With Patanjali Ayurved Ltd. (PAL), Baba Ramdev has taken the once coveted and near strong-held consumption industry by storm. He has literally taken the bulls by the horn; and marketing teams at MNCs like HUL, P&G, ITC, etc., are gasping for breath. It’s great to be a capitalist in India and Baba Ramdev is a unique capitalist; I would probably say he is the BEST STARTUP story in India. Better than the Valuation bubbles like Flipkart, or their likes. He makes money (profit), he has a great supply chain system in place and he delivers quality products. In fact, he should make money on all his products so that he keeps expanding and delivering value for money for his customers. We have already covered in detail PAL in two of our earlier pieces.
As of now, in an interview in Nagpur, Baba Ramdev said he is targeting to have a major slice in the India’s consumer market pegged at ~Rs. 50.0 L crore. He further added that, “as of now PAL has 20,000 employees, 200 scientists and 10 research labs. Our products are research-based. Our Dantkanti toothpaste is popular across the world. We are producing 25 lakh tubes of the paste per day and will soon be producing 50 lakh tubes daily.” Baba Ramdev is big on R&D and they are proving it with their quality Ayurvedic products. Dantkanti already has more than 5% market share in toothpaste. Post, Dantkanti success, now all players like HUL or P&G are coming with Ayurvedic toothpaste variants; however their success is difficult to tell.
Desi Jeans: What are the plans?
In an interview with Telegraph he said “The idea (of the apparel brand) started with some followers asking me for Patanjali yoga wear. Then we thought ‘why not a whole range of dresses – Paridhaan – for everyone’? If we are fighting to bring economic independence for our country from multinationals by promoting indigenous and natural products, we should also be in the garments market. We will make men’s and women’s wear, not just traditional Indian clothing but also modern wear like jeans for example. Just because I am a baba does not mean we cannot marry modernity with spirituality, we can make, let’s say desi jeans.”
Frankly, Baba Ramdev is an extremely shrewd businessman. He knows, he is the best brand ambassador for his products. One statement of his, is sure to make waves in the media and even act as fuel for trolls on social media and for self-styled knower-of-all-things like Scrolls and DailyOs. They give him the much needed traction.
So, even before he launches anything, his products get the desired visibility. This is one advantage that he has over his competitors. If a product is to be launched by HUL, they will hire Kareena or Aishwarya, spend crores on TV shoot, etc., and still the ads don’t guarantee visibility because hey! people watch with the dreaded remote in their hands.
But, it is quite easy for Baba. He has got not just the business right but also the news psychology right. He makes a statement about new business, people make fun; there! he gets his coverage.
Didn’t you notice the cartoons, trolls, memes, jokes about Shuddha Satvik Jeans from the house of Patanjali. Now, everyone knows that he is coming to the Apparel business. He already has his first mile of product placement done. Next, he can use a few models for his product; or easier directly sell it as his stores.
What I find amazing is that Baba Ramdev was very smart in coining the term Desi Jeans; as frankly most of the jeans brands operational in India, albeit having a foreign brand name like Levi’s, Lee or Wrangler or Crocodile or Mark & Spencers, are manufactured by Indian companies like Arvind Mills, Nandan Denim, etc.
Coming to numbers; PAL is planning to set up its biggest unit on a 40-lakh sqft at Mihan in Nagpur, which will be bigger than its first unit at Haridwar and biggest in the country. PAL plans an investment outlay of Rs. 1000 cr., for the project and expects to employ 10,000 to 15,000 youths. The company is also planning an EOU in the SEZ at Nagpur.
The global market for denim is forecast to reach USD 64.1 billion by 2020. The Indian denim industry has shown continual growth over the years and currently the country boasts of a denim manufacturing capacity of around 1.1 billion metres per annum. Its utilization levels are pegged at 80-85%. Despite the impressive statistics, the Indian denim manufacturing industry contributes ~5% to the global scenario, reflecting the overall performance of the textiles industry. With targeting exports and domestic market, Baba Ramdev has a huge target set.
His success will depend on his ability to deploy capital and leverage his existing supply chain & marketing setup. The production costs are generally lower for FMCG products; it’s the supply chain & related expenses that eat chunk of margin. He has been able to kill this cost and remain competitive for customers. Even with Apparel wear, if he is able to maintain this ratio; and use pure cotton production, then Baba Ramdev’s Paridhan will be a huge success. We wish him best for the same. And, honestly, any new Entrepreneur should be wished the same; that is the Spirit of Make In India and StartUp India.