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Patanjali Ayurved far from glory days even as revenue and profit rise

While the company's operating revenue grew 6%, net profit jumped 22% in FY2020

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Patanjali Ayurved | Patanjali

Arnab Dutta & PTI 

Patanjali
Patanjali Ayurved rakes in over 80 per cent of the Patanjali Group’s total revenue

Indigenous fast-moving consumer goods (FMCG) major Ayurved has reported 22 per cent growth in its net profit for 2019-20 (FY20).

According to the financial data accessed by business intelligence platform Tofler, the group’s flagship entity reported Rs 423 crore net profit for the year, compared to Rs 349 crore it had posted in 2018-19 (FY19).

Ayurved, that rakes in over 80 per cent of Group’s total revenue, said in its annual filings with the Registrar of that its operating revenue grew 6 per cent to Rs 9,023 crore in FY20.

The firm’s top-line growth remained higher than the previous year. In FY19, the ayurveda major had clocked Rs 8,330 crore turnover - 2.4 per cent higher than Rs 8,136 crore it had posted in 2017-18 (FY18).

Since its sales faltered in 2016-17 (FY17), Patanjali is yet to regain the momentum it used to have earlier.

In 2014-15 and 2015-16 (FY16), its revenue had grown 86 per cent and 100 per cent, respectively.

In recent years, its net profit, too, has suffered. Despite double-digit growth, Patanjali’s net profit fell well short of Rs 1,190 crore it had reported four years ago.

In FY20, its net profit margin stood at 4.67 per cent, compared to 13.3 per cent in FY17 and 16 per cent in FY16.

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Patanjali Group Co-Founder Baba Ramdev told news agency PTI that the last financial year had been challenging for the firm.

“Despite financial challenges, we have worked uninterrupted. We acquired Ruchi Soya,” he said.

In December last year, the group had completed the process of acquiring the defunct FMCG firm Ruchi Soya for Rs 4,350 crore.

Since the introduction of the goods and services tax (GST) hit its operations in 2017, Patanjali has not managed to recover from the low growth cycle.

According to the firm, introduction of GST in mid-2017 severely disrupted its operations for most parts of the year. The initial glitches related to GST and the realignment work required due to its implementation cost the firm two months of its business.

A report by CARE Ratings noted that the decline was “primarily because of its inability to adapt in time to the GST regime and develop infrastructure and supply chain”. As a result its top line declined 10 per cent in FY18.

To counter the falling sales, Patanjali had adopted a multi-pronged approach. The firm, which depended heavily on branded outlets till 2017, began going deeper into the market by adding mom-and-pop stores.

To strengthen its sales and distribution in general trade, Patanjali hired 11,000 field personnel and set a target of doubling that number by 2019.

In spite of single-digit top-line growth in FY20, Ramdev is hopeful that Patanjali will regain its lost glory.

“Even during the lockdown, except some days when movement was not allowed, we did not stall our services. Other took one to two months to handle the situation. We resumed production from the first day since we have our own transportation and distribution lines," he said.

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First Published: Fri, November 13 2020. 19:16 IST
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