Baba Ramdev, founder of Patanjali Group is on an aggressive growth plan: To be the market leader in the overall FMCG space in India by toppling global major Hindustan Unilever Limited (HUL). The yoga guru-turned-businessman candidly admits that to achieve his goal he has to battle it out with HUL.
“We have only one company ahead of us and that is HUL. We will make them [HUL] do a headstand,” Baba Ramdev tells Fortune India, while speaking on Patanjali Ayurved’s Ltd upcoming follow-on public offering (FPO) for Ruchi Soya Industries Ltd.
In 2019, Patanjali Ayurved acquired bankrupt firm Ruchi Soya, known for its Nutrela soya chunks, under the Insolvency and Bankruptcy Code for ₹4,350 crore.
“I agree that HUL is the market leader in FMCG…but Patanjali has all the product line, distribution network, and reach. It is possible for us to compete with HUL and win. We have built a strategy around this and we will work on it in the next three to five years to achieve our target,” Ramdev says.
However, analysts are of the opinion that it wouldn’t be an easy task for the yoga guru to take on HUL. “Patanjali has been struggling in core FMCG. The two companies are not strictly comparable as Patanjali sells many low-margin products. HUL is No 1 in more than 80% of products with best-in-class margins in the segment. Patanjali has been struggling in its core FMCG. It’s doing reasonably well in toothpaste and hair oil,” argues Abneesh Roy, executive director, institutional equities, Edelweiss Securities.
Roy further points out that “In most other segments, it [Patanjali] is performing below the initial market expectation. For the edible oil business that Ruchi Soya wants to break into, Marico’s Saffola is the only strong brand there. Low-end edible oils are very low margin and not really FMCG.”
According to Ramdev, the target to be the number one brand in the FMCG market in the country is not just a “dream.” “We have the ability and capacity to do that as well backed by our research capabilities, manufacturing facilities, distribution strength and supply chain,” he adds.
The yoga guru believes that today the majority of the population prefer using natural products especially after the Covid-19 pandemic. “People like using natural cosmetics, haircare, and dental care products. And this is our core strength. We will work on building that portfolio and get into aggressive marketing. We will take on HUL with Patanjali. We have the strength and the strategy to do it.”
Commenting on the FPO for Ruchi Soya, Ramdev, who is also the non-executive director for Ruchi Soya, argues that he expects to receive Securities and Exchange Board of India (SEBI)’s nod for FPO in “a few days,” adding that there is no pending legal compliance for Ruchi Soya. “There is no controversy or dispute. No mismatch of information. Everything is crystal clear,” he says.
“After we get the support of the investors, our first aim is to make the company [Ruchi Soya] debt free and then focus more on strengthening the marketing and distribution channels to ramp up our market share across categories and segments where we are present,” Ramdev says.
In July this year, Patanjali Group announced a turnover of ₹30,000 crore in FY21 of which ₹16,318 crore was from Ruchi Soya.
Ramdev believes his weapon to fight the FMCG battle is his vast reach across countries. “I have a reach of 200 crore across the world and over 100 crore in India. We need to convert that reach into brand equity for the company backed by trust and loyalty. For that we need to work hard. It is not a big deal,” he says while signing off.