Yoga Guru Ramdev’s company Patanjali Ayurveda’s sales and its profits have come down significantly in the financial year ending March 2018. One of the reasons for this is that in order to answer Patanjali, especially multinational companies have launched a number of natural and herbal products. Among them, Patanjali Goods and Services Tax was trapped in the difficulties on the distribution front after the tax was imposed.
According to the financial data from the research platform Tofler, Patanjali’s earnings in fiscal year 2017-18 dropped 10% to Rs 8,135 crore, which was Rs 9,030 crore a year ago. This is the weakest performance of the company since 2013. That year the company’s annual sale was double. According to the preliminary data of Care Ratings, the company’s Net Profit in Fiscal Year 2017-18 also decreased by almost 50% to 529 crores. Regarding financial details, the reply sent to Patanjali was not received until the news was written.
According to the report of Care Ratings, “The biggest reason for the fall in Patanjali’s turnover is the failure of the GST system to adapt itself on time. The company also failed to develop solid infrastructure and supply chain. The biggest reason for the sharp fall in the company’s profitability was the lack of profit before interest, lease, depreciation and tax (PBILDT) margins. Due to the increased expenditure due to the expansion, and the increase in sales and distribution expansions, the company’s PBILDT margin dropped from 18.73% in FY17 to 11.98%.
Analysts say that the company has appointed different distributors for business verticals like Staples, Personal Care and Biscuit, which is causing it trouble at servicing level. According to the Investor Note issued on behalf of IIFL Institutional Equities, “Due to the slowdown in Patanjali’s growth, there is a weak management of trade channels and lack of concrete advertising strategies. Separating distributors according to the product category also put pressure on retailer servicing. ”
Apart from this, the comptators retrieved their lost market share while retaliating with the company. jefferies analysts says that Patanjali’s influence in the market has come down and Dabar has retrieved lost market share in his hands. Patanjali, who started the business as a pharmacy in 1997, has launched two dozen Mainstream FMCG products from toothpaste, shampoo and other personal care products to Modern Consumance Foods like Cornflakes and Instant Noodles.
Patanjali’s initial success got catalyst for Herbal, Ayurvedic and Natural Products. With the fall of multinationals in this space, the share of these products has increased to almost 10% in the consumer goods market. HUL has re-launched Ayurvedic Personal Care Products, Lever AYUSH Brand, Indulekheha has bought Haircare brand and launched Citra Skincare brand.