With current capacity bursting at the seams, Baba Ramdev’s home-grown consumer goods company Patanjali Ayurved is planning to raise Rs 1,000 crore in project loans.
According to The Economic Times, the company is in talks with State Bank of India, Bank of Baroda, UCO Bank amongst others to realise their expansion plans of setting up plants across the country.
To this, Acharya Balkrishna, Managing Director at Patanjali Ayurved, said,
Project financing will increase as we expand our presence nationwide, extending product lines. We require this as we are now setting up more plants across the country. Long-term project loans with five to 10 years maturity should serve our purposes.
So far, the company has been taking short term loans to meet their working capital. In the past, public sector banks like Punjab National Bank and SBI have lent credit to the company, with large private players like ICICI Bank, HDFC Bank also approaching the Patanjali group.
Started 10 years ago in 2006, Patanjali has been giving competitors like Hindustan Unilever, Emami, Godrej Consumer, and Colgate, a run for their money.
According to Acharya, at present, the demand for Patanjali products is more than the supply, and this is only possible due to the huge workforce and volunteers, which drive the growth of the company. He believes if the growth continues to be robust, Patanjali may cross revenues of over Rs 20,000 crore by 2020.
As per a report by CLSA Research in August 2015, Patanjali saw its revenues quadruple in the last four years, and made more than Rs 2,500 crore in revenue during the last fiscal.
This year, the consumer product chain plans to double its revenue, reaching Rs 5,000 crore by the end of this fiscal. But recent reports suggest that they have hit Rs 4,500 crore already.
Also, Patanjali is known to source raw materials from its own farmlands, boosting operating profit by 20 percent for the company by eliminating middlemen. Further, it also helps in reducing the price of their products by almost 30 percent when compared to other major brands (and competition) such as Dabur.
What are the rivals doing?
To fend disruptive competition from Patanjali, Nestle announced that it will launch up to 25 new products across various categories in the next four to six weeks.
Besides multiple products in chocolate and confectionery, the new products will include seven variants of Maggi noodles, Greek yogurt brand 'Grekyo', and protein growth brand 'Pro-Gro' in the dairy segment.
Talking about Patanjali, Suresh Narayanan, Nestle India Chairman and Managing Director, in an earlier interview, said
That is the kind of competition we would positively call disruptive competition. They come and redefine the rules of the game. I have said that script for the future will be written by redefining the rules of the past.
In terms of spiritual well-being, Art of Living teacher Sri Sri Ravi Shankar has a similar business. Started at the same time, Sri Sri Ayurveda Products sells cereals, health drinks, and personal care items in 600 franchise stores as well as through their online platform.
But Patanjali seems to be way ahead in the league giving companies like Britannia, Dabur, and Nestle a run for their money.