Patanjali open to deals with MNCs: CEO

NEW DELHI: Patanjali Ayurved, which has constantly positioned itself as a ‘swadeshi’ alternative to multinational products, is open to deals with global companies.

“We have three-four offers from global companies who are keen to do international deals with Patanjali,” the company’s chief executive Acharya Balkrishna told ET in an interaction. “We are not averse to working with multinationals, as long as it doesn’t clash with our values. We aren’t rejecting them just because they are MNCs. We are looking at the offers.”

He refused to name any multinational that has approached Patanjali.

French luxury giant LMVH had in the past said it is keen to pick up equity in Patanjali. The ayurveda products maker had forced global and local players including HUL, L’Oréal, Colgate Palmolive and Dabur to step up their portfolio in this space as it became a Rs 10,000-crore-plus company in just about a decade.

However, Patanjali has been losing ground in recent times. Data by researcher Nielsen shows that the company has lost market shares across its core categories such as detergents, hair care, soaps and noodles between July 2018 and July 2019, even as HUL has relaunched its ayurvedic range of products. Patanjali has gained share only in toothpastes, the data shows.

Balkrishna attributed the fall in market share to trade disruptions following the implementation of goods & services tax (GST) two years back. “The GST rollout had a big impact on our operations; it took us time to align our trade, supply and distribution channels to GST,” he said. “But now we are bouncing back, and results have started to show this quarter onwards.”

Patanjali numbers showed that in the July – Sep 2019 quarter it reported sales of Rs 1,769 crore, up from Rs 1,576 crore in the corresponding year ago quarter.

The company’s sales have been falling in the last couple of years. After reporting peak annual sales of Rs 10,500 crore for the year ended March 2017, Patanjali’s sales fell 10% to Rs 8,135 crore in FY18.

“We have done well in this quarter and will do better in the next quarter,” Balkrishna said.

He said Patanjali will not venture into new categories or expand its retail footprint till it regains lost ground, and instead focus on consolidation.

“While there are many brands in this space now, giving an ayurvedic name to a product doesn’t make it so,” he said. “We have invested heavily in research and development which will stay with us.”

According to Nielsen’s quarterly report released last month, the overall FMCG sector grew 7.3% by value in the quarter ended September, versus 16.2% growth in the year-earlier quarter. The report said consumption growth in rural India fell to a seven-year low of 5% in the September 2019 quarter on lack of stimulus, agrarian distress and inconsistent rains.

Balkrishna said economic revival hinges on the government making more efforts towards ease of doing business, and companies fixing gaps including in distribution and product development. “We expect consumption revival in a year’s time,” he said.

Refuting media reports that Patanjali Ayurved was struggling to raise funds for the acquisition of edible oils maker Ruchi Soya, he said it has already secured loans. Patanjali had made an offer of Rs 4,350 crore for Ruchi Soya.

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