Patanjali group Co-founder Swami Ramdev, who is also Director of Patanjali Foods, on the company’s acquisition of the non-foods business of Patanjali Ayurved, his ambitions for a Rs 1 lakh crore turnover, and more
Yoga guru Swami Ramdev is as at ease in talking about revenues and profits, as he is in twisting his lithe and supple frame into an asana. Having taken sanyas in 1995, Ramdev, who prefers to be referred to as the Mentor and Spiritual Head of the Patanjali group, pulls no punches when it comes to taking on multinational companies in the FMCG space.
As part of that ambition, Patanjali Foods Ltd (erstwhile Ruchi Soya Ltd) has acquired the home and personal care business of Patanjali Ayurved Ltd for Rs 1,100 crore, and a 20-year licensing arrangement for a 3% turnover-based fee. The deal aims to strengthen the company’s position in the fast-moving consumer goods sector.
In an interaction with Business Today TV, Ramdev speaks about his plans to expand the Patanjali business empire in the years to come. Edited excerpts:
What is the rationale for the acquisition?
We are reaffirming our commitment to becoming a major player in the FMCG space. Two years ago, at the time of our FPO (follow-on public offer), we had set an ambitious five-year target of attaining a 50:50 split between the two major verticals—edible oils and FMCG. I am saying ambitious, because the share of FMCG in the total revenue was only 6-7% in FY22. In FY23, it rose to 19-20% and in the recent financial year, it went above 30%.
With the acquisition, we are consolidating the ‘Patanjali’ brand FMCG products portfolio. We see multiple synergies in terms of brand equity, product innovation, cost optimisation, infrastructure and operational efficiencies. This will also have a positive impact on market share, revenue and earnings.
Will you look at more acquisitions?
We will acquire domestic brands first, and later, foreign FMCG brands.
There is a trend towards ‘premiumisation’ in the FMCG space. How does Patanjali plan to maintain its market position given the strong competition from global majors?
Patanjali caters to all segments. We have products in the mass-, value- and premium segments as well. We have many products that command a premium in the market. Cow’s Ghee, for example, is among the market leaders and sells at a premium… and we hold nearly 70% [market share]. Nutrela is a market leader and has more than 40% of market share. The nutraceuticals range is again a premium offering by the company.
We launched a slew of premium products last year, including ragi biscuits, seven-grain biscuits, digestive biscuits, and a dry fruits range under the Nutrela brand. We have also introduced a new range of sports nutrition products under the ‘Nutrela Sports’ brand.
We are well connected with consumer aspirations and market trends and posing a very strong challenge to global firms.
Is it a challenge, given that global companies spend much more than you on R&D and marketing?
Our competition is not just with domestic companies, but directly with Unilever, Colgate, Nestlé, and others. Our resolve is to capture their market share. Our vision is to capture a dominant share of the market.
What are your long-term plans for the Patanjali group?
Our group turnover today is around `45,000 crore, and our goal is to take it to `1 lakh crore. We renamed Ruchi Soya as Patanjali Foods, and it has already become one of the largest food companies in the country. Our goal is to make it the largest foods company in the world.
We have very strong brands. In the edible oils segment, we are the second-largest company with nearly 10% market share. Our goal is to achieve a dominant market share in hair care, dental care, and skincare. We want to make Patanjali Foods the largest company in the home and personal care segment in India, and then globally. If a product like Colgate can be known worldwide, then why not Dant Kanti [Patanjali’s toothpaste brand]? Our products are 100% safe and affordable—why wouldn’t the world turn towards them?
Have high raw material costs impacted your margins?
During Covid-19, there was a lot of pressure, especially on bathing soap and dental care products. Now, it is relatively less. Our long-term strategy is to provide quality products at affordable prices.
India remains dependent on the import of edible oil and pulses. What are your plans in this space?
We want to make India self-sufficient in edible oils. Patanjali has oil palm plantations across 12 states in the country, with special focus on the North-east. The total allocated area is more than 700,000 hectares, on which rapid plantation is being carried out in partnership with farmers. We import nearly 5 million seed sprouts every year and grow them in our nurseries. Later, they are planted in the farmland of our partners. Over 50,000 farmers are being benefitted through this. Besides that, we will work on all traditional oils of India, including mustard, groundnut and coconut.
Our goal is to stop the outflow of Rs 2-3 lakh crore every year due to edible oil imports. This will strengthen the country’s economy, India’s currency, and make our farmers prosperous.
There have been signs of weakness in the rural economy…
The rural economy will get a boost. The government’s focus is on villages, the poor, labourers, and farmers. The way the government’s policies are progressing, the rural economy will receive a booster dose in the future.
Questions have been raised in the past about the manufacturing and quality of some of your products. What do you have to say on this?
Patanjali has 100% in-house manufacturing. None of our products have ever failed quality tests. There is a fake news factory in India that spreads lies and despises traditional heritage and knowledge. We will slowly overcome it.