Patanjali has been a remarkable success story in the Indian FMCG market. The company, riding on the traditional Indian system of medicine and healing called Ayurved, is today an over Rs. 10,000-crore topline company. Some of its products like ghee, honey, toothpaste and atta have upset the run of the established Indian and multinational players. The company recently forayed into security services and also plans to get into jeans and other items of clothing. While Baba Ramdev is more than a face for the company, the brain behind it is its founder and Chief Executive Officer Acharya Balkrishna. He talks to Moneycontrol on the company’s plans to double its annual turnover and more.
The company recently forayed into security services and also plans to get into jeans and other items of clothing. While Baba Ramdev is more than a face for the company, the brain behind it is its founder and Chief Executive Officer Acharya Balkrishna. He talks to Moneycontrol on the company’s plans to double its annual turnover and more.
You have crossed Rs. 10,000 crores in annual sales. What is your target by 2020 or 2025?
What we have done is what the society needed, what was necessary for the society. We were taking security services from various agencies for our establishments. We saw that the boys were not trained properly, the training that should be there wasn’t there. Then we took some retired people, prepared them under a company. Then once we started deploying them at our facilities, we started getting requests from others. Our Ayurveda journey also started the same way.
We used to make medicines for our patients. Then people came and asked for medicines for their near and dear ones, their relatives. That is the story behind Patanjali’s birth. It’s god’s grace and people’s trust that has brought us here. Similarly, in future, whatever people’s needs are, based on people’s trust and confidence, we will do everything to fulfil that need and honour that trust. Today, people raise questions but what I definitely want to say is that our aim was social service, it is social services and will remain social service. Whatever work is needed for the society, we will do that.
Foray into security services and then getting into manufacturing of jeans. Don’t you think Patanjali’s brand equity is getting diluted?
We don’t think foraying into security service will dilute our brand equity as it was needed for our own work. As far as making jeans is concerned, our focus area is not just on jeans but on every item of clothing, every item of Indian clothing. Our aim is not to make jeans but to cater to the farmer who grows cotton. The fabric is very cheap but once it gets branded, it becomes expensive. There is a big difference between the actual price of the cloth and the final retail price. Removing that gap is our work. So whatever is good for the society, I believe if we do that in the right manner, the brand will not get diluted.
Every few months, reports emerge that some of your products don’t meet quality standards. Recently, there were reports of your besan, mustard oil and salt not meeting quality standards.
There is a conspiracy, there’s a well-planned strategy to defame an established institution. Let me give you 2-3 examples. Take amla juice. In some unknown laboratory – no agency took the sample, not a government one, none knows who picked up the sample – one laboratory gives a report that the sample does not match FSSAI standards. Amla juice anyway does not come under the ambit of FSSAI guidelines because it is a herbal juice. FSSAI guidelines talk about fruit juice. Now based on that report, somebody sent a letter to CSD (army store) canteen.
They said they would check and they sent us a letter. Then that was deliberately made an issue. We talked to FSSAI, we talked to CSD people. There was nothing.
Now long back, 36 samples belonging to all, and not just Patanjali, were picked up in Uttarakhand. Somebody wrote 36 samples fail. Many wrote 36 percent products fail. Such brouhaha was created. I queried and found out that they had raised objection over two products. One was a seed which is a single compound, single ingredient. We pack it and sell. The seed has a natural coating and it cannot be separated. It has to be powdered.
Sometimes, there are issues with labelling. That should not happen and we will correct that. Small issues are made to sound big. A person thinks the product has failed. There are deliberate plans to stop Patanjali (Patanjali ko roko, Patanjali ko roko).
Just last week, 4-5 cases have been filed against us. Different companies have filed them, some in Mumbai and some in Delhi. They have a problem. We will fight in the court. One thing I want to say is our intent was never bad nor is it now. Who are we working for? If Patanjali grows, who benefits? Is it Acharya Balkrishna or is it Baba Ramdev? Baba Ramdev doesn’t want anything, Acharya Balkrishna doesn’t want anything. Till date, what have we done out of that wealth to benefit us? That’s the important issue. We try to run our lives on a minimum of resources.
We are doing big work in education. In acharyakulam, there is an ayurvedic college, there is a university. In the ayurvedic college, we charge nothing beyond the government fees, nothing in the name of donation. Kids from poor families are being taught at zero fees. Can anybody think that medical education can happen at zero cost? We sent material worth crores of rupees to help people affected by floods in Bihar, Assam and Gujarat. Not just money, people from our institution work day and night to help people. So if you look at all these activities, you will realise that yes, Patanjali’s intent is good. Clerical mistakes should not happen and we will set them right.
Earlier, for a long time, people asked what is the infrastructure Patanjali has. I said the country’s largest food park, the country’s first food processing unit, that is with Patanjali. We have more than 50 lakh square feet of constructed area. If you consider factory setup, I don’t think any company in the world has this kind of a large infrastructure.
Then people thought what is their setup for research? Recently the Prime Minister inaugurated a large laboratory. More than 300 scientists are working with me, working day and night. We are working at a big level, working at a very deep level
We can’t progress based on just one thing, we will have to progress on every aspect. Take procurement, raw materials. There are big problems. People have created hype chanting herbal, herbal. Where is herbal, where will we get herbal from? I don’t want to take the name of any company, there are companies which are just started their shops around herbal. Go and check stocks of raw material. Where is the raw material? Where is the source of raw material? We are working on backward linkages, we are working on a plan for contract farming.
We are working on research for cultivation. Patanjali is working on a large scale at many levels. If Ayurvedic herbs get over, how will the company run? If you are going to mine the herbs, you will also have to grow them. We are focusing on that.
So what are your efforts in that direction?
We have signed a MoU with the Uttarakhand government for cultivation. There is a wasteland. People from border areas are leaving Uttarakhand. There is a border with China, with Nepal. The border with China is a dangerous area, unsafe area. If people live there, in a way civilians working for the military, provide information on who came and who left. Patanjali is associating with gram panchayats to grow herbs in border areas.
In northeast, we are setting up a very big plant in Tezpur. We have finished planning for cultivation on more than 10,000 acres in Arunachal.
How much are you investing this year and what are the sales you are targeting?
We are setting up a lot of units at this point of time. So I think, we would be investing at least Rs. 4000 crores to Rs. 5000 crores this financial year to set up these units, capacity expansion and research and development. Like I said, we are setting up a big plant at Tezpur in Assam, a big plant at Nagpur where work has begun. Work has started on big plants in Indore as well as Noida. We are also expanding at Haridwar. Construction will not happen every year but there are big plans this year. Our target is to double the sales from last year. If not double, we will do somewhere near that.
You talked about a conspiracy. You mentioned Baba Ramdev. Don’t you think your company has benefited from Baba Ramdev’s proximity to the BJP government at the centre?
We have taken no benefit of any form whatsoever from the government nor do we want. We are thankful to the government as we have faith it will not work against us, the government will not intentionally, not in a conspiratorial manner, will never work against us because this is about the country. The government understands our work.
When a system or a government is against somebody but is still not able to act, people’s trust rises. So the distrust of the previous government led to rising in the trust of the people. This government’s approach is not uncooperative and that is more than a support for us. Whatever good we want to do today, the law and the government are with us and that is a strength. We have also not done any work that would have made us seek extra favour nor do we want it. Whatever the government, all we want is there should be no conspiracy.
We want the government to create an enabling environment for the people who want to do good in society. Good work should happen and good work should reach its destination and the government should help achieve that and the current Narendra Modi government is doing work for that. They deserve our thanks and gratitude.
A few years back, CLSA had come out with a report titled ‘Wish you were listed’. Do you have any plans for an IPO?
There is no plan for an IPO. There are products which we sell at a loss also. On some, we keep the minimum margin. Overall, we try to target a margin of around 10 percent. Our expenses are little. That’s the sentiment with which we work. If we go for an IPO, it is natural for an investor to expect returns on his investment. If we don’t meet his expectations and sentiments, we would end up hurting them. And if we meet them, we may face difficulty in having the peace with which we are doing our work, the fun and the free spirit with which are carrying out our work. That’s what we feel and hence there is no plan for an IPO.
You had signed a pact with Amazon for the online sale of your products. Have you thought about extending that pact to other online retailers? What are your plans for online sales?
We have a new plan for online sales, there is a big plan there. Talks with the big online retailers have happened and agreements with most of them have been signed. We will launch a big initiative at a broad national level in time to come.
What are your plans for expansion of Patanjali stores?
We have opened more than 300 Patanjali megastores. We are increasing their presence in cities where such possibilities exist. There is a huge demand. There are many requests to open these stores in places where they don’t exist. Our team is sifting those applications.
There is no dearth of competition. Sri Sri Ravi Shankar has also entered the market. What is your view on that?
We welcome him. It is a happy occasion for the people as they did not have options earlier. It is good for the people that they have options now. We should leave it to them to decide who to give preference to, what to choose.
One finds out about a product on a single use. It is not that anybody who follows Swamiji will necessarily use a Patanjali product. At the same time, a Patanjali consumer may not necessarily follow Swamiji. There are a lot of people who do both. For trust, we need quality, we need a price. We are working on every angle. So whoever comes, our best wishes are with them.