Patanjali Ayurved has narrowed its gap with consumer product companies including Dabur, Marico and Godrej Consumer as the Baba Ramdev-led firm more than doubled its sales in the past ten months.
The Haridwar-based company has posted sales of Rs 3,267 crore in the ten months to January 2016, a 106% jump compared to Rs 1,587 crore a year ago, according to rating agency Brickwork, which said it sourced provisional data from Patanjali Ayurved. “PAL has expanded its basket of products tremendously over the last year. Sustaining this with profitable growth requires continuous R&D, enlargement of contract manufacturing and quality control,” the agency said in a report.
Brickwork has a ‘stable’ rating on Patanjali Ayurved’s Rs 300 crore long-term credit. With its sales performance, the company has closed in on established players. For instance, Marico posted revenue of Rs 3,903 crore for the nine months ended December 2015 while Godrej Consumer reported sales of Rs 3,585 crore.
The country’s largest ayurveda company Dabur had standalone sales of Rs 4,233 crore during this period. In a tough consumer market that barely grew 8%, most of these companies increased their local sales 8-12%. Patanjali sells about 500 products, ranging from ayurvedic medicinal products and staples to cosmetics but its biggest seller is ghee, which contributes 30-35% to its revenue, followed by healthcare at 20%.
“Even after excluding ghee which is a commodity product, PAL will likely overtake these mid-sized companies in term of sales by FY17 as it has been expanding reach rapidly and adding capacity to support it,” said Edelweiss Securities’ associate director Abneesh Roy. For a company that started as a small pharmacy in 1997, Patanjali expanded its reach from 200 outlets in 2014 to 5,000 franchise stores at present and launched more than two dozen mainstream FMCG products as none of the existing herbal players catered to categories such as noodles, oats and detergents.
Its products are 15-20% cheaper on average than those of its peers and many of its peers have been running offers and promotions to compete with the company. “What we have done is consistently focused on quality and pricing. Ask consumers about our product quality. Why are repeat purchases coming? It’s because of the quality we are offering consumers,” SK Tijarawala, spokesperson of Patanjali Ayurved told ET last week.
“As far as pricing is concerned, we are trying to give consumers the best possible prices. There is no incremental pricing,” he said. The company’s turnover grew 69% to Rs 2,007 crore during 2014-15, compared to Rs 1,187 crore in the previous year. Profit after tax nearly doubled to Rs 309 crore during the year, from Rs 155 crore in 2013-14.
Date: 22nd March, 2016.