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Baba Ramdev does not own any stake in the company, but he has played a huge part in the brand’s gaining visibility.
The company almost doubled its profits in FY15 at Rs. 308.79 crore from Rs.154.70 crore in FY14.
Home-grown Patanjali Ayurved Ltd. (PAL) is growing rapidly, giving the much-older established players in the fast moving consumer goods (FMCG) segment a run for their money.
And, if the Haridwar-based company is able to sustain the pace, it would soon overtake other majors such as Dabur India, Emami and Marico in terms of sales and profitability.
According to a rating rationale document by Brickwork Ratings, a credit rating agency, Patanjali Ayurved clocked in a provisional turnover of Rs. 3,266.97 crore in the first 10 months of the current financial year. This is more than double of Rs. 1,587.51 crore reported in the corresponding period of the previous financial year.
This is the first time that the FY15 and FY16 numbers of the company have been disclosed. Incidentally, Patanajali has not disclosed its FY15 numbers to the Registrar of Companies (RoC) yet.
While Patanjali’s turnover and profit is currently less than most of the FMCG majors, it is rising at a much faster pace.
According to Bloomberg, Emami reported a turnover of Rs.1,953.02 crore in the first nine months of FY16. Marico clocked in a turnover of Rs.4,819.61 crore between April 1 and December 31,2015. Both, Godrej Consumer Products and Dabur registered turnovers in excess of Rs. 6,000 crore in the first nine months of FY16.
On the profitability front, the company, which has yoga guru Baba Ramdev as its brand ambassador, almost doubled its profits in FY15 at Rs. 308.79 crore from Rs.154.70 crore in FY14, according to Brickwork Ratings.
While the low-base effect makes the profit growth look impressive, it comes at a time when most other FMCG majors saw their profit grow in the range of 10-20 per cent.
According to Brickwork ratings, the company has “expanded its basket of products tremendously over the last year.” Sustaining this with profitable growth requires continous R&D, enlargement of contract manufacturing and quality control. PAL is competing directly with about a dozen well-established FMCG players for its different product range, and the fight for market share could result in pricing pressures.
The company intends to have a Rs. 320 crore bank loan facility to fund its expansion plans. The rating agency has assigned ‘BWR AA-’ rating to the company’s long-term working capital credit of Rs.300 crore it plans to avail from Punjab National Bank. The rating reflects a ‘high degree’ of safety with a stable outlook. A further Rs.20 crore short-term bank guarantee has been rated as ‘BWR A1+’ by Brickworks that denotes ‘very strong degree’ of safety.
“The rating reflects the wide variety of FMCG products brought out by the company under ‘Patanjali’ brand name, strong growth in terms of sales and profitability registered over the last two years, absence of term debt and low level of working capital facilities, and ambitious plans for future expansion and growth,” according to Brickwork Ratings.