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Patanjali and the tycoon in saffron

Is Patanjali Ayurved an FMCG giant in the making? The authors find out

Manavi Kapur & Viveat Susan Pinto 

Tycoon in saffron

Some six months ago, Kishore Biyani, India's own Sam Walton, got a phone call from Baba Ramdev, yoga teacher to the masses and co-founder of Patanjali Ayurved. What they talked about can be gauged from the fact that Biyani made two trips to the Patanjali food park near Haridwar in Uttarakhand in the weeks that followed.

The astute Marwari was "bowled over by what he saw": neat and modern production lines packaging a wide range of FMCGs. He tasted some of the foodstuff produced there and instantly liked it.

The affair culminated in a deal earlier this month under which Biyani will retail Patanjali's 500 or so products: biscuits, juices, honey, supplements, toiletries and instant noodles.

At the moment, these are sold through Patanjali's stores and some multi-brand grocery stores; now they will be available in Biyani's Big Bazaar and Food Bazaar supermarket chains.

This could be a force multiplier for Patanjali: from Rs 2,020 crore in 2014-15, it hopes to log a turnover of Rs 5,000 crore this year. And it's hugely profitable: it made a profit of Rs 316 crore in 2014-15.

Based on its strong financials, brokerage CLSA said in a recent report, quite simply: "Wish you were listed."

There is a significant sub-text to the Ramdev-Biyani deal. In the past, Biyani has had run-ins with FMCG companies over margins; now, with Patanjali in his corner, he can battle them with renewed gusto.

Large FMCG companies, more notably multinationals, are worried at Patanjali's rise. Privately, they fear that with a friendly regime at the Centre, it could infringe upon their intellectual property. Also, the Bharatiya Janata Party-led government could help it make inroads into the large institutional markets like the armed forces' canteen stores.

Ramdev, of course, is no friend of the multinationals - never was. "We want to create a situation in which multinationals are unable to sell anything in India despite their best efforts to do so. We are hoping to give them a headache," he said at the conference to announce the deal with Biyani. "Indians should consume Indian products. Why should we allow multinationals to profit at our expense?"

It was Biyani's swadeshi roots, Ramdev added, that led him to tie up with the man often called India's retail king.

The partnership between the ascetic and the businessman could grow in the future. The two, Biyani says, could come together to develop products. Biyani could also set up factories at Patanjali's food park. If industry sources are to be believed, Biyani could help Patanjali put up factories outside Haridwar, at his food parks.

Despite not being a stakeholder in Patanjali, Ramdev, it is learnt, is available whenever the company needs him - for marketing its products, featuring in ad campaigns, or even negotiating deals. His style is personal, conversational.

Acharya Balkrishna
Healer to the rich and famous, Ramdev is in much demand and was unavailable for this report. But his second-in-command, Acharya Balkrishna, agrees to talk at his office in Patanjali Yogpeeth, which is located short of Haridwar.

Patanjali Yogpeeth appears from behind a massive gateway. The exteriors of the buildings are in soothing pastel tones, with abundant greenery and bougainvillea flowers adding just the right amount of brightness. There is not a spot of garbage in sight and security guards all over make sure it stays that way. It houses a hospital, pharmacy and the several Patanjali trusts.

Seated in an air-conditioned waiting room with a wooden floor and spotless pink walls, two men animatedly talk about the merits of doctors using tablets to upload patient files and radiology reports and write prescriptions. Another man shows them a demonstration of the new software on his MacBook Pro.

There is nothing otherworldly or pristine Hindu out here.

Balkrishna's office resembles that of a cabinet minister, complete with a towel on the chair and resounding silence. The desk, in line with his stature at Patanjali, has piles of folders, presumably with papers for him to sign. Behind him, a large metallic artwork of Ramdev forms a halo of sorts. The wall facing his desk has a large book cabinet, which also houses trophies and mementos that Balkrishna has collected over the years.

While Balkrishna says he is the managing director of Patanjali, its website says that he is the chairman. That aside, Balkrishna, along with Ram Bharat, Ramdev's brother, manages the affairs of the FMCG enterprise.

Balkrishna says Patanjali makes high-quality products at affordable rates, which are good enough to sell without much advertising support. "No one will ever tell you to use the soap they're using. But that changes when they start using Patanjali products. Our biggest strength is our products," he says.

Balkrishna recalls how Patanjali diversified from yoga and ayurveda into juices, when amla farmers spoke to Ramdev and told him about how they found no market for their produce. "Swamiji [Ramdev] then said that we could make amla juice, a form in which amla was never traditionally consumed," says Balkrishna.

He lets it slip that Ramdev believed he could make the product popular through his yoga classes, especially when his followers trusted his word.

The story of how Patanjali strode into the instant noodles business is much like a fable, too. According to Balkrishna, Patanjali was never thinking about noodles, not even when the Maggi controversy broke out. "It was a rumour that went viral on the social media that got us thinking," he explains.

While the details of the launch are still being ironed out, Balkrishna remembers the time when the noodles were first developed. "Our research team made several iterations to the products. Swamiji, who had never tasted noodles in his life, had noodles for several days."

Multinationals doubt Balkrishna's claims of quality and detractors scoff at it. Some years back, communist leader Brinda Karat alleged that Patanjali's medicine had bone powder. Tests carried out in laboratories found the claim unfounded. Patanjali products only grew in popularity thereafter.

Some experts concede that Patanjali has created reasonable brand equity, which would have been impossible with loose quality controls. Patanjali broke into TRA's annual Brand Trust Report for the first time this year, featuring among the seven most trusted ayurveda brands in the country.

TRA Chief Executive N Chandramouli says this is partly because of Ramdev's own celebrity status in business and political circuits.

"Ramdev was also the only spiritual leader to figure in our top 21 personalities list, at number 16 this year. This is the first time in the four years since we launched the report that a spiritual leader has featured on our personality list, otherwise dominated by Bollywood and cricket players," says Chandramouli.

Explaining the 15 per cent profit margin, Balkrishna says it's because Patanjali's administrative cost is only up to 2.5 per cent of revenue, as against 10 to 15 per cent in large companies. "Our top management does not take any money and this helps us scale up our operations while keeping costs low," he says.

Balkrishna seems to lose some of his enthusiasm when asked if other members of the company's leadership team will be available for comment. He reluctantly dials a number on his golden iPhone 6Plus to fix an appointment with Deepak Singhal, the chief strategy officer.

Patanjali Ayurved
Spread across 150 acres, the food park, located 25 km from where Balkrishna sits, houses most of the factories that make Patanjali's FMCGs. Those who work here claim it is the world's largest food park.

Patanjali and the tycoon in saffron
Inside his simple office within the administrative block, Singhal appears to be the suave face of the company. Dressed in white kurta-pajama, he switches between English and Hindi with ease.

A graduate from Kurukshetra University and with over 10 years of professional experience, the 36-year-old joined Patanjali almost two years ago after a two-hour meeting with Ramdev.

A meeting of minds and agreeing on core principles is essential before any key employee is hired.

The current structure of the organisation has Balkrishna at the helm, Swami Muktanand and Bharat as board representatives, a vertical head each for food, toiletries and ayurveda, followed by vice-presidents for different functions such as exports, marketing and R&D.

This amounts to about 200 employees in the general manager and above bracket. As a whole, the company has a staff strength of about 10,000, including contractual workers.

Largely, employees are hired through job portals and references. "We are strategising to visit some top campuses this year for hiring. But we can't deny that there is a certain geographical challenge," says Singhal.

Product plans are based on identifying products in the market "that Patanjali can produce at a lower cost," says Singhal. A research facility, with over 50 scientists, focuses on finding such products. Are these healthier? Maybe, though the food park includes a candy plant that uses 1.5 truckloads of sugar every day.

Singhal arranges for a tour of the food park with Krishna Kumar Mishra, Patanjali's public relations head. Before entering the juice-packaging unit, Mishra wears shoe covers and a disposable cap over his head.

Inside, the fragrance of concentrated amla is overpowering - nearly 6,000 litres of juice is produced here every hour.

For such large output, the food park has a warehouse that spans 100,000 square feet and can store up to 11,500 tonnes of goods. This is also a zero-waste plant, Mishra explains, since a dedicated bio-research institute at Patanjali works towards how organic waste can be used as fuel, fertiliser and fodder for cattle.

The unit is no less surgical in terms of its metallic surroundings and cleanliness. While most of the senior staff, such as the plant heads and Mishra, is dressed in all-white shirt and trousers, the factory workers wear an apron over their clothes. The production lines are automated and comparable to the best in the country.

Our next stop is the massive chyawanprash unit, which also houses a coconut oil bottling plant. Patanjali sources this oil from plantations in south India and sells it under its label.

Women clean the oncoming stream of plastic bottles with a cloth and place labels on them before they are automatically sealed off. Many workers and the plant head, Guddu Singh, come forward to greet Mishra. Keeping true to tradition, greetings begin with Om and end in Pranam.

What is also common in most offices and plant units are photographs of Ramdev and Balkrishna, in a strange amalgamation of tradition and modernity.

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First Published: Sat, October 31 2015. 00:30 IST