Baba Ramdev’s Haridwar-based consumer goods maker firm looks to raise Rs. 1,000 cr this fiscal
New Delhi: Patanjali Ayurved has significantly narrowed the gap with FMCG majors such as Dabur, Marico and Godrej Consumer as the Baba Ramdev-led firm has more than doubled its sales in the past year to . 5,000 crore. In fact, analysts nearly ` have downgraded Colgate and Dabur as they face relentless pressure from Patanjali. Acharya Balkrishna, managing director of the Haridwar-based company told Neha Tyagi in an interview that competing with these players was never the intention. Edited excerpts:
Since Patanjali Ayurved has a strong religious undertone, have you considered opening stores outside places of worship?
We will do well outside temples as we have pooja essentials such as agarbatti and ghee, but we can also do well near hospitals because we sell medicines. We don’t need to follow any such strategy because we are everywhere -our shops will do well regardless of where they are located because of the sheer range of products we sell.
How are you keeping up with the rise in demand? Is there a need to outsource some of the product manufacturing?
We have finished working on a lot of models when it comes to herbal cultivation. We have created a very big setup in the North-East and planted close to 8 lakh saplings of the medicinal herb Indian Tinospora (giloyaguduchi) there. Similarly, we have planted 50,000 saplings of amla, some on our own and some with other farmers. We have also started cultivation of aloe vera in parts of Rajasthan. Around 40 quintal seeds of tulsi have been planted. We have planted nearly 15 lakh herbal plants this year alone and I doubt if anybody else has done something like this before in India.
A few months ago, Baba Ramdev announced his intent to open his own line of clothing. Any update?
We have done a lot of R&D on this, but right now our priority is to improve in the categories that we are currently in and to take them forward. Our target is to double the number of stores.
Other `babas’ are competing with your brands now, and mainstream companies are launching ayurvedic products.What’s your take?
Our aim was to establish ayurveda and discover how it can be made part of our daily lives. Everyone knew about herbal medicines but we tried to incorporate herbs in necessities like toothpastes, soaps and shampoos. A lot of research and experimentation have gone into each of our products, and we are not here to compete with anyone but to propagate ayurveda and healthy living.
But the space is getting cluttered and it’s now Baba’s products versus others. Don’t you think the entire theme of ayurveda will be lost?
Everybody has the right to serve the country it isn’t Baba Ramdev’s alone.Our main objective is to tell people about ayurveda, and it is up to them to decide where they want to buy from. ICICI Bank and HDFC Bank have offered to provide loans to yoga guru Baba Ramdev’s rapidly expanding Patanjali Ayurved, which is looking to raise about `1,000 crore this fiscal, at a time when lenders are shying away from most corporate borrowers.
The two private sector banks recently approached the Haridwarbased consumer goods maker to offer corporate loans, the company’s managing director Acharya Balkrishna told ET. Public sector banks State Bank of India and Punjab National Bank have so far extended credit facility to the company so far, he said.
“While big industrialists fail to repay loans, we pay off our dues right on time. This is made possible due to our escalating product sales,“ Balkrishna said, citing a repayment to Punjab National Bank.
Patanjali Ayurved, which is competing with leading fast-moving consumer goods makers such as Unilever, Nestle and ITC, plans to raise funds through bank term loans or corporate bonds as it aims to double its production capacity to 2,000 tonnes a day by the end of 2016-17.
Queries emailed to both ICICI Bank and HDFC Bank remained unanswered till late evening on Sunday . “Whoever gives us cheap money , we will go for it as we are expanding fast,“ Balkrishna said. “More banks are coming to us with their offers while a few merchant bankers too contacted us with fundraising proposals via bond sales. We are exploring all options,“ he said. The company manufactures a large number of fast-moving consumer goods, and herbal and ayurvedic products. It is now planning to set up manufacturing units in Maharashtra, Madhya Pradesh, Punjab, Jharkhand and West Bengal as well. Its new product lines may in clude nutrition baby foods.
“They may require project financing as they plan to set up food parks in some locations this year,“ said MSR Manjunatha, rating analyst at Brickwork Ratings, which has graded the company with AA(stable outlook). “We have rated them for a working capital loan facility for now,“ he said.
A few months ago, Care Ratings graded the company triple B+, one notch lower than the current rating.
In 2015-16, the company paid about 10% interest on average on its borrowings. The company is believed to have taken loans of less than `500 crore during the fiscal, but the exact number could not be verified.
It reported a turnover of `3,267 crore till January for 2016-17 compared to `1,588 crore a year ago, Brickwork Ratings said, citing provisional data.
ICICI Bank, HDFC Bank offer loans to Patanjali