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Last Updated : Oct 04, 2018 01:42 PM IST | Source: Moneycontrol.com

Yoga, ayurveda and now fashion, Patanjali juggernaut's on a roll

Patanjali, which started a small sized pharmacy in 1997, marked its presence in yoga through yoga sutras with Baba Ramdev being the face of the brand

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Patanjali's juggernaut seems to be on a roll as Baba Ramdev’s firm is all set to enter the apparels market in India after marking its presence in yoga, Ayurveda and fast-moving consumer goods (FMCG) space.

Baba Ramdev’s Patanjali Ayurved, in response to CNBC-TV18 query, confirmed plans to launch its apparel business — Paridhan in December 2018.

The company has issued an invitation for franchisees to open exclusive brand outlets for apparels and fashion accessories. Paridhan stores will also house fashion accessories including bags, belts, and wallets. It is likely to open 3,000 stock keeping units and may scale this up going forward.

Read — With Patanjali set to make pants, will Baba Ramdev stretch the textile sector?

According to reports, prices of these products will be at least 30-40 percent lower than leading brands in those categories.

Patanjali, which started a small-sized pharmacy in 1997, marked its presence in yoga through yoga sutras, with Baba Ramdev being the face of the brand. Ramdev’s already established image of a yoga guru and a firm believer of ayurveda helped Patanjali create a brand perception of health and wellness among the Indian masses.

After excelling in ayurvedic medicines, the company forayed in India's FMCG sector becoming the fastest growing company in this sector which was once dominated by multinational behemoths. Patanjali's entry in this sector sent out waves, whereby, FMCG heavyweights such as HULDabur, and Emami, among others, bore the brunt. These companies reported a fall in their market share and increased spending on advertisements.

Read — EXCLUSIVE: Patanjali’s CEO aims to double sales, rules out IPO to preserve 'free spirit'

The Haridwar-based company soon started manufacturing a range of goods from shampoo to noodles building a well-diversified product portfolio in a short span. Patanjali’s household penetration had increased to 45 percent from 27 percent in 2017.

In a bid to expand the reach of its products, Patanjali recently collaborated with retail chains like Future Group, Reliance Retail, Hyper City and Star Bazaar and e-commerce platforms. The firm is reportedly clocking an online sales of up to Rs 15 crore every month and expect it to grow further every month.

Patanjali has also started dabbling in the digital space with the launch of SIM cards and an instant swadeshi messaging app Kimbho to take on WhatsApp.

Patanjali Ayurved also announced its foray into the dairy segment by launching milk and milk-based products, including curd and cheese, targeting sales worth Rs 1,000 crore from the segment. Besides, it has also ventured into the frozen vegetable segment and introduced products such as sweet corn, pea and potato fingers.

The launch of an apparel sector adds another wing to Patanjali's empire. Its entry may affect some of the large players (since it has set a top-line target of Rs 5,000 crore in the first year itself) and the unorganised textile manufacturers, who are already reeling under GST-induced pressure, would be the worst hit.

The company which is targeting revenues of Rs. 10,000 crore for FY 2016-17 and Rs. 20,000 -25,000 crore in FY 2018 has extensive sales channel of over 5000 distributors, 15,000 stores, and 100 mega-marts.

But the company is also facing some challenges now.

While Patanjali has grown more than ten times in revenue in the last five years, it is reportedly facing a slowdown. The firm's FY18 revenue was flat, after growing its turnover to Rs 10,000 crore in FY17 from Rs 2,000 crore from FY14.

A combination of internal factors which are driven by Patanjali’s own strategies and external factors such as a competitive response seems to cause the slowdown in Patanjali, according to Credit Suisse report.

"The key factors leading to the decline in Patanjali are brand fatigue setting in due to lack of renovation, inability to crack general trade distribution, dilution of the ayurvedic credentials on excessive extension, strong competitive response from large companies with their own ayurvedic offerings, and a sharp drop in advertising spends," the Credit Suisse report said.
First Published on Oct 4, 2018 01:42 pm
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