How a yoga guru created a 2,500 crore FMCG business | Baba Ramdevs

Patanjali Case Study

When reports came out that Patanjali Ayurved Ltd (PAL), promoted by yoga guru Baba
Ramdev, had recorded gross revenues of 2,500 crore (around $380 million USD) in fiscal
2015, business strategists and journalists went into a tizzy.
How had this new kid on the corporate block outdone its more street-smart business rivals?
The answer holds key lessons for not only business analysts, but also entrepreneurs and
business students who trying to do a SWOT analysis on Patanjali and evaluate its core
competencies.
A quick search of the Internet would tell you that PAL, along with the yoga institution,
Patanjali Yogpeeth, was founded by Ramdev along with his associate, Acharya Balkrishna, an
Ayurveda practitioner, in 2006.
While Ramdev focused on yoga, Balkrishna developed Ayurveda medicines. Gradually, PAL
started manufacturing food items and cosmetics, and today, has its headquarters and
manufacturing unit at the 100-acre Patanjali Food and Herbal Park at Haridwar, Uttarakhand,
employing 6,500 people.
The gross revenue figures for FY15, 2,500, were no flash in the pan. PAL had registered
turnovers of 1,200 crore in FY 14, 850 crore in FY13, and 450 crore in FY12, according to
figures from the Registrar of Companies quoted by websites. The 2015 figure compares with
Emamis 2,217 crore and Jyothy Laboratories 1,481 crore (much older companies,
founded in 1974 and 1983, respectively).
In a report, Credit Lyonnais Securities, a foreign stockbroking company, expressed
amazement over PALs success: Wish you were listed.
But Acharya Balkrishna doesnt delve too much into PALs growth, and says it was achieved
without a business plan: We dont know markets or marketing . . . but what we know is
serving the people by providing them high-quality products at attractive prices.
Ramdev would agree: We havent done this for business but for welfare. I am not doing this
to amass personal wealth. Neither do I own a single share of Patanjali Ayurved nor do I take
a single penny to promote it.
They probably know business plan by some other term, because PAL certainly has a clear
holding pattern, a well-developed supply chain, and a sagacious product-development
process. But yes, true to his words, Ramdev has no stake, and Balkrishna holds 92 percent of
the company, with the rest in the hands of a Scotland-based NRI couple Sarwan and Sunita
Poddar.
PAL has a three-tier distribution system consisting of clinics, wellness centres, and nonmedicine outlets to retail 800 products. The company also runs an ecommerce portal that
sells a wide range of products from hair cleansers to hing peda.
It has distribution agreements with Reliance and the Future Group and a product
development arrangement with the Defence Research Development Organisation (DRDO) for
food and health supplements. PAL even has an HR policy that aims at hiring executives from
rivals.
The magic screen

How did Ramdev and PAL climb such heady heights? The first big break that came Ramdevs
way was probably Sanskar TVs decision in 2002 to broadcast his yoga sessions. Aastha TV
followed the next year.
Ramdevs telegenic appearance and expertise as a trainer made yoga on TV a runaway
success. Soon, millions began to squeeze the programme into their busy morning schedules
in search of better health and fitness.
The mix of spiritualism and traditional Indian therapy proved a resounding success. When
Baba launched PAL, it already had a credible brand ambassador Ramdev himself. The
one lakh free yoga classes conducted by the Yogpeeth convinced people that he was not in it
for the money.
PAL also had a nearly captive marketas many as 20 crore Indians, or one-sixth of the
countrys population were said to have attended yoga sessions conducted by Ramdev and
had faith in their teachers healing power.
PAL also benefited from a huge, readymade advertisement campaignword-of-mouth
publicity at camps by yoga students and trainers.
Once customer trust is earned [through yoga], reaching them [customers] through your
products becomes easier, says Ashita Aggarwal Sharma, professor of marketing at SP Jain
Institute of Management and Research.
Besides, the swadeshi tag and the price advantage (products are reportedly priced 10-40
percent below their rivals) endeared the Patanjali brand name to Ramdevs admirers.
The products themselves have an aura of purity about them for the Indian consumer as they
are claimed to be 100 percent natural. The suggestion of medicinal content also helps
promote them.
Business and more
Ramdev has not confined himself to the business of spirituality, and has made forays into
politics, often declaring that he would launch his own political party.
But because of his political associations and controversial statements, he has remained cobranded with right-wing groups. Nevertheless, his tirades against corruption have won him
supporters from outside his core constituency of yoga enthusiasts, spirituality seekers, and
born-again patriots.
However, the dependence on Ramdevs popularity does pose risks for PALif his image
takes a hit, the companys bottom line will suffer. Ramdev has drawn the ire of liberals for
his statements on mental illness, infertility, and homosexuality.
More seriously for Ramdev, the Uttarakhand government has registered cases related to
alleged land-grabbing, benami transactions, and tax evasions against Ramdev.
There is a perception that Ramdev and Patanjali products lack acceptance among the youth.
Evidently, he takes this problem seriously: PAL has reportedly engaged top advertising
agencies such as Mudra to promote it among the youth, given that 50 percent of the
population is under 25 and 65 percent under 35. It has cooked up products that appeal to
youth, such as instant noodles.

However, the new noodles hit a roadblock within weeks of its launch, when the Food Safety
and Standards Authority of India pointed out that PAL had no licence for the product. Later, a
consumer reportedly complained of bugs in the noodles.
Ramdev is exasperated with all the bad press. The media talks about my controversies but
people talk about my contributions to society. Why are they [media] after me? But he looks
ahead. In an interview, he reportedly declared that PAL would notch up 10,000 crore soon.
Now, for a yogi, this may not be a difficult asana to perform.