Exclusive: the accidental business - Patanjali Ayurved

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Exclusive: the accidental
business - Patanjali Ayurved
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It’s all set to be a ₹5,000 Crores company by next March, and is headed by a Yogi. It has effectively demolished all set notions of business, finance and marketing. In an age where companies spend as much as 70% of their earnings on marketing, this ‘desi’ FMCG brand expends a few pennies at the most. Yet, Kishore Biyani, CEO, Future Group expects sales revenue of about ₹1,000 Crores in the next 3 years from his partnership with this brand. We’re talking of the ‘swadeshi’ FMCG giant – Patanjali Ayurved.

BI India chatted up with Acharya Balkrishna, Managing Director of Patanjali Ayurved to get a rare glimpse into this unconventional business machine that’s raking in the moolah like never before.

1. How did Patanjali begin?
We’ve always focused on the needs and demands of the people of the country. That led to the inception of the brand. Our focus has always been on Yoga and Ayurveda. We never planned it to be so big. We wanted to serve the people, and by the grace of the Almighty it has been successful. Without divine intervention this would never have been possible.

2. How difficult was it to create a brand?
The biggest difficulty was that people who run MNCs never revolt against the government. However, Swamiji spoke up against black money and other pressing issues. You must realize it’s the government that issues certificates and licenses. To stand up to the government and yet establish a brand, it’s a daunting task. We have had over 300 cases registered against us. Yet, we were successful in our protest. Our processes are transparent and in line with the government operations and the love of the people is with us. That’s exactly why the brand has been left unharmed.
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3. How do you conduct your market research?
We’ve never done any market research or market survey. We’ve focused all our efforts on R&D, product development and quality control.

The initial idea was that MNCs offer the best quality. They had a monopoly over the Indian FMCG market. Indian brands were expected to lose out on quality. We focused on low price and high quality to demolish this myth. It has worked for us.

4. How do you assess the need for a product?
We never think of commercial benefits. Our efforts are guided by consumer demand. We surround ourselves with people and understand their sentiments, needs and desires.

Our first products were Aloe Vera Oil and Amla Juice. There was no market for products like these. Nobody ever thought this would sell. It started like this. Amla farmers were in dire losses. We felt we should buy some from them. We knew Amla was very good for your health. Swamiji declared the benefits of drinking Amla juice, and it started to sell. Any corporate trained in market research and planning would call this move a foolish move.
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For Aloe Vera Oil we were selling it at as little as Rs. 200. Most MNC priced theirs at around Rs. 1300. Our focus was never on the size of the market, but on the demands of the people.

5. Why don’t you market your products?
For any FMCG product you'll have raw material, processing cost and packaging. Nobody gives out of their own pocket. Either one has to increase the price or offer inferior quality. If we invest in marketing we can’t offer low prices. MNCs might try to sell products via marketing, we’ll do the same with quality.

6. Are you worried about the future of your retail outlets after the partnership with Future Group?
Our sales would spike from this partnership. Once people see products in malls, try them, and find it’s effective, they’ll become loyal customers of the brand. This would draw them to our brand stores. This would strengthen Patanjali as a brand.

7. What are your current expansion plans?
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Our Atta noodles would arrive very soon. We would sell it at half the price of most leading MNCs. We’ll also launch Power Boost – a malt-based children’s health supplement soon. We’re currently focusing on ramping up our R&D operations on this.

8. How did you come across the idea to have your won noodles brand?
We never planned to enter the ready-to-eat category. Our social media expert spoke up about the Maggi controversy. The posts went viral. People asked us to offer a healthy alternative to Maggi. Our R&D team worked on it and started developing. Now we’re a few days from the launch.

9. How do you plan to finance your expansion plans?
We would get bank loans. We can also loan from partner institutions. There are no plans to look at FDI currently.

10. Do you think your financial model is self-sustainable?
We’ve come so far based on this model. We started by taking personal loans as well. Patanajali can’t dream to be a global brand overnight. We don’t build castles in the air. This model seems simple and effective to us.
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11. Have you broken even?
In the zeal to expand, when we started there were several problems. We optimized our systems accordingly. We decided to expand as much as we can afford to. It’s as simple as that.

12. Are you looking at other brand partnerships?
None as of now. We’re always open to more fruitful partnerships that would help better our services.

13. What do you look for in a job candidate before you hire them?
Our system is corporate, but our culture isn’t. We hire people that share our line of thought. Incidentally they’re also experts in their fields. We don’t hire those who have non-vegetarian fare, consumer tobacco or alcohol. They must be patriotic and spiritual. We routinely receive resumes for consideration. We scan them and choose the best in case of vacancies.

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We look at a relationship that can survive the test of time. They work here to serve society, not just to earn money. I personally never charge a rupee as a salary.

14. It’s been in the news that you’re looking to hire executives from top FMCGs.
If there are people in the system that are willing to come to our side, it’s a different thing. However, we never target specific brands. We haven’t come this far by copying the financial system or policies of any company, and we won’t. We don’t consider these companies as competition.

15. Do you think Swamiji’s share of controversies had a positive or negative impact on the brand?
The central and state governments were against us when Swamiji stood up against the government’s policies. This means people had faith in us and our brand. Otherwise this would have closed down by now.

(The following conversation was in Hindi. It has been translated to English with as little loss as possible)