Baba Ramdev-led Patanjali sales drop as rivals launch natural products

December 27, 2018

Baba Ramdev-led Patanjali Ayurved has faced a major setback for the year ended March 2018 as it reported a drop in its sales and profit because of stiff competition from rivals, mostly multinational giants launched natural and herbal products, as well as its own distribution issues following goods and services tax rollout, says an Economic Times report.

The Haridwar-based company’s revenues dropped 10 per cent to Rs 8,135 crore in the last fiscal from Rs 9,030 crore in 2016-17, the publication mentioned citing reports from research platform Tofler. As per provisional data sourced by CARE Ratings, the Baba Ramdev-led enterprise’s net profit more than halved at Rs 529 crore in FY18 from Rs 1,190 crore a year earlier, it said.

“The decline in turnover was primarily because of the company’s inability to timely adapt to the GST regime and develop infrastructure and supply chain,” the financial daily quoted a report by Care Ratings as saying.

It further mentioned that there a sharp slump in the company’s profitability margins, with the profit before interest, lease, depreciation and tax (PBILDT) margin falling to 11.9 per cent in FY18 from 18.7 per cent in FY17 due to rise in overheads and ongoing expansions, higher distribution and selling expenses.

The publication quoted unidentified analysts as saying that Patanjali had appointed separate distributors for several business verticals such as personal care, staples, and biscuits among others, which affected in servicing stages. “Growth slowdown in Patanjali is a direct result of poor management of trade channels and lack of a coherent advertising strategy,” ET quoted an investor note by IIFL Institutional Equities as saying. “Splitting distributors according to product categories has also complicated retailer servicing,” it said.

In 1997, Patanjali Ayurved started as a small pharmacy and later on launched a complete bouquet of products, including shampoos, soaps, detergents, toothpastes and other personal care products to breakfast cereals such as cornflakes, and in the recent years, it emerged the fastest-growing consumer products brand.

Separately, Patanjali Ayurved again showed interest in acquiring debt-ridden Ruchi Soya after the highest bidder Adani Wilmar withdrew its offer to buy the bankruptcy-bound company, citing “delays” in closing the resolution process. In August, Patanjali had approached the Mumbai bench of the National Company Law Tribunal (NCLT), challenging the decision by Ruchi Soya’s creditors to pick Adani Wilmar over it.


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