Baba Ramdev: A Pragmatic Business Baron

The following article by U. Mahesh Prabhu was first published by BW Businessworld Magazine. 

So far, trust has been a key factor in determining the ‘success’ of Patanjali Ayurveda. The yoga guru’s saffron robe still attracts significant trust which FMCG companies can’t get even via million-dollar celebrity endorsements

Baba Ramdev is believed to be the founder of Patanjali Ayurveda Ltd — a Rs 2,000 crore ayurvedic and  FMCG products conglomerate with an enviable national footprint. Surprisingly, he has no financial stakes in the venture which is poised to be Rs 10,000 crore enterprise by 2021. His confidant Acharya Balakrishna, on the contrary, owns a whopping 92 per cent shares in the company. Baba Ramdev has had no hesitation to declare that he’s an “illiterate”. They very idea of a saffron clad “sanyasi” with minimal, or close to no, education taking on the might of the multinational corporations such as Unilever and Nestle has thrilled a lot many in the Hindutva as well as Swadeshi brigade.

The company has already overtaken two major players in the segment, namely: Jyoti Laboratories Ltd and Emami Ltd which have been around for decades. According to many experts, Patanjali Ayurveda Ltd has been able to lock horns with global majors owing to their direct procurement of raw materials from farmers surpassing middlemen. This apparently helps the company not just to offer better price but to maintain average operating profit of 20 per cent. Another important ingredient which gives a significant “boost” to Baba’s company is Patanjali Food & Herbal Park. Established in 2009, its promoters claim it to be among the finest in the country with over Rs 500 crore in investment.

Of late, Patanjali’s products were sold exclusively through three distinct franchisee formats, namely: Patanjali Chikitsalaya, Patanjali Arogya Kendra and Swadeshi Kendra. There was a time when these centres swore by Baba Ramdev and his swadeshi doctrine; mocking the likes of Big Bazaar and other large scale retailers for their “capitalist” mind-set was as routine. “They’ll never be able to produce the quality for the price we offer…” I have seen that coming from several of Patanjali’s franchisees. No doubt their product is good and their pricing competitive – they definitely had a greater scope to reach more rural masses. But today those very franchisees are the most disgruntled lot. The franchisees who once ran business without proper bills while hailing “Baba Ramdev’s work on black money are today forced to have a proper billing as well as credit/debit card payment machines installed. Thanks to company’s partnership with Big Bazaar and Reliance Fresh, Patanjali’s franchisees are forced to be competitive. While you get no discounts at these Swadeshi franchisees – you are able to get greater offers as well as discounts at “Videshi” retailers.

Initially, Patanjali Ayurveda Ltd made all the sales through word of mouth. Today, all that is changing. Professional media planners as well as advertising enterprises are signed up. Advertisements sporting Baba’s and Balakrishna’s photos are all over print and satellite television channels. The ambition of the “Sanyasi” is no more hidden. Amid all his aggressive media strategy the future of his franchisees isn’t so bright. Will Patanjali continue to work with them or part ways? Tremors are already visible. Questions are being raised by scores of these franchisees – albeit behind closed doors – as to whether they are being betrayed.

Not everyone is pleased with recently published Credit Lyonnais Securities report wooing Patanjali besides asking it to be listed on stock markets. Even though Baba and Balakrishna have rejected the idea – many believe that it should not come as a surprise if he makes a U-turn from the statement – sooner or later. Not many may remember but when Baba had started his stint with Yoga programmes, which later became a regular in Aastha channel, Baba made tall claims like “Yoga is cure for all…” and that “… in presence of Yoga no medicine was required…”. Later, when Acharya Balakrishna’s influence grew – through his show on Ayurvedic herbs and plants – Baba changed his stand and started promoting ayurveda and eventually his own brand of ayurvedic medicines.

There was also a time when Baba made great hue and cry about black money and ill effects of the same on the country. Yet he made no efforts to ask his franchisees to make arrangements to give proper bills on every sale – retail as well as wholesale.

There are also over 81 cases still pending against his various institutions in the court of law facing diverse charges including “Benami transactions” as well as “tax evasions”. According to confirmed sources except for one or two, most of the charges are true. Baba and his “bhakts” call all these cases to be “politically motivated”. There was also a time when Baba wanted to foray into politics with Bharath Swabhiman Andolan. Today that’s just another trust without significant function.

What intelligent mind cannot resist is to ask as to how two people from financially despicable background started a company in 2006 with crores of rupees before making it a force to reckon with in the Ayurvedic pharmaceuticals as well as FMCG segment. It’s also not clear as to what sum have India born British couples – Sarwan & Sunita Poddar – have invested in the company for 8 per cent of the stake.

A “Sanyasi” according to Vedic scriptures is one who’s without any material connection – financial as well as egoistic. He’s got no belongings; emotional or physical. He’s always free and liberated. This concept is now used as a cost control method at Patanjali Ayurveda Limited by keeping the salaries under check. Baba plans to initiate some 20 swamis to take care of key managerial and mentoring tasks are handle in the “most effective way”. It’s therefore should not surprising to note that Patanjali Ayurveda isn’t a good paymaster. People are made to work here for long hours for below the industry average remuneration. Although Baba may claim that “they are working without qualms…” it’s not hard to guess the truth.

Trust has been a key factor in determining the “success” of Patanjali Ayurveda Ltd, so far. Ramdev is a “sanyasi” and his saffron robe still attracts significant trust which FMCG can’t get even via million-dollar celebrity endorsements. Baba amplifies this effect by enduring 200,000 kilometres of relentless travel annually for “Jan Sampark” or “mass connectivity” through “Yoga Shivirs” or “Yoga Camps”. Given the fact that Baba isn’t growing any younger even he knows that this can’t go on for ever.

I personally feel that Baba’s good work with farmers through direct procurement of raw materials is a bit exaggerated. The idea is verily borrowed from the ITC – also a tobacco major and now a top FMCG conglomerate. ITC deserves significant admiration than Patanjali since a lot many factors were against them. Yet the Y C Deveshwar-led enterprise has maintained low key while keeping up with their good work.

No doubt Baba Ramdev definitely has some very good product in his arsenal but how long will he be able to maintain the cost and quality factor is a million-dollar question. With poor pay and long work hours it’s not as easy as Baba may consider it to be. Yet another major impediment could be 80 odd court cases against the company.

Therefore, while many may call Patanjali Ayurveda Ltd a professional organisation, with closer analysis anyone can realise that it uses many of the best practices of International Society for Krishna Consciousness (ISKCON) as well as BAPS Swaminarayan Sanastha. What definitely puts Baba Ramdev “out of the league” is his sheer blend of political opportunism as well as absolute showmanship.

Author | Investor | Painter | Media, Management & Political Consultant

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