A report case1 on Patanjali Ayurved Ltd Success stories, setbacks and improvements

Abhishek was very happy the moment he got to know the results of his summer internship
interview process. To work with an FMCG company had always been his dream, even before
he landed himself into the world of MBA graduates. Clearing the interview process did not
come as a cake walk for him, as he had if not expected but at least imagined for a company
whose foundation seems to be far different from the typical megacorps in the same industry.
He was selected as an intern to work in Patanjali Ayurved Ltd. for the period of six months.
He was even happier because he was placed at Darbhanga district which was near to his native
place in Bihar and he could atleast go and visit his home during weekends.

Abhisheks journey in Patanjali

In the initial days of joining, Abhishek spent some time learning about the company. There
were some interesting facts that he was not aware about the company even though he thought
he had studied well and known enough about the company before the interview process. Only
after joining Patanjali, he became aware of many things about the company and practically
experienced what is generally taught in MBA classes.

About Patanjali & its idea of success

Ever since its inception in 2006, Patanjali had been gaining popularity among people in India.
Patanjali became a leading name in Indian FMCG sector. The speed of its growth has given
stiff competition to multinational FMCG groups in India and the revenue growth is multi folds
greater than those leading brands. What differentiates Patanjali from other leading brands is its
image that has been created in the minds of the consumers by its founders.

While gaining popularity & faith by practicing & teaching Yoga, Baba Ramdev Ji and Swami
Balakrishnan Ji came up with an idea of starting their own chain of herbal consumer goods.
Their efforts of not only promoting Yoga but also promoting herbal, quality and swadeshi
products have really been fruitful and highly profitable for the company as people accepted
these products without any hesitation.

1
This is an attempt to create a hypothetical case based on real observations of the writer who himself has
worked as a summer intern in the organization case is upon Patanjali Ayurved Ltd. and has taken personal
interviews with different stakeholders of the company- distributors, retailers, customers and most
importantly employees.
Surprisingly, one of the main founders of Patanjali, Baba Ramdev, does not hold any stake in
the company. This is surprising to the fact that he is the soul and backbone behind Patanjali
and it is mainly his presence in the company that has helped the brand find its position in the
minds of the consumers. Having no stake in the company appears like a nave motive of
expressing that Baba Ramdev himself does not take away any profit that is generated by the
companys operations.

Success came all the way to Patanjali because of many reasons and many steps that Patanjali
& its founders have taken since its initial launch. Birth of Patanjali was preceded by launch of
Divya Pharmacy Trust by Baba Ramdev and Swami Balkrishna in 1995. They made herbal and
ayurvedic medicine & distributed these medicines for free for the first three years.

People started finding cures of their illness in herbal medicines and Yoga. These initial years
helped both the founders gain trust of consumers in Indian market. Soon they wanted to launch
more herbal products into Indian market and initiate their idea of launching low cost Swadeshi
products. And then there was the birth of Patanjali Ayurved Ltd. as all this was not possible
under the umbrella of Divya Pharmacy trust.

At the time of initial launch of selected products, Patanjali didnt even make its Ad campaign
on print or digital media but products got popularized mostly through word-of-mouth
popularity with their launch in Yog shivirs and Arogya Kendra. Diversifying herbal product
categories, producing quality products and most importantly having a trust factor in the minds
of consumers resulted into word-of-mouth popularity of the products among the consumers &
companys revenue and profit grew multiple times.

In these yog shivirs only Patanjali found its first employees as initial jobs or employment by
Patanjali as company was given to managers and workers of Yog Shivirs, used to be called as
Yog Pracharaks. This very much helped in uplifting lives of these Yog Pracharaks as earlier
they used to get minimal wages for volunteering in Yog shivirs, and now they were preferred
employees of the company designated as either TSI (Territory Sales Incharge) or SO (Sales
Officers) based on merit and experience. Yog Pracharaks now had a regular job with good take
home salary. They became pivotal asset and basic pillar for Patanjali and helped Patanjali reach
its goal of promoting and reaching products to people pan India.
Setbacks
With increase in demand and popularity, Patanjali always had scope to launch new products.
However, being an amateur it faced hurdles at times and is still facing. Not having the required
expertise challenges the organization at many levels; and for Patanjali these challenges are not
just at making market for new products or at these products manufacturing or marketing end
but also at the supply side of their products. The ultimate objective of supply chain is to build
the supply linkages at every level so that there is no compromise on maximising value to the
customer; such importance of supply chain is very well understood by the leading organizations
and for that they always prefer people with supply chain experience. However, in case of
Patanjali, even after a decade, company faces challenges in supply of products from
manufacturing units to distributors to retailers, and these bottlenecks are very important to be
cleared off for company to keep continuing its remarkable growth.

Abhishesks observations
During the course of his internship, Abhishek was doing daily calls with DSO or with ASM to
distributors or retailers of Darbhanga district of Bihar. With daily calls to distributors and
retailers he not only became aware about the company and its reasons of success, but he also
came across some negative factors which are hindering the companys growth. What he
observed was that problem is at very initial stage of giving distributorship. Just as initial jobs
or employment by Patanjali, distributorship too did not follow any specific criteria.

No standard distributor selection parameter was followed for selecting distributors as

distributorship was given to anyone who was ready to invest and few distributors also had no
work experience in retailing, wholesaling or distribution of FMCG also got the distributorship
of Patanjalis products.

With not so perfect supply chain, Abhishek observed that distributors face issues in getting
products on time & even if they get the products they face one serious issue of products getting
expired even before being sold to customers as distributors themselves receive them late. In
Patanjali, basic food products like Dals, rice were having only three months of expiry period,
where as competitors similar products had somewhere around 6-12 months of expiry period.
This largely hampered the willingness of distributors & retailers to buy these products from
Patanjali. Also, Patanjali started to diversify into multiple product lines at a very early stage. It
became very difficult to train the sales force and even the distributors were not completely
aware of all the products that company launched.

However, soon Patanjali started to realise the improvements it needed to make to remain in the
market. Patanjali started to hire employees directly from the labour markets. Employees with
prior FMCG experience joined the company and their expertise really helped the company.
Also, Patanjali soon came up with new policies for compensating the retailers and distributors
on expired and damaged products. These initiatives helped increase the revenue upto 2002
percent in the Darbhanga district & Patanjali again gained popularity among the distributors
and retailers in the same district.

Q1: What do you think could be the possible reasons behind Patanjalis success?
Q2: Was it justified at Patanjalis end to diversify itself into multiple product lines in short span
of time. Do you think it would have been better if company had focussed itself into limited
products?
Q3: What other steps do you think can help Patanjali improve on its sales & distribution
channel?

2
This figure is indicated after observing the sales figures before and after Patanjali initiated the improvements.
These sales figures were collected and noted by Area Sales Manager with whom writer was assigned during his
course of internship.
 Exhibit I Indias Biggest FMCG Players Revenue Growth (%)
India's Biggest FMCG Players - Revenue Growth (%)
FY12 FY13 FY14 FY15 FY16
Patanjali NA 87.16% 40.37% 70.20% 137.64%
Jyothi Laboratories 9.30% 53.70% 23.70% 14.10% 9.60%
Emami 15.60% 17.10% 4.80% 19.10% 17.80%
Marico 26.20% 14.90% 8.10% 27.10% 5.70%
Dabur 14.50% 15.80% 12.00% 11.50% 5.90%
Colgate/Palmolive 17.80% 17.50% 13.10% 11.30% 4.50%
Unilever 12.10% 16.70% 8.60% 9.90% 3.80%
P&G 29.40% 30.00% 21.60% 13.80% NA

Source: MoneyControl.com, Release by Registrar of Companies, Media Reports

Exhibit II Indias Biggest FMCG Players Net Profit Growth (%)

India's Biggest FMCG Players - Revenue Growth (%)

FY12 FY13 FY14 FY15 FY16

Patanjali NA 63.40% 103.30% 70.57% 42.13%

Jyothi Laboratories 4.00% 47.30% 140.90% 34.60% 13.70%

Emami 23.40% 43.30% 79.60% 18.40% 30.50%

Marico 6.70% 27.50% 34.50% -5. 6% 28.70%

Dabur -1.70% 27.60% 13.70% 13.50% 23.20%

Colgate/Palmolive 10.90% 11.30% 8.70% 3.50% 3.10%

Unilever 16.70% 41.10% 1.90% 11.60% -5.40%

P&G 20.20% 12.10% 48.60% 14.60% NA

Source: MoneyControl.com, Release by Registrar of Companies, Media Reports

Exhibit III Product Brochure

Patanjali Products List of Skin Care:

Face wash
Face Scrub
Toner
Aloe Vera Gel
Face Cream Product List
Body Lotion
Sunscreen
Face Pack
Body Pack
Ayurvedic Face Pack
Kajal
Sindoor
Body Oil
Crack Heel Cream
Soaps

Patanjali Products Hair Care Product list:

 Shampoo
Conditioner
Hair Oils
Mehendi

Dental Care:

Toothpaste
Tooth powder
Tooth Brush

Medicated Juices:

Biscuits from Patanjali Product List:

Fruit Juice and Squash and Sarbat from Patanjali:

Sarbat
Squash
 Fruit Juice

Patanjali Spices:

Patanjali Pachaks or Digestive Aids:

Health Care Products from Patanjali:

Washing Powder, Cake and other Home Products from Patanjali List:

Washing Clothes
Washing Dishes
Cleaning floor
Hand Wash

Some Miscellaneous Products from Patanjali Product List:

Godhan Ark
Agarbatti: Available in 4 varieties - Sandal, Rose, jasmine, Dhyan
Sweet Musli Churna
Satavari Churna
Patanjali Balm
Peedantak Tail
Peedantak Oinment
Divya Dhara
Shadbindu Tail
 Drishti Eye Drop
Lavan Bhaskar Churna
Trifala Churna
Hartaki Churna
Giloy Ghan Vati
Medohar vati
Neem Ghan Vati
Tuli Ghan Vati