The monk who wants a billion-dollar company

Pale green gooseberries dangling on bushes greet our eyes as we drive into Baba Ramdev’s Gurukul Gaushala near Haridwar. It is a sprawling cow shelter with 400 cows. 

Close by is the bustling Patanjali YogPeeth, from where the Group's FMCG operations are masterminded. Here, the first thing you are served is an assortment of amla (Indian gooseberry) candies.  And 35 km away at the 100-acre Patanjali Food and Herbal Park at Padartha, you are urged to taste an amla-aloevera-litchi concoction, one of the latest products from the TetraPak juice line of Patanjali.

The tart berry is a constant theme at Baba Ramdev’s sprawling Patanjali manufacturing empire that stretches from Muzzafarnagar, to Saharanpur in the fertile Gangetic plains of Uttar Pradesh and Uttarakhand.

The reverence to the fruit is understandable: Patanjali’s ₹2,000-crore FMCG journey began ten years ago, quite accidentally, with gooseberries. Acharya Balkrishna, the 43-year-old architect of Patanjali’s growth from a cottage industry to the one that is giving MNCs sleepless nights, recounts how it all started in 2005, when a delegation of farmers met Ramdev. 

They were going to destroy their gooseberry plantations as there was no demand for the fruit. To stop them, Ramdev started manufacturing amla juice. 

“At first, we had no clue how to go about it and outsourced the fruit to a food processing unit in Hoshiarpur in Punjab,” says Balkrishna. The juice became a runaway hit, and Patanjali started sourcing gooseberries from all over the country to meet the demand. Today, 25 truck loads of gooseberry arrive at the Patanjali unit, where 6,000 litres of juice is processed per hour. “Now there are so many other amla juice manufacturers in the country. We literally created the category,” says Balkrishna.   

Creating new product categories partly explains Patanjali’s early success. After amla juice, it started making the sort of esoteric local food and personal care products (aloe vera juice, hing (asafoetida) digestive golis , shikakai (acacia concinna) sherbets and spices that Indians otherwise shopped for at khadi or gramudyog outlets. 

“We suddenly saw a market gap that could be filled,” says Balkrishna. “Whatever people demanded, we kept making,” adds Ramdev, before taking a jibe at MNCs, “We don’t bother with expensive market research.” As the enterprise flourished, Patanjali became ambitious and started getting into established FMCG categories. The change also seems to have coincided with Ramdev’s growing political clout.

Today, Patanjali, Divya Pharmacy - the Ayurvedic medicine manufacturing company, and Patanjali Gram Udyoga Unit, produce nearly 600 products. Patanjali has now muscled into noodles, cornflakes and cookies. The group employs about 15,000 people in its units.

Ramdev says the business has grown 150 per cent this year, and may close this fiscal with a turnover of ₹5,000 crore. Though Ramdev claims that he and Balkrishna don’t set targets, in the next breath, he throws a ₹10,000-crore-turnover-in-three-years goal.

The growth, he adds, will come through expansions into everything from baby care to garments.  “From bio-fertilisers to healthy food, to organic cotton clothes, we will produce anything that can make India and Indians beautiful,” declares his acolyte Balkrishna.

But how is noodles making Indians beautiful? Both Ramdev and Balkrishna insist it’s not an incongruous product for them, but are weaning Indians away from ‘ videshi ’ junk food by offering healthier local alternatives. “ Swadeshi is our goal” says Ramdev, and declares, “noodles – which resembles our sevaiyan (vermicelli) - is quite Indian.”

But why are they so antagonistic to MNCs? After all the FMCG market in India is currently a ₹2 lakh-crore market and there is enough room for everyone.  Anurag Mathur, partner, PwC India, says: “Macroeconomic trends show that there is enough opportunity in the secular packaged food industry for both, the MNCs and Indian companies.”  Mathur says the market will double in five years.

Yet Ramdev seems to be obsessed to best Nestle’s Maggi. He personally tasted the Patanjali noodles and sent it back to the R&D lab 13 times, before he was satisfied. The yoga guru says his only motive is to see that the ‘money of this land should not go overseas.’ He declares: “Collective prosperity and charity are our goals. The profits from the FMCG business will be used to build 500 Acharya Kulams across the country.” These are K12 schools that will impart vedic education. The first of these is already up in Roorkee. Also being launched are Ayurvedic colleges and research institutes. “Next year, we will be starting animal-based trials for medicines for blood pressure, cancer and hepatitis,” says Ramdev.    

To achieve a turnover of ₹10,000 crore, Ramdev will need more manufacturing capacity, investment and manpower.

From where will the money come?  “Bank loans,” says Ramdev, and adds he does not own a single share in Patanjali.  Balkrishna has over 90 per cent stake.  As for talent, Balkrishna says, “We look for people in mid-sized companies.” 

As yet, Patanjali has not visited a B-school to recruit, preferring to get talent from its network, or by advertising. “It’s important for the person and the organization to be in harmony,” says Balkrishna, pointing that everyone in Patanjali works with “Aadhyatmik bhavana" (spirituality). None in Patanjali smokes, or consumes alcohol.

 Talk to the production managers and many have worked with established firms. Some like Pankaj Sharma, who has done stints with Shaktibhog and ITC, joined Patanjali attracted by the prospect of heading a unit. He heads the spices unit here. But several others are here out of missionary zeal to help Baba and say they are working as karma yogis.

Soon after sewing up a deal with Patanjali, Kishore Biyani of Future Group forecast that it would be among the top three FMCG manufacturer in a few years. "I would say Patanjali can become No.1 ahead of HUL. This is not based on optimistic high expectations but based on fact,” says Aditya Pittie, CEO of Pittie group who is the pan-India distributor for Patanjali’s modern trade and Mumbai distributor for its general trade (kirana shops) business.  “In Mumbai, we are seeing 30 per cent growth month-on-month,” says Pittie.   

Initially, Patanjali’s consumers came from its massive yoga and Ayurveda network. Patanjali Yog Samiti has 1 lakh branches, and 5 lakh teachers. Across India, there are 10,000 Patanjali Chikitsalaya and Aarogya Kendras.  Ramdev claims he has interacted with at least 20 crore people who have attended his camps.

Now, the group is trying to expand its consumer base through professional channels. There are 80 super distributors and 700 distributors and 5,000 franchisee stores. After the much hyped deal with Biyani’s Future Group, Patanjali is now going after almost every other modern trade brand – from Spencer’s to More, to place its products.

  “Our aim is that 15 per cent to 20 per cent of Patanjali’s turnover should come from modern trade,” says Pittie. The Group is setting up giant Patanjali Mega Marts too.  

The push for high growth comes with challenges. Sourcing of raw material, for instance, will be critical to cope with the volumes.  Patanjali has already faced that with gooseberries. To reach online consumers faster (Grofers and Big Basket now stock Patanjali products), it must have manufacturing units and warehouses across the country.

Patanjali’s product portfolio is unwieldy. That’s a challenge that Mudra and McKann Erickson, who have been roped in to handle advertising for Patanjali, will have to overcome.  From a zero-advertising strategy , Patanjali has done a U-turn, emerging as the third biggest television advertiser in the country.

Also, as Naresh Gupta, Managing Partner, Bang in the Middle, an advertising agency, points out, for the brand to move into the big league, it has to appeal to those who don’t buy into Baba’s personal belief system. He says, “Today Ramdev is also a political figure and to merge commerce with politics has not been easy or successful for anyone.”

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