IEA Sección 1. Información fundamental sobre la ejecución del

INNOVATION

- What makes Patanjali a credible threat is that it does not try to beat other FMCG companies at their game; it changes the game for them: IIFL

- Patanjali’s proactive moves have been crucial for its growth. Other consumer companies will need to step up innovation:Edelweiss

 PRICING

- Priced anywhere between 10%-30% cheaper than peers, Patanjali poses serious challenge to flagship products of many companies: Reliance Securities

- The company is set to eat market share of some of the FMCG majors in oral care, hair care and OTC products with its economical pricing across its brand portfolio: Bonanza Portfolio

 THE BRAND, MARKETING

- Patanjali has the advantage of being associated with a personality, Baba Ramdev, a yoga guru with a following of millions who popularises this brand through his camps: IIFL

- Patanjali will also be launching its mobile app, which will allow consumers to locate nearby outlets that are selling Patanjali products and also facilitate online ordering: Edelweiss

- Patanjali has gained traction in a few categories, one of which is toothpaste: Credit Suisse

- It was one of the top three brands advertised on television in last week of November, as per BARC:Reliance Securities

 REVENUE, MARKET SHARE

- Patanjali could reach a net turnover of Rs 20,000 crore by FY20: IIFL

- Industry sources indicate that Patanjali’s market share is likely to be around 5% by end 2015. This is a big success in this category, which had just three players until now: Credit Suisse

- Patanjali likely to more than double its revenue to Rs 5,000 crore in FY16 from Rs 2,000 crore in FY15

A premium product but an economical price tag. That is what yoga guru Baba Ramdev-backed brand PatanjaliAyurved promises customers. That strategy has worked, with PatanjaliAyurved Ltd, which flaunts its ‘Make in India’ roots, set to touch the Rs 5000 turnover mark in FY16.

Patanjali to tie up with Future Group

Riding on the yoga guru's brand value and personal endorsement for its products, PAL is among the top FMCG companies in the country, ahead of Jyothi Labs

Arnab Dutta | New Delhi October 8, 2015 Last Updated at 00:33 IST

Yoga guru Ramdev'sPatanjali Group is set to tie up with Kishore Biyani-led retail major Future Group. To reveal the business deal between the two groups, Biyani, Ramdev and his close aide Bal Krishna - who also holds several key positions in Patanjali's various arms - will hold a press conference on Friday in Delhi.

While Patanjali did not respond to queries on the purpose of a tie-up with the retail major, a Future Group official said, "A tie-up or association for the food & FMCG (fast-moving consumer goods) products between Future Group and Patanjali Group will be announced." He, however, declined to reveal more details.

The group's flagship entity PatanjaliAyurved (PAL), which was co-founded by Ramdev in 2006 as a private limited company and eventually converted into a public limited company in 2007, currently produces FMCG products ranging from branded basmati rice to noodles, and toothbrush to juices.

Riding on the yoga guru's brand value and personal endorsement for its products, PAL is among the top FMCG companies in the country, ahead of Jyothi Labs. While Emami Ltd and global FMCG major Procter & Gamble has annual sales of Rs 2,031 and Rs 2,334 crore, respectively, PAL is not far behind, breathing on their neck at Rs 2,028 crore, according to CARE Ratings. While Ramdev does not hold any stake in the company, he is frequently seen endorsing PAL's products, the latest being during the launch of Patanjali's instant noodles last month.

So, how does the company do it?

“There are four reasons why Patanjali’s products are cheaper than competition,” the Kotak report said.

“Patanjali’s top management takes no salary and they have no big expenses,” the report added.

Ramdev, the face of the brand reportedly doesn’t own any stake in the company. His close confidant, Acharya Balkrishna, is the managing director. Ramdev’s brother Ram Bharat runs day-to-day operations, while Deepak Singhal, a pharma veteran and Ramdev follower, is the chief strategy officer.

Secondly, Patanjali benefits from efficient raw material procurement—without any leakages or commissions paid. This cut down costs by at least 5%.

However, Patanjali’s core strength in cutting costs lies elsewhere.

It has largely avoided huge advertisement costs that account for asmuch as 10-15% of the other FMCG majors’ expenditure. “Baba Ramdev is a great proponent of a direct marketing FMCG company, and is one step ahead of the likes of the Amways and Avons of the world,”.

For years, Patanjali relied on direct marketing by the yoga guru’s disciples and instructors.

According to brokerage firm, CLSA, Patanjali has the potential to reach out to more than 200 million directly or indirectly linked to his yoga programme.

This year, however, Patanjali has firmed up plans to spend almost Rs300 crore on advertisements across television, radio, print and digital media. Overall, it plans to invest Rs1,000 crore to set up exclusive stores, and ramp up online distribution.

The fourth and last reason is the company’s ability to maintain very low profit margins, according to the Kotak report.