PATANJALI

REPORT
A price leader in Indian FMCG space

COURSE TITLE MANAGERIAL ECONOMICS

COURSE CODE ECOM531

COURSE INSTRCTOR DR. NADEEM AHMAD BHAT

SUMIT KUMAR 12115441

87%

RAJAT SAINI

87%

KARAN

87%

SHRUTI

87%

page 1
INTRODUCTION

Patanjali Ayurved (often referred to as Patanjali) is an

Indian worldwide conglomerate holding corporation
headquartered in Haridwar. It was founded in 2006 by
Ramdev and Balkrishna. The company's headquarters and
manufacturing operations are located in Haridwar's
industrial area. Cosmetics, ayurvedic medication,
assistance, and food items are all manufactured by the
company. Balkrishna is the company's corporate boss, with
a 94 percent shareholding. Ramdev is the company's
representative and takes strategic decisions.

Patanjali Ayurved was founded in 2006 by Ramdev

and Balkrishna. Balkrishna controls 94% of the
corporation, with the rest distributed amongst other
Yoga Guru Ramdev
shareholders. Balkrishna had a net worth of $2.3
billion in May 2021.

Patanjali was one of India's fastest-growing FMCG

firms in 2016, as per CLSA and HSBC. It was worth
94%
an estimated 3,000 crores (approximately US$480
million in 2020). Patanjali's yearly turnover for the
2016–17 budgetary year was forecasted to be ₹ 10,216
crores (US$1.3 billion). [16] According to an analysis
by India Infoline (IIFL), Patanjali's success would
have had an impact on at least 13 publicly traded
firms, including Hindustan Unilever, Colgate, Dabur, Acharya Balkrishna
ITC, and Godrej Consumer Products.

The company's major production site is Patanjali Food and Herbal Park in Haridwar. It is
boosting its industrial output from 35,000 crores (approximately 400 billion or US$5.2 billion in
2020) to 60,000 crores (corresponding to 730 billion or US$9.6 billion in 2020) by bringing
additional production plants in Noida, Nagpur, and Indore.

The Patanjali Food and Herbal Park gained 35 full-time, militarized Central Industrial Security
Force (CISF) troops in 2016. The park would be India's eighth private institute to be secured by
paramilitary CISF troops .

page 2
GROWTH AND FINANCIAL REV.

Year
According to statistics released by
business intelligence platform Tofler, 2010-11
Haridwar-based Patanjali Ayurved Ltd 2011-12
showed a 21.56 percent increase in
2012-13
standalone net profit at ₹ 424.72 crore
for budget year 2019-20. 2013-14
As per the corporation, its net profit for
2014-15
the budget year 2018-19 was Rs 349.37
crore. 2015-16

The corporation's revenue from 2016-17

operations for the fiscal year ended
2017-18
March 31, 2020 was Rs 9,022.71 crore,
increased 5.86 percentage. In the 2018-19
previous financial year, it was Rs
2019-20
8,522.68 crore.
0 10,000 20,000 30,000
Its overall income in FY 2019-20 was Revenue in crores Source: Wikipedia

Rs 9,087.91 crore, up from ₹ 8,541.57

crore in the previous financial year
ended March 31, 2019.

"We have not slowed our services during the

lockdown, with the exception of a few days when
mobility was prohibited. Other firms needed one to
two months to deal with the crisis... but as we have
our existing transportation and logistics lines, we were
able to continue production straightaway "he stated-
Yoga Guru Ramdev.

Baba Ramdev, the co-founder of Patanjali Group, told

the associated press PTI that the previous fiscal year
was already critical for the company. "Under financial
troubles, we have continued to operate without
stoppage." "We grabbed Ruchi Soya," he explained.
The group finalized the acquisition of the moribund
FMCG manufacturer Ruchi Soya for Rs 4,350 crore in
December 2019.

page 3
Data Analysis and Interpretation

Health is a major concern these days due to the pandemic situation we are trying to find everything
“Natural” in this world full of chemicals. Patanjali has gained huge response and popularity in the
Indian market, in the last three years. From salt to dish wash bar, from shampoos to toothpaste Patanjali
has spread its empire into the world.

Why Patanjali?

Though there are other companies such as Dabur, Himalaya, Ayush, etc. that market ayurvedic FMCG
products, Patanjali has gained a high name in less time. There are many advantages of Patanjali products
that attract new customers and keep old customers intact.

The prices of Patanjali products are 10%-30% lesser than

its peers
The mantra of natural and no chemicals gained mouth
publicity to a great extent
All Products are safe and tested
Apart from the end result, there are no side-effects using
these products
The “Swadeshi” brand, plays a major role
Plant operating costs are very low
High brand loyalty and satisfaction

For example:
Patanjali launched a soap at Rs 40 against its
competitor Himalaya who has been in the market
for years with similar soap at Rs 50. Due to
Patanjali’s excellent marketing strategy and
product placement, the demand for Patanjali’s
soap increased due to its low price and the
demand curve of Patanjali (FIG.4) shifted
rightward from DD to D1D1 and Quantity
demanded from Q to Q1. This in turn decreased
the demand for Himalaya (FIG.5) and shifted the
demand curve of Himalaya leftward from D1D1
to D2D2 and the quantity demanded from Q1 to
Q2.

page 4
Data Analysis and Interpretation

Continuing the previous example demand for

Patanjali’s soap increased due to its low price and the
demand curve of Patanjali (FIG.4) shifted rightward
from DD to D1D1 and the Quantity demanded from Q
to Q1. This in turn decreased the demand of Himalaya
(FIG.5) and shifted the demand curve of Himalaya
leftward from D1D1 to D2D2 and quantity demanded
from Q1 to Q2. The impact of this on the supply
curve is shown in the above image the supply curve
shifted from S1 to S2 hence enabling Patanjali to
supply more products in the market and capturing the
majority of its competitor’s market.

Reason For Patanjali’s Success

Pricing: The pricing of all the Patanjali products is

always lesser than their competitors. As we all know,
India is a cost-sensitive market. That’s why they started
gaining more and more consumers.
The Market Needs: Patanjali understood the market
needs quickly. While their competitor Baidyanath
group was selling all the ayurvedic products as
medicine. Patanjali started all such products in FMCG
products. For instance, ‘Dant Manjan’ turned into
‘Dant Kanti’ toothpaste.
Number of Products: The FMCG products became
successful. The company started to expand its business
and now it is one of the most emerging companies in
India.
Retail Stores: To fulfill the demand of consumers,
Patanjali made a big decision to open their retail stores
in many cities. This is also one of the biggest reasons
for the success of Patanjali.

page 5
Practical Application of Patanjali

The brand relies heavily on Baba Ramdev for the

ads and promotion as he is not a businessman, he
is a public figure too. In past, there was an
incident done by one of his employees in Assam
that baba Ramdev himself has to come and
apologize. So, by this incident, we can conclude
that if someday something happens to baba
Ramdev than there will be sever downfall in the
supply as well as the demand for the product.
As for the pricing of the products we can say that
the product is less pricey so it’s affecting the Patanjali is a brand that has a huge
company also as people think that the product is international market but it is restricted to
of inferior quality. the Indian market. Patanjali should try to
There are way too many products offered by target the young audience as there is a
Patanjali and within them, toothpaste and huge chance to increase the market.
shampoos are sold which generates high revenue As India is a farming country and the
so Patanjali should discontinue the product which products of the Patanjali mostly depend on
doesn’t generate high revenue. the farmers, we are well aware of the
monsoon of the country so Patanjali should
make a backup plan for any future
problems.
There is a huge competition for Patanjali from
the brands like HUL, Marco, and Dabur. There
is a new entry in the market Sri Ayurveda
which is also a competitor for Patanjali.

In past there was this incident that gave

negative publicity to Patanjali, Nepal
department of drugs administration issued a
public notice for Patanjali saying that they have
found bacteria, mold, and other toxins. That
created negative word-of-mouth publicity for
the brand and damaged its reputation also.

So from all of these, we can conclude that

without the presence of the baba Ramdev it’s
very difficult for Patanjali to survive in the
market as there are more and more competitors.

page 6
Conclusion
So, we can see that Patanjali has disrupted the
FMCG sector and this effect is due to their health
or nature-based products with the vast variety and
they are dominant in the market in the current
scenario if seen. Patanjali has come up with
herbal products and this has caused the problem
for many other giants and has affected their
dominance in the market. And, due to this other
companies have started coming up with herbal
products too in order to stand out and maintain
their profile in the market. Patanjali has its
products in categories such as ghee, ayurvedic
medicines, cooking oils, and many more. Patanjali
tries to attract people with products in less price
range and also, they show their products as
healthy, rich, and beneficial for health.
So, this has attracted people, and only because of
this mentality that Patanjali’s products are healthy
and reliable do people opt for them. Patanjali has
forced companies to change their mindsets with
respect to price range and products. Patanjali
made their impact in the market in a shorter
period of time and also they also grabbed the
major market share. But, slowly as their products
are not having any Unique Selling Propositions as
they are claimed to be natural. Patanjali was doing
well in the market but they were not able to meet
the demands on time due to their supply chain
problems. Indian consumers are really sensitive to
any change in their surroundings usually rely-
page 7
-on the opinions of others which drive them
towards the value proposition the brand is
offering.
Patanjali basically sold faith and reliability with
less price structure. The success of the brand can
be attributed to the association of Patanjali with
Baba Ramdev. Patanjali caters to the needs and
wants of every Indian individual. Retailers are
usually satisfied with the Patanjali stock
regardless, of less margin as compared with other
big brands like HUL, Dabur, and Himalaya.
Patanjali was worried about their strategies as
their stocks were totally sold out and replacement
was not done on time and this made them feel that
their sales and brand image would get hurt.
So, they focused on this point as customers can
move towards other ayurvedic brands. As
consumers' perspective was clear that Patanjali is
affordable and they are natural and more
importantly they are Indian brand. Patanjali is
more into ayurvedic so, it helped them to get into
the roots of the market. Holding into different
markets sectors & variety of the products offered
was a plus point for them. Patanjali focused more
on health-conscious people as Patanjali has been
investing more in organic and ayurvedic products.
Patanjali’s ayurvedic products helped them to
capture the market easily. Patanjali’s products
were sold from strong channels like hospitals, and
dispensaries. They also have Swadeshi Kendras to
sell their products and meet the demands. The
brand is having a perception of health and
wellness as Baba Ramdev is associated with the
brand. Patanjali is having a word of mouth
promotion as their advertising costs around 12-
20% of their revenue expenditure. Patanjali is
having brand loyalty.
END OF REPORT | THANK YOU.