Patanjali's ambitions hobbled by missteps/industry/cons-products/fmcg/what-went-wrong-with-patanjalis-dream-run/patanjalis-ambitions-hobbled-by-missteps/slideshow/69753721.cms
Three years ago, yoga guru and entrepreneur Baba Ramdev was riding high.
The consumer goods empire he co-founded had tapped into the Modi wave. Customers were snapping up Patanjali Ayurved's affordable, Indian-made products such as coconut oil and ayurvedic remedies, in a mounting threat to foreign companies that had bet big on India.
"Turnover figures will force multinational companies to go for kapalbhati," Ramdev declared in 2017, vowing sales would more than double to Rs 200 billion ($2.84 billion) in the year to March 2018. But instead Patanjali's sales plunged 10% to Rs 81 billion. And in the last fiscal year, it likely deteriorated further.
Patanjali's ambitions have been hobbled by missteps. In particular, experts highlight inconsistent quality as Patanjali expanded very quickly.
Patanjali also suffered, like many others, from Modi's 2016 ban on high-denomination banknotes and 2017 introduction of a new goods and services tax. The moves disrupted economic activity.
Problems were expected/industry/cons-products/fmcg/what-went-wrong-with-patanjalis-dream-run/problems-were-expected/slideshow/69753711.cms
Patanjali says it has 3,500 distributors that supply some 47,000 retail counters across India. Patanjali shops, mostly popular with rural Indians rising into the middle class, sell snacks like mango candy or ayurvedic remedies promising to cure joint pain.
Ramdev, a household name whose TV yoga shows are watched by millions, has been the public face of Patanjali since it was set up in 2006 and remains its brand ambassador - his bearded face smiles down from ubiquitous billboards and hoardings in villages.
But the company is owned by his business partner Acharya Balkrishna, who met Ramdev at a Sanskrit school three decades ago and holds 98.55% of Patanjali's shares. The 46-year-old Balkrishna, whose net worth Forbes puts at $4.9 billion, brushed aside concerns about the company's health during an April interview.
Issues included not having long-term deals with transporters, which complicated planning and increased costs. Patanjali executives also lacked the software needed to effectively track sales.
Third party suppliers/industry/cons-products/fmcg/what-went-wrong-with-patanjalis-dream-run/third-party-suppliers/slideshow/69753698.cms
As Patanjali has ramped up its offering to more than 2,500 goods, it has prioritised scale over quality and farmed out production to third parties, which has dented quality.
In 2017, Nepal's drug watchdog found that six Patanjali medical products had microorganism content above a maximum ceiling set by the regulator. Santosh K.C., an official at Nepal's Department of Drug Administration, said there were no problems with other Patanjali products.
Balkrishna denies there have been quality issues, noting that India's national laboratories accreditation board has approved Patanjali's central lab.
Reuters reviewed 81 Patanjali products in a Mumbai Patanjali store and found that 27 of them had labels that listed the goods as partially or wholly manufactured by other producers.
The construction of Patanjali's own factories has been dogged by delays, which the company attributes to starting multiple projects simultaneously.
A food plant in Maharashtra due by April 2017 and an ayurvedic and herbal products factory outside Delhi expected by 2016 are now slated for 2020, according to Patanjali.
Devotees and detractors alike say Patanjali's management style is a far cry from standard corporate culture.
Employees at Patanjali's main food plant in Haridwar gather to chant "om" every morning. Senior managers must dress in white. Failure to follow wardrobe rules and late arrivals result in pay deductions.
Patanjali, which said it employs around 25,000 people, last year advertised for salesmen across India. But one ex-employee said Patanjali had also chopped several hundred posts since mid-2017.
Patanjali has also announced plans to sell SIM cards, solar panels, bottled water, phones and jeans. Balkrishna said the diversification was working.
In 2017, computer scientist Aditi Kamal pitched Ramdev the idea of an Indian-made messaging app. Kamal said she was hired, and six months later was overseeing 100 employees. But the 2018 launch of the app, called Kimbho, was marred by privacy flaws and Patanjali halted the venture.