’s follow-on public offer (FPO), Patanjali Ayurved, the promoter company has big plans for the group now. The company plans to emerge as the largest food and FMCG company in the country with the merging of food businesses under Ruchi Soya. According to the company’s founder yoga guru Baba Ramdev, who is also the face of the company, this will create a formidable player in the FMCG segment and would even outperform the largest FMCG companies in the country.

In an interaction with Moneycontrol, Baba Ramdev also claims that the FMCG companies such as HUL, ITC, Dabur, Colgate-Palmolive have tried to replicate Patanjali Ayurved’s success with natural products but have not gained any ground. He also discusses the path ahead for Ruchi Soya and Patanjali Ayurved, the focus categories, and the reasons for the merger.

Please note the text has been edited and translated for brevity and clarity.

You are often heard talking about making Patanjali Ayurved and Ruchi Soya the top FMCG company in the country? What is the roadmap you have set for this?

For Ruchi Soya, we will be focusing on four portfolios. First is its traditional oil business, which has refined oil, and now we are also introducing natural virgin oil to it in a big way. This will be meant for the premium segment. The refined oil portfolio already targets masses and now with natural virgin oil, we will reach out to the premium segment. And, on top of this, Patanjali Ayurved’s edible oil and cow ghee products will also be merged into Ruchi Soya, making it the number 1 oil and ghee company in the country. So, the traditional business will get a boost from Patanjali’s portfolio. Our ghee brand itself is over a thousand crore brand and we are a leading brand in virgin oil, mustard oil, rice bran oil.

It will be difficult to make Ruchi Soya the top FMCG company in the food and FMCG space just based on its offerings so we decided to transfer the entire food portfolio to Ruchi Soya, which is a big thing. Our food portfolio has very strong brand equity and sells on the basis of brand trust. We house popular products such as chyawanprash, medicated juices, etc. Our food portfolio is about Rs 5,000 crore and in the next two-three years will clock a revenue of Rs 10,000 crore. We are building the segment to target masses as well as premium consumers. We have introduced low unit products for masses. Ruchi Soya also houses our biscuit portfolio already, which has products like milk biscuits and ‘atta’ biscuits.

The third category is nutraceuticals, which are purely premium products. We are selling multivitamins, iron, whey protein in this segment and have shaken the dominance of MNCs in it. With the introduction of natural and organic products in the segment, the chemical, animal-derived, and synthetic products that were being sold, have been replaced. We have made history with the acceptance that we have gained for Nutrela Nutraceuticals just in the nine months of its launch. The fourth pillar is of palm plantation. This has huge potential and will be spread over lakhs of acres of land. It will help in bringing down the country’s dependency on exports for palm oil.

From next year onwards, you will see all these categories contributing a large share to Ruchi Soya’s business. We will see the contribution of nutraceuticals and food grow and the results of palm plantation will show in the next three-five years. Overall we have strong brand equity and we plan to pay off the debt of the company after the FPO in one go and improve our working capital. We have a big portfolio and a strong customer base, I doubt, any other company has it.

But why have you decided to merge the food businesses under Ruchi Soya now?

You have to understand, first of all, it would have been difficult for any other company to launch an FPO amidst the current environment of distress, share market volatility, and the threat of a possible third world war. But we are always up for challenges. People dare when they have a good track record, perform a vision for the future, and are confident.

However, we realised that investors were a bit confused. We were receiving concerns about how the two companies – Ruchi Soya and Patanjali – would be positioned. So to clear these doubts….also the investors will benefit when the food business is transferred. Benefitting investors means our company will grow and hence we decided to merge the food businesses.

How are you merging the distribution of Ruchi Soya and Patanjali Ayurved?

Like how we had done with our biscuit portfolio for which distributors were completely different. We transferred the entire business to Ruchi Soya along with distribution and manufacturing and put a non-compete agreement in place. So all the businesses that we will transfer to Ruchi Soya, we will transfer their manufacturing, distribution too. We anyway have a separate team for food and non-food.

What will be the focus areas for Patanjali Ayurved going ahead?

Patanjali has four portfolios. One is dental care under Dant Kanti, we have a large hair care portfolio under Kesh Kanti and have a good market share in the segment; we also have a strong portfolio of skincare and home care products. Take our aloe vera gel, it is a segment we created and we have about 70-80 percent market share in it. Several companies right from Hindustan Unilever to Emami tried to get into the segment but their products could not gain acceptance in the market. We plan to make it bigger going ahead. Similarly, in home care, our herbal dish wash bar is a category leader.

Patanjali Ayurved’s edible oil and cow ghee products will be merged into Ruchi Soya

Most people in our country think, charity should only be done by saints and corporates should focus on business but when you serve the nation then crores of people trust you.

You had gained market share with the launch of Dant Shakti in the oral care segment. Have you been able to increase your share in it? Also, which are similar emerging segments for Patanjali Ayurved?

Our dental care brand is over a thousand crores and now we have launched Patanjali Sensitive, which again is a market of over Rs 1,000 crore. We think we can gain a market share of 25-50 percent in this segment too. So, we have a huge potential in this segment.

In haircare, Kesh Kanti Advanced has been launched, which is bigger than Indulekha. We should be able to clock Rs 1,000 crores with this brand in the next three-four years. If you evaluate each brand in terms of the capital market, then each brand of ours is worth Rs 50,000 crore. We are focusing hugely on medicine.

Everybody knows these companies are copycats. They have copied us.

- Ramdev

Several other companies are now launching natural products and you are not the only company positioned in the ‘natural segment’ anymore. Colgate-Palmolive, for instance, has also rolled out a toothpaste based on natural ingredients. Similarly, several companies including D2C brands, have launched cow ghee. So don’t you think it will make it challenging for you to gain market share from here on?

Everybody knows these companies are copycats. They have copied us. If you think about it, which is the leading company in the ayurvedic segment, known for its natural products? People of the country know Swami Ramdev and Patanjali Ayurved. Nobody can replicate our brand equity. Nobody can take our share and I am not saying this in arrogance. A brand like Hindustan Unilever spent thousands of crores on Ayush but they did not achieve anything. Similarly, Colgate Vedshakti was launched! The ingredient, they (Colgate-Palmolive) have introduced is of no use when it comes to dental care. They do not know the formulation (of natural products) and people do not trust them.

The consumers do not connect with these companies. And anyway, if the market expands then several brands enter it. In the last two years, during the pandemic, companies introduced ghee; even Dabur entered the segment and launched ghee, mustard oil. ITC launched ghee. They have all tried launching our products, thousands of crores were spent but they did not achieve anything out of it.

Competition should be there in the market as then consumers will realise our value. But people do not trust competition. The brand game is dependent on trust. FMCG companies can rope in brand ambassadors by spending Rs 5-10 crore, they can make good ad films and can launch products through their product distribution but they cannot bring Ramdev. How will they build trust? I have spent 30 years serving this nation. We are not talking in arrogance or ignorance but we are what we are.