From Baba to Bania: Best of Luck Ramdev:The Great Yoga Guru From India

In July, 2016, Ashok Kumar (65 years), was wondering whether his favourite Yoga Guru
Ramdev (49 years) should have ventured into business of marketing fast moving consumer
products (FMCG) on a very large scale. Ashok had attended two 7 days camps,, one in his
own city and another in Haridwar (U. P.). The second camp was residential and part of the
International Conference on Yoga and Social Transformation in January 2011. This
included moe than 600 participants, both from India and abroad. The facilities were likefive
star holiday home on the banks of river Ganges. Besides face to face training camps, Ashok
had watched Baba Ramdev for more than 3000 hours on Astha TV channel owned by
Ramdev. Each day, for 365 days, Ramdev conducts classes for two and half hours. Baba
Ramdev, starting from 2002, must havegiven approximately 13000 hours lessons of Yoga on
TV. Ashok, a teacher for more than 35 years, was highly impressed by Ramdevs capabilities,
knowledge and communication skills to link with and convince, masses to successfully
achieve his mission of delivering health and happiness. Entering into commercial business
would mean diversion of his energy.

Crossing his mind were the questions: should an outstanding yoga guru become a Bania; a
Trader? Should he feel proud of becoming Indias fastest growing swadeshi FMCG baron
and sell shampoo, tooth paste, detergents and anti-ageing cream and many more? Ashokwas
concerned that the short term success should not make Ramdev arrogant and make boastful
observations like:I will make the MNCs do Shirshana (headstand); Ab tak Colgate ka toh
gate khul gaya. Nestle ka toh panchhi urne wala hai, Pantene ka toh pant gila hone wala hai:
aur do saal mein Unilever ka lever kharab ho jayega.(Cogates gate has already
opened.Nestles bird is about to fly. Pantenes pant is about to become wet. And in two years,
Unilevers lever will become bad.) He thundered these lines, at a press conference on April
27. But as he later told: Those lines are said in jest. My goal is not to harm anyone. I want to
draw my line longer, not to shorten anyones. But this challenge should alert them not to
cheat customers and overprice their products1.

-------------------------------------------------------------------------------------------------

This case has been prepared by Dr. SharadSarin, Professor, Marketing and Strategic
Management Area, XLRI. Jamshedpur. It is intended as a basis for class room
discussions rather than to illustrate either the correct or incorrect handling of business
situations
Note: Throughout this Case, the conversion rate used is US$ 1 = Rs. 65

1
In 2006, the sale of Patanjali was around Rs.50 cr.(US$37.5 mn ). But by 2016, it had
reached a sales of Rs. 5000 cr.(US$770 mn.). The 100 times increase in 10 years had come
through combination of superior quality products at20 to 40% lower prices and rapid
expansion of Patanjali product range.Soon I would dwarf the competitors like HUL and
other MNCswere his boastful observations from his Yoga camps and public speeches.

Who is Baba Ramdev(Ramkrishna Yadav Name given by family)

Ramdev (born 1965 in Haryana, India), has been conducting Yoga classes since 1995 in
Haridwar.He gets the credit of bringing Yoga to the masses. He was born in a poor family of
a farmer. Hestudied in a local Hindi medium school till grade 7. Subsequently he became a
sanyasi after attending the preachings of several gurus and swamis in India.Since 2002,
Astha TV channel, started showing live camps of Yoga. Till date his Yoga session is telecast
live on Astha TV channel between 5 to 7.30 am. Astha reaches 20 million households with a
viewership of 100 million in 160 countries2. Besides the general public, each Yoga camp
would have high profile citizens like politicians, government officers, Defence Personnel. By
early 2016, Ramdev claims to have taught Yoga to more than 200 mn.3. By this time he has
also trained half a million Yoga teachers in India.

Ramdev, with meagre resources has created two giant trusts Divya Yog Mandir Trust and
Patanjali Yogpeeth Trust. The campus in Haridwar has facilities to accommodate nearly 1000
persons. It boasts of having two air-cool auditoriums, one of 2 lac square feet (accommodates
800 plus) and another smaller one of 60,000 square feet (accommodates 400)in which
Ramdev conducts Yoga classes. The website of Patanjali claims to be the most popular Yoga
Institute in the world. It has the largest Out Patient Department (OPD) to treat 6 to 10
thousand patients everyday through Ayurveda.His website states that the key objective of
Patanjali Yogpeeth and Divya Yog Mandir Trust is to make a disease free world through
scientific approach to Yoga and Ayurveda. His aspirations include creation of a New world
Health Organization.To an expert architect, the creation of such an empire would cost billions
of rupees. But Ramdev claims to have raised the resources on his own by selling Ayurveda
medicines, Yoga training camps at moderate prices and also through donations received from
well wishers and disciples. Even though Ramdev has Shanti Kutir as new air conditioned
office4,he still sleeps in his 10 feet by 10 feet small room hired in 1995. Even during extreme
winters, he wears only cotton dhoti.

2
He not only preaches Yoga but also practices it for two and half hours everyday for 365 days.
He works for 18 hours a day and leads extremely simple life. Like all great leaders, there is
100% walk the talk. Through these camps, Ramdev is attempting for a massive social
transformation of 1200 mn. Indians.5Feel proud of India is his constant reminder in his
Yoga Camps.In each camp, he promotes the products of Patanjali and Divya
Pharmacy.Besides sharing the benefits, he also promotes the non-harmful aspects of
Ayurvedic products made from natural herbs. As he claims these are based on knowledge
stored for several centuries in the medical treatment of Charakand Patanjali Rishis. As per the
Ancient Indian scriptures, Patanjali was the pioneer in introducing the science and art of
Yoga to the world. Similarly, Charak was the Ayurvedic doctor, practising many formulation
of herbal treatment.

In a recent Camp at Imphal, Manipur (April 6, 2016), Baba Ramdev promoted the entire
basket of Patanjali products. In his words Yeh Prachaar nahin, Prasad hai (This is not
promotion, but blessings to you all). He shared that all these products are prepared from
natural ingredients like herbs and trees. Go back to nature Prakriti which would prevent
adulteration Vikriti.

As per India Today magazine, Ramdev today is the most televised Yoga Guru.In last 6
months or so, Ramdev has been on air every 30 seconds on some channel or the other.In 6 to
8 years, like rain, articles and TV coverage are pouring every day. Not only the website, but
Ramdevs team is using all types of social media facebook,,You tube,twitter and many
more.

Kaushik Dekka calls him as seamless blend of all three: Spiritualism, Business and Politics5.

Spreading The Swadeshi Wings at Breakneck Speed

Over a decade, Ramdev through his Yoga camps has been attacking MNCs like Colgate,
HUL, Nestle and many more. He would blame them for exploiting the Indian consumers.
Ridicule Cola drinks as good toilet cleaners!!

The Economic Times, a leading commercial newspaper of India carried a news on 9 th March,
2016, Jamshedpur Edition: Patanjali goes Swadeshi with Retailers6. Ramdev was
motivating the retailers to fulfil the dreams of Mahatma Gandhi, the Father of the nation, to
promote Swadeshi (Indigenous - manufactured in ones own country). Ramdev expected
retailers to store the products motivated by the feeling of nationalism, without any extra

3
commission or additional incentives. The competitors of Patanjali felt that this strategy of
adopting the formula be Indian and buy Indianmay not work in the long run. All retailers
and distributors need additional financial motivation which Patanjali was not providing. But
Ramdev felt that earnings of 8 to 10 times more than the competing brands could garner the
support of retailers. High quality and low price were strong reasons to assure high earnings.

By2015, India had more than 8 to 10 million retail outlets in India. [ref. Exhibit-10]. A
leading consumer product company like Hindustan Unilever Ltd (HUL) was catering to
nearly 6.4 million outlets in India [ref Exhibit 9]. Nestle, a leading food company had around
3 lac retail outlets and Amul, with a turnover of US $ 3.7 billion (Rs. 24,000 crore in fiscal
2015) had around 4 lac retail outlets in India. Amul is the largest selling milk and milk
products company of India. A question crossing the mind of many experts was: Would
Ramdev be able to scale up retailing similar to his competitors in next 4 to 5 years?In 2005
Patanjali had only 100 retail outlets. But by 2015, there are 15,000 exclusive retail outlets and
0.1 mn. stores which stock Patanjali products. Ramdev claims to operate Swadeshi Kendra in
6000 villages of India. In 10 years, (2006 to 2016), the sales of Patanjali had a meteoric rise
from Rs. 50 cr. ($7.5mn.) to Rs. 5000 cr. ($770mn.). A jump of 100 times.

In the early days, Ramdev was promoting few herbal preparations like eye drops, dental tooth
powder, dental toothpaste, herbal juices (amla-Indian Gooseberry, aloevera) a few
formulations of Ayurveda treatment from Divya Pharmacy, But by 2014 15, the product
mix exploded to 500 products from Deshi Ghee (clarified butter),Atta Noodles to cornflakes
to fruit juices and to many more.[ref Exhibits 7, 8, 9]. Table 1 provides a glimpse of the 7
product categories and products within each category.

Table 1- Patanjalis Product Mix in 2015

Product Categories Products

1 Nutrition and Supplements Badam Pak, Chyawanprash, Ghee, Honey, Health Drink,
Fruit Juices
2 Grocery Candy, Gram flour, Corn flakes, Herbal Tea, Mustard Oil,
Rice, Salt, Spices, Dalia, New Atta Noodles
3 Medicines Asava, Bhasma, Guggal, Parapati Syrup, Vati, Pishta,
Churna
4 Home Care Agarbatti, Dish Wash bar, Herbal Gulal
5 Personal Care Body Care, Face Cream, Lotion Tooth brush and tooth
paste, Eye Care, Ageing Cream, Hair Oil, Shampoo,
Conditioner
6 Books and Media Audio Cassettes, CDs, Books

4
7 Health Care Digestive, Health & Wellness
Source: Student Presentation: Strategic Marketing, Elective course (2015)of XLRI,
Jamshedpur

We are giving a tough fight to foreign companies in each and every segment -be it
medicines, herbal cosmetics or foods, claims Ramdev. All the products are sold at 10-40%
cheaper prices than MNC brands in the market.For instance, if Kelloggs is selling flakes for
Rs. 91 and Rs. 159 (MRP for 250 gm and 475 gm, respectively), Patanjali flakes are available
for Rs. 85 for 250 gm and Rs. 145 for 500 gm. [Exhibit 11] provides the price differentials of
leading brands and Patanjali.

Till end 2015, the marketing and advertisingexpenses were very low.Ramdevwas relying on
200 million Indian followers who have learnt Yoga from him. Word of mouth (wom) was
his major promotion vehicle. And millions of his followers had started using his products.
But by mid-February, 2016, Ramdev and Patanjali brands started appearing very frequently
on all popular print and T.V. channels throughout India. Some experts in the FMCG industry
feel that soon his advertising to sales ratio (A/S) may exceed companies like HUL or ITC. On
an average, FMCG companies globally spend 8 to 15% on their sales on marketing
communications.For Patanjali, the likely spend for the Year 2016, is likely to be Rs. 360
crore ($5 mn.). The split of Rs. 360 cr. is likely to be Rs. 300 cr. for TV, Radio and Print; Rs.
60 cr. for outdoor publicity8. Hema Malini, a leading actress of Hindi films, promotes
Patanjali brands on TV channels.

In order to cope up with the rising demand, Patanjali is planning to invest $300 mn. in the
Food Park. Earlier they had invested $150 mn.. Patanjali has 150 acres food Park in the foot
hills of Himalayas.9Hamne ye kaam vyapaar ke liye nahin, upkaar ke liye kiya hai [We
haven't done this for business but for wellness of others]. It's not a business, he insists. I am
not doing this to amass personal wealth. I neither own a single share of Patanjali Ayurved,
nor do I take a single penny to promote it.10We never had a business plan. We also don't
know markets or marketing, But what we know is serving the people by providing them high-
quality products at attractive prices. says Acharya Balkrishna, the managing director of
Patanjali Ayurved.11

Ramdev claims that Patanjali's ayurvedic products are thousand times better than any
global brand. We have been in this (ayurvedic) sector and they are now entering it. So they

5
are following us.In five years, I will take swadeshi products of Patanjali to such great heights
that foreign companies will dwarf in front of us, declares Ramdev.12

In an interview to Sounak Mitra of Live Mint13, Ramdev has set the target to reach $15 bn in
next 10 years. This is 1 trillion rupees. The target of 1 trillion represents a third of the size of
the entire consumer package market of India which is likely to reach 6.1 trillion by 2019. In
2015, the size of the packaged market was 3.2 trillion and was projected to grow at 12 to 15%
annually.According to Sounak, Ramdev claims, this growth would happen naturally. I do not
dream, but I only work. We are not into small things. Whatever we do we multiply several
times, be it Yoga or Ayurveda or now business. Baba seems to be following the AK 47 rifle
approach to launch new products. There is a continuous launch and regrouping of categories.
The 7 categories of 2015 are 6 categories.Patanjali has identified 6 areas Natural medicines,
Natural cosmetics, Natural Dairy products and Food, Natural Cattle feed supplements, Bio
Fertilisers and bio pesticides and Natural indigenous seeds. Sounak mentions that whereas the
sails of HUL grew only by 4% in FY 2015 16, the sales of Patanjali grew 11 times from Rs.
450 crore to Rs.5000 crore in 2015. The break up of the sales14 of Rs.5000 ($750 mn) was
Food 37% (Rs. 1850 cr./$285 mn), Health Care 19% (Rs.950 cr./$146 mn), Toiletries
15%, (Rs. 750 cr./$115 mn), Hair Care 11% (Rs. 550 cr./$85 mn), Dental products 11%,
(Rs. 550 cr./$85 mn), Cosmetics 7% (Rs.350 cr./$54 mn).

The Brand Equity15 shares Patanjalis plan to double his business. The pace of growth needs
planning observed Balkrishna. Soon Patanjali would have 1.2 million square feet of modern
warehousing space in 20 top cities. Balkrishna observed without strong planning, we will not
be able to grow further. Part of this strong planning is improvement in supply chain. The
rapid growth has given sleepless nights to the executives of Patanjalis competitors like HUL,
ITC and many more.

Ramdevs Business:Views of Some Experts

Harish Bijoor, a well-known brand consultant from India feels that Indian FMCG markets are
polarised between multinationals like Unilever, Nestle and Procter & Gamble (P & G) and on
other hand, are the companies like ITC, Dabur and Emami. Bijoor feels that Ramdev is
attempting to open a third front.16

Piyush Pandey, Executive Chairman & Creative Director, Ogilvy South Asia Pacific and
highly respected creative genius of India feels, Ramdev is a great proponent of a direct

6
marketing FMCG company, and is one step ahead of the likes of Amways and Avons of the
world. He is an all-rounder who is batting, bowling and fielding at the same time.17

Santosh Desai, a widely quoted brand Guru of India and currently the CEO, Future Brands,
an outfit of Kishore Biyani, promoter of Future Group, feels, Its a strong business model of
providing a counterpoint to MNC companies. And its a legitimate route. There are enough
people who think there should be a strong counterpoint to MNCs.18

Amy Kazimin of The Financial Times described Patanjali as a disruptive force which is
posing a major challenge to all the well known multinational like Nestle, Colgate, Unilever
and Kelloggs.19

Pradeep Kumar, (name disguised)CEO of a leading consultancy firm for dairy products in
India, observed: I am a big admirer of Baba Ramdev for his contribution to Yoga to the
millions of Indians. Having been in the field of dairy business for over twenty years I am
keenly watching the business of Patanjali. He described Ramdev as a super trader with no
backward integration for any of his products like Atta, Noodles, Cornflakes, Dahi, Ghee.
How would he survive for long was his question. Pradeep shared Patanjali has the largest
processing plant for juices like Amla, Aloevera, but not for other fruit juices. It is beyond my
comprehension as to how he could introduce so many products at such a high speed.
According to Pradeep, Ramdev and Balkrishan understand the herbs and Ayurvedic products
very well and they should confine to products based on the herbs only. But so many products
is beyond me.

Rahul Nene, managing director of Witthaus Management Consulting, a talent search

company observed: "Baba Ramdev is an astute manager with exemplary oratory skills.
Nobody has probably understood rural marketing so well and in such a short time.20

Alyque Padamsee, knwon as Bhishma Pitamah, the Grand old man, of Advertising Industry
in India, observes:

Patanjali has done a great job of popularising yoga and ayurveda. It is to be seen what they
do with their money. Maybe you or I wont go to yoga sessions with Ramdev on weekends
but lots of Indians would. His is a distinct mix of Ayurveda with Hindu/Indian imagery that
has crores of followers, Its the first time in India that an actual saint has branded goods...and
hes done exceedingly well.21

7
Creating a New Patanjali: Hiring professionals from FMCG companies

From a two men army, both Ramdev and Balkrishana ; are making serious efforts to make
Patanjali a bigger professional organization.By early 2016, Patanjali had three Vice
Presidents, all reporting to Balkrishna, the M.D. It had 1500 employees. The three V.P.s
came from Dabur, Emami and HUL. Within last 6 months, it had recruited around 250
executives

Ours is not a corporate culture--it is a spiritual culture and it is purpose-driven," said

managing director Acharya Balkrishna."Our compensation packages are in line with industry
standards.We do not seek great qualifications. During our interviews, we only make sure of
two things--that the applicant does not smoke or consume liquor and should be of Satvik
nature. Ramdev says people are drawn by Patanjali's objectives of reinvesting in society
and nation building."22Converting professionals into saints would be a major challenge for
both, feels Predeep Kumar, the dairy consultant.

The Global Herbal Markets: The Status as of early 2016

In its formative phase, Patanjali was confined to producing herbal medicines and herbal
product like Chyawanprash, hair oils, dental powder and many more. For these, the markets
even by 2016 were very small. The global markets were expected to be $115 bn. by
202023.As shared inthe article, many companies like Dabur or Himalaya produced ayurvedic
medicines (ethical products that should be prescribed by doctors) and hoped that, apart from
ayurvedic doctors, allopathic doctors would also prescribe them. That did not happen as there
was never enough data to satisfy allopathic practitioners. There is huge scepticism more so
in global markets - over herbal products and their contents. Herbal products in India are not
subjected to regulatory tests and approvals. Subsequently to overcome the growth
barriers,well-known companies, like Dabur and Himalaya, started selling products over the
counter (OTC). This provided substantial growth opportunities. Patanjali whose turnover was
Rs. 50 cr. ($7.5 mn.) in 2006, had explosive growth of 40 times due to food, personal care
and home care products.24

The large organised players in India are:Dabur, Emami and Himalaya, which produce both
medicines and OTC products. There are premium players like Forest Essentials and

8
 HUL[Hindustan Unilever Ltd.]. Patanjali is a new player in the field which is trying to gain
markets by following an aggressive pricing strategy. Most of its products are cheaper by 10 to
40%.25

The Opportunities for Patanjali Products: The FMCG Space of India

Exhibits 1, 2, 3, & 4 share that Indian markets would remain huge for both urban and rural
markets. India is likely to become $5 trillion economy by 2020. Food processing industry
which is currently an underperformer in India, needs to be toned up. Patanjalis investment in
Food Park are likely to pay rich dividends. All put together, by diversifying into food and
grocery, (non Ayurvedic products) Patanjali has made smart move to manage its future.

By 2015 the FMCG market of Rs. 2.5 lac cr. (approximately $400 bn.)26 offered massive
scope for expansion. Exhibits 7, 8, and 9bring out presence of several huge markets for
products of Patanjali. Three major categories of Patanjali are Food & Grocery, Personal Care
and Home Products. Presently Patanjali has 500 products and 1500 SKUs27.

The Formidable Competitors: Ramdevs Battlefield

By entering into such a variety of all kinds of products from staple food like Atta to breakfast
cereals like cornflakes, biscuits to health supplements like Chyawanprash, Honey to personal
care products like bath soaps, shampoos and facial creams to ayurvedic medicinal
supplements and many more, Ramdev is likely to face very formidable competition from old
and deeply entrenched players both from India and abroad. The list is long. It is not confined
to just a few like Hindustan Lever HUL or Kelloggs or ITC or Dabur or Nestle. Table
2provides a snapshot of Ramdevs battlefield

Table 2- Ramdevs Battlefield

Indian Companies MN.Cs

Company Year Employe Sales Company Year Employees Sales in $ bn.
es
1 Britannia 1892 2500+ $ 1.2 Cargill 1865 153,000 $120.4 bn.
bn.
2 Dabur 1884 6500 $ 1.2 GSK 2000 96575 23.923 bn.
bn.
3 Emami 1975 20,000 + $ 1.2 Johnson & 1886 127,100 $ 75 bn.
bn. Johnson
4 Godrej 2001 1200+ $ 0.7 Kelloggs 1900 30,671 $ 15 bn.
Consumer bn.

9
 Product
5 GSK Health 1956 4000+ $ 0.66 Mondelez 1923 1,60,00 $ 33.2 bn.
Care bn.
6 Himalaya 1930 5000 + $ 0.7 Nestle 1866 3,39,000 $ 100 bn.
bn. 21 more than 1
bn.
7 HUL 1932 18000 $ 4.5 P & G 1837 1,10,000 $ 83 bn.
bn. 1820 more
than 1 bn.
8 ITC 1910 25,000+ $ 5.9 Unilever 1930 1.72 lacs $ 74 bn.
bn. 190
. countries
9 Jyothi Lab 8193/2001 5000+ $
Ltd
0.8bn.
1 Marico 1991 2500 + $ 0.75
0 bn.

1 Parle 1939 10,000 + $ 1 bn.

1
TOTAL .1 mn. $ 16bn. TOTAL 1.2 mn. $ 648 bn.
[Approximat [Approxima
e] te]
Source: Prepared by author

The sales of 11 Indian companies were around US$ 16bn..for fiscal 2015. Similarly, Ramdev
was competing with 8 global giants from Cargill to Unilever. The combined sales of these
giants was around $648 bn. for fiscal 2015. Together these were employing around 1.1 mn.
people. On the other hand, the Indian companies were employing around 1 lac people.

Giants like Nestle which has around 2000 brands, is the largest food company of the globe. It
began in 1866 in Switzerland. Its sales in 2015 was around $100 bn.. It had 29 brands with
sales of more than US$ 1 bn.. Good Food, Good Life is the Corporate slogan of Nestle. The
products of Nestle are sold in more than 194 countries and it is employing more than 0.4 mn..
people.

Nestle began its Indian operation some 57 years ago and by 2014, its sales was around $1.5
bn. (Rs. 9554 cr.) and has 7000 plus employees. In India, it has divided its product into 5
categories, viz:

1. Milk products and Nutrition

2. Beverages: coffee & Tea
3. Prepared Dishes and Cooking Aids:

10
 4. Chocolates and Confectionaries
5. Vending & Food Services

Nestle (India) claims to be benefiting 1 lac farmers. It claims to have created 50,000 direct
and indirect jobs. Its website even for the Indian company, makes a very impressive reading

Like Nestle, are the achievements of Unilever with sales of $74 bn.in 2014 and more than
1.72 lac employees. P & G was established in 1837. By 2015, it had 1,10,000 employees and
sales of $83 bn..

In India, HULs distribution covers over 2 million outlets across India directly and products
are available from 6.4 mn. outlets. Amul through its 3500 distributors and 4 lac retail outlets
is serving its customers throughout India. In 2015, Amuls sales was around $4 bn..

Dabur which started its business in India in 1884, employs 6500 plus people. It has 21
product categories and 5 flagship brands. Its sales were $1.2bn.. (2015)It claims to be
serving 60 mn. customers. Its brands are leaders in Chyawanprash, Honey, Fruit Juices and
Hair Oil.

Parle, the largest biscuit manufacturer of India with 40% market share, started its business in
1939. Its brand Parle G is the largest selling brand of biscuits in the world,. Its products are
sold from nearly 3.3 million retail outlets.

Will Patanjali in a short period of time scale up all its businesses and become a giant MNC?
Will these giants leave Patanjali alone? To anyone familiar with business reality, the task will
appear huge , complex and unrealistic.

Baba Going Against the Mantra of Focus

World is full of examples where companies with over diversified product mix and brands
were focused to cut down the number and consolidate. In India, HUL at one point of time had
more than 140 brand. It finally reduced to 7 to 8 power brands. Could Baba defy the
conventional wisdom?

Cavin Kare, a very successful brand in introducing the shampoo in sachet at 50 p (half a
rupee) is an outstanding story from India. It forced the giant HUL a major player in
shampoo for long in India to follow it. After achieving a reasonable success and size, it

11
thought of growing further through food products, personal care products. For 5 years it
struggled and is now back to the Shampoo business.27

Parle Biscuits a company which began in 1939, and has the largest selling biscuit brand in
Parle G of the world. Till late, i.e. even after more than 75 years, it could not muster up
courage to expand its range of biscuits.

Nestle, a very well respected food company of the world, with very strong R & D bases and
plants all over the world, have confined itself to noodles the 2 minute Maggie noodles in
India. Despite of managing a very large portfolio of food products, it has not succeeded even
in the soup business in India. Cadburys (now Mondelez), attempts to enter the biscuit and ice
cream markets in India, failed. After huge investments, Kelloggs took several years to
achieve breakeven in India.

Ramdev plans to have more than 10,000 centres selling his products. He also has got shelf
spaces in major retail outlets like Reliance Fresh, Big Bazaar, Spencer and many more. But
the point is that can shelf space alone would create customer pull? Attractive prices yes, but
the biggest challenge would be management of supply chains and production units. Amul
faced several challenges for maintaining its items as minus 30 degree centigrade (Icecream)
zero degree butter and milk normal room temperatures like milk powders. It had the know
how and where withall to enter in many businesses, but it remained confined to milk and milk
products. [ref Box 1]

Box 1 AMUL: An Excellent Story from India

An Indian Example where Focus has paid Rich Dividends : AMUL The Taste of India
Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMFL) which owns Amul..Amul,
is the largest food product marketing organization of India. Founded in 1946, it is managed
by a co-operative of 3.6 million producers in Gujarat. Starting from the collection of 200
litres of milk /day from 200 farmers, its collection by 2014 15, reached 14.85 million liters
/day from 1800 plus villages milk co-operative societies. In fiscal 2015, its sales was US$
3.4 bn. (Rs. 22100 cr.).
Giving quality milk products at very affordable prices was the key reason for outstanding
success. Thus Nestle which is the major competitor had its equivalent products or brands at
twice the price of the brands of Amul. Similarly Amulicecreams are sold at 30 to 40% lower
prices than its major competitors.

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As shared in Amuls website, Milk is the largest agriculture crop in India with market value
exceeding US$ 65 bn.. (Rs. 4 lac cr.). Due to its persistent efforts of a very comprehensive
nature cattle breeding, collection of milk to marketing India has become the largest
producer of milk in the world. Milk production is growing at the rate of 4.5% per annum
Under the umbrella brand Amul, as of 2016, it has nearly 40 brands 80% sales still comes
from milk. The balance is from butter, ghee, cheese, dahi, Ice cream, buttermilk and a few
more. Inspite of its outstanding success, it could not be successful in its ventures like Dhara
edible oils, Amul Chocolates, pizza and milk additive - Nutramul. But for all its milk and
milk brands its market share is more than 70%
With head office in Anand, it has around 35 branch offices throughout India. It has a team of
more than 750 professionals managing the sales and marketing functions. It has strong R &
D set up which covers all aspects from management of Cattle, improving its yield, process
technology and new product development. Most of the professionals managing marketing and
sales are Indian Institute of Rural Management at Anand (IRMA) graduates and MBAs from
several other institutes.

Contrast to Amul, Patanjali is still a two men army of Ramdev and Balkrishnna. Further
Amul is focused on only milk and milk products. On the other hand, Baba with 500 products
and 1500 SKUs is marching in all directions. After few failures, can it force Baba to say We
ran everywhere without reaching anywhere?

Food is a business linked to culture and taste. In late 90s HUL was keen to increase its share
in the food business. But inspite of considerableefforts, its share of food in its total sales is
insignificant. Exhibit 9 brings out that in India it is a predominantly a soap detergent and
personal care products company. The parent Unilever has 50% in Food business [ref Table 2
- Formidable Competitor] 75$ bn. in 2014.

Besides the issues of culture and taste, food is highly perishable and runs the risks of quality
consistency at the points of delivery. Will Baba be able to manage the freshness throughout
India. This too will be a big challenge for his team.

Call for Swadeshi* [Made in Bharat]: Its relevance in 21st century

Ramdevs entry into business is on the hate platform of MNCs. As he claims There is
nothing personal but the fundamental reason for the strong dislike towards them is the
waythey have been exploiting the country. They make millions here but don't spend much on

13
the welfare and charity of the people of this country. Look at us, most of the money that we
make goes back into the country as charity. We plan to spend at least Rs.10,000 crore ($1.5
bn) in opening schools across the country. The day when MNCs like HUL and Nestle allocate
even 25% of their earning towards the welfare and charity of the people, I will shut down
operations. It is not possible for them.28

To many experts in the field of globalization, his call for Swadeshi for FMCG products like
soap, toothpaste and beauty aids and alike may appear to be out dated. They may observe that
MNCs like Hindustan Lever (HUL)have not only provided high quality products, but have
also set the norms for good governance. It has set standards of performance for large number
of businesses in India.

*Swadeshi is a Hindi word meaning Indigenous products'

Challenging MNCs is a good idea. It would help the consumers. But a reference to Table 2
would bring out that the MNCs have very deep pockets and a vast pool of expertise on all
aspects of business starting from R & D, technical knowhow, financial management, supply
chain management and many more. Low price and superior product quality could be good for
customers, but could he scale up the operation and maintain the same standards for the entire
product portfolio for long? This would not be easy.

Without competing with the MNCs, the Indian companies can never be globally competitive.
It is only after opening up of Indian economy in 1991, the Indian customer could get a vast
choice of world class products and brands at very competitive prices. Had MNCs not there,
Indians would still be driving an Ambassador car, a TV made by ECTV (a local
company)and Chetak scooters from Bajaj. The gains of competition and interconnected world
are very substantial for any country. India cannot afford to fall behind again.In this
interconnected flat world, India, by continuing with the call of Swadeshi may be caging itself
to remain poor and weak for all times to come. Easy availability of markets for Swadeshi
should not be the temptation of any political or business leader. In America, the campaignBe
American and buy American of early 1980s did not work. Majority of Americans are using
foreign brands made in China and elsewhere.

The Larger Purpose of Ramdevs Life

14
In his short span of professional life of 21 years, (1995 2016), Ramdevs achievements are
legendary. Like Mahatma Gandhi, Ramdev seems to be born with a larger purpose of
transforming India. Compared to business, the social, political and economic issues of a
country like India are very complex and large. Over the years, he has demonstrated his
capabilities to connect with masses and galvanize the whole country. Contrast to this,
business or commerce can be performed by many. Ramdev does not have to worry to
checkmate the MNCs. Many others could do it. Further, his hating the MN.Cs is
contradictory to promoting love and harmony through his Yoga classes. Like many wise
people, he too must be aware that anything built on hate can not last long. But collaboration
with MNCs can help in serving the million in India.

Admirers of Ramdev like Ashok wonder, whether they can convince Ramdevthat India needs
him in his original avatar of Yoga Guru and not the avtar of a Bania, and become Indias
Swadeshi FMCG baron. There is still a long way for him to achieve the mission of a
diseasefree world through Yoga and Ayurveda leverageing his core-competencies - Deliver
Health and Happiness. and establish a new World Health Organization.

Questions for Discussion

1. Is it advisable for Ramdev to enter in so many business? Would going against the
mantra of Focus help Ramdev?
2. Should Ramdev re-define purpose of his life or go back to his original mission of
health and happiness to all through Yoga and Ayurveda. In other words what would
help India more: Baba Ramdev or Bania Ramdev ?
3. In the 21st century, does it make sense to use Swadeshi as a platform to promote
products? Discuss the pros and cons for a country like India.
4. What will make more sense for Ramdev: Hate or collaborate with MNCs !!

15
Annexures

Exhibit 1 - Projection of Indias GDP in 2025 and its changing Structure

By 2025, India will be $5 trillion economy. Currently it s around $2 trillion. Rural

India would account nearly for 40%.

Indias share of wallet is shifting from basic necessities to discretionary items. Good
news for branded and packaged food products.

Rural consumption growth will accelerate over the next 20 years. Per- household
consumption in Rural India will reach todays Urban Levels by 2017.
Source: The Bird of Gold: The Rise of Indias Consumer Market, McKinsey Global
Institute, May 2007

Exhibit 2 Status of Food Processing in India Some projections

Food Processing can do to Rural India what IT has done to Urban India
Food and food processing industry is accounting for 15% of GDP
Indias Food Processing Industry needs to be Agriculture Plus
Estimated to be $180 bn. (INR 8 lakh crore), the Food Processing Industry
contributes about 1.3 to 1.5 % to Indias GDP

16
Source: Feeding a billion, The Role of the Food Processing Industry AT Kennedy and
FICCI 2013

Exhibit 3 Food Processing Industry in India : The Current State of Affairs

In spite of having comparative advantage in terms of raw material/agro

production, and growing demand for processed food, the level of food
processing is not significant as compared to other countries.
Food is the biggest expense for an urban and rural Indian household
constituting share of 38.5% and 48.6% of the total consumption expenditure of
households in 2011 12 respectively.
Only about 2.20% of the fruits and vegetables in India are processed, which is
much lower when compared to countries like USA (65%), Philippines (78%)
and China (23%)
More importantly the lack of processing and storage of fruits and vegetables
results in huge wastages estimated at about 35%, the value of which is
approximately Rs. 33,000 crore annually.
Source: Productivity and Competiveness of Indian Manufacturing Sector, Economoic
Services Group, National Productivity Council, 2008

Exhibit 4The Retail Environment of India

a. Size of Retail Industry in India by 2015, is estimated to be around $US600 bn..

Registering a CAGR of 7.45% since 2000, the retail Industry is expected to grow to
US$1.3 trillion by 2020, a CAGR of 9.7% between 2000-2020
b. Indian Retail Market 2012 13
- Food & Grocery 60%
- Apparel 8%
- Mobile & Telecom 6%
- Consumer Electronics 3%
- Food Services 5%
- Jewelry 4%
- Other 11%
Source: retailmantra.com

Exhibit 5 Share of Organized & Unorganized Retail

a. The Unorganized Retail - 92% and Organized 8%

17
 b. The breakup of Sales of organized Retail is likely to be (2015)
c. The Break up of Sales of Organized Retail 2015:
- Apparel 33%
- Food & Grocery 11%
- Mobile & Telecom 11%
- Consumer Electronics 8%
- Food Services 7%
- Jewelry 6%
- Footwear 4%
- Other 20%
Source: retailmantra.com

Exhibit 6Retail E-commerce Sales in India (in $ bn.)

2013 - 3.59 bn.

2014 5.30
2015 - 7.69
2016 10.68
2017 14.18
2018 17.52

Source E Marketer.com

Exhibit 7 Estimate of Demand for Food & Grocery Products: in US$ bn.

2016 2021 CAGR in per cent

Size of Food & Grocery 425 685 10
Major Categories
1 Atta 2.5 5 15
2 Desi Ghee 60 120 15
3 Edible Oil (Packaged) 20 40 15
4 Fruit Juices 1.5 3 15
5 Biscuits 4 6.5 10
6 Chyawanprash 0.15 0.3 15
7 Honey 0.15 0.3 15
8 Indian Namkeen(Salted snacks) 3 6 15
9 Breakfast Cereals, other supplements 0.5 1 15
10 Malted Drinks 1 2 15
11 Noodle 0.75 1.2 10
12 Papad 0.75 1.2 10
13 Pickle 0.75 1.2 10
14 Tomato sauce 0.25 0.5 15
15 Churan (digestive products) 0.25 0.5 10

18
 16 Potato Chips 0.75 1.5 15
17 Tea (Packaged) 1.5 0.24 10
18 Coffee 1.15 1.8 10
Source:Authors research based on Internet

Exhibit 8 Estimate of Demand for Personal & Home Care Products in US$ bn

Products Year CAGR in per cent

a. Personal Care Products 2016 2021
1 Toothpaste & Powder 1 1.6 10
2 Shampoo 0.75 1.5 15
3 Facial Cream 0.75 1.5 15
4 Body Lotion 0.3 0.6 15
5 Hair Oil 0.75 1.2 10
b. Home Care Products
1 Detergents 5 8 10
2 Agarbattis 0.75 1.5 15
3 Branded Agarbattis 0.6 1.2 15
Source: Authors research based on Internet

Exhibit 9 Break up of Sales over the Years: HUL

1998 - at Rs. 30/dollar 2015 at Rs. 65 per dollar

% Break up Sales % Break up Sales
Products in Rs.cr. In US$mn in Rs.cr. In US$mn
1 Soaps & Detergents 40.6 1893 630 48.4 14,880 2300
2 Branded Soaps 1.1 50 17 1.1 50 cr 76
3 Personal Products 12.5 58 18 29.3 9241 1420
4 Beverages 21 979 327 11.8 3300 500
5 Packaged Food 1.1 50 17 6.2 1848 285
6 Others - - 4.3 1200 185
Source HUL Annual Reports 1998 , 2015

Exhibit 10 Approximate Retail Outlets of leading FMCG companies in India 2014 15

Company:
b. AMUL 3 to 4 lacs
c. HUL 6.4 mn. (indirect) 2mn. (direct)
d. Cargil India 2 lacs
e. ITC 4.3mn. (indirect) 2 mn. (direct) as per ITC no.of Retail outlets in India aw 8
mn.

f. Dabur 2.8mn.
g. Nestle 4.5 mn. (indirect) 1 mn. (direct)

19
 h. Parle G 3.3 mn.
i. Marico 3.3 mn.
Source:Authors research based on Internet

Exhibit 11 The Price Comparison Patanjali and Competitors

Products Quantity Price in Rs

Patanjali Others
Chyawanprash 500 gm 115 160 (Dabur)
Pineapple Juice 1 litre 85 99 (Dabur Real)
Honey 500 gm 135 199 (Dabur)
Face Wash 60 gm 60 80 (Pears)
Shampoo (anti dandruff) 200 110 159 (Head & Shoulder)
Bathing Soap (Neem) 75 gm 15 24 (Himalaya)
Dish Wash Bar 175 10 15 (VIM)
Corn Flakes 500 gm 145 182 (Kelloggs)
Detergent Powder 250 gm 13 19 RIN)
Source:Rajiv Singh,Baron Ramdev June 14 2015 : The Economic Times (Kolkata)

Exhibit 12 Patanjali Factories and Offices

Name Location
Divya Pharmacy Medicine and Herbal KripaluBaag Ashram, Kankhal, Haridwar
PatanjaliAyurved (registered) D-26, Pushpanjali, Bijwasan Enclave , New
Delhi
PatanjaliAyurved (1 Unit) D-38, Industrial Area, Haridwar
PatanjaliAyuved Ltd. (2 Units) Yogpeeth, MaharshiDayanand Gram, Delhi
Highway, Haridwar
PatanjaliYogpeeth (3 Units) Gram, Padarth, Haridwar
Patanjali Bio Research Institute Gram, Padarth, Luxar Road, Haridwar
Source:Prabhat Khabar, Jamshedpur, 11 April , 2016
List of Tables:

Table 1- Patanjalis Product Mix in 2015

Table 2 - Ramdevs Battlefield

20
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