CLSA wants Ramdev’s Patanjali to be listed

The list of Baba Ramdev’s admirers is growing fast. From common people to political leaders, film actors, sports personalities and now, the Defence Research and Development Organisation (DRDO), Patanjali Ayurved Ltd (PAL), spearheaded by the yoga guru, has caught the fancy of foreign brokerage firm CLSA.

Analysts Vivek Maheshwari and Bhavesh Pravin Shah of CLSA, in a report titled ‘Wish you were listed: Patanjali Ayurved’, said: “PAL perhaps lacks most ingredients for building a largescale consumer goods business, be its negligible advertisement and promotion spends or distribution network. Yet, the brand power of a yoga guru has brought PAL into the top league.”

“Within a short timeframe of eight years since inception, PAL has created a splash in the Indian consumer market... as it has reportedly crossed ₹2,000 crore in annual revenues in FY15 making it bigger than the likes of Jyothy Labs and Emami,” they added.

Jyothy Labs and Emami had reported total revenues of ₹1,440 crore and ₹2,030 crore, respectively, for fiscal 2015.

Ramdev had indicated that he expects to achieve a topline of around ₹5,000-10,000 crore in the next few years.

PAL has taken considerable efforts to build its back-end and has three facilities in Haridwar.

Most of Patanjali’s products are available at an attractive discount to its peers. This is thanks to the significant investments made in back-end operations, including direct sourcing from farmers. This has, however, not come in the way of making profits as the company registered 20 per cent operating profit margins in FY14, Maheshwari and Shah said.

It is worth noting that the FMCG industry typically spends 12-20 per cent of its net revenues in advertisements and promotions. This percentage is much higher for companies in their early phase of evolution. In this context, the revenue achieved by Patanjali, without much media support, is clearly commendable.

The plans are even more interesting as the company is now looking at ‘traditional’ ways to expand. It is targeting to more than double its top-line in the coming years. The group is also focussing on emerging e-commerce channels and has a dedicated website.

Interestingly, Baba Ramdev does not hold any stake in PAL. One Balakrishna reportedly holds 92 per cent stake, while the remaining 8 per cent is held by a Scotland-based NRI couple Sarwan and Sunita Poddar. The couple is also associated with the UK Trust of Patanjali. In 2009, they had donated a 684-acre island in Scotland to establish the first dedicated international yoga centre outside India.

On Sunday, DRDO signed an agreement with Patanjali Ayurveda for manufacturing and marketing some of the herbal supplements and food products developed by it.

The agreement includes transfer of Seabuckthorn-based products developed by the Defence Institute of High Altitude Research to Patanjali Yogpeeth.