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Patanjali comes calling

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  7 Nov 2016 12:00 AM GMT

With the entry of Baba Ramdev’s Patanjali Ayurveda Limited into the manufacturing sector in Assam, the Sarbanda Sonowal government has maged to rope in its first big investor to the State. ysayers may scoff at this development, considering the near-simultaneous meteoric rise of Patanjali group with the installation of a BJP-led government at the Centre since 2014. Now that the same dispensation is also ruling Assam, questions may be raised as to what incentives the Patanjali group has been offered to set up a project at Ghoramari near Tezpur in Sonitpur district. The Rs 1,350-crore Patanjali Herbal and Mega Food Park, said to be its largest project in the country, will sprawl over an area of 150 acres, and is slated to begin production by March next year. Baba Ramdev has said that the plant will give direct employment to over 5,000 youths, benefit over 50,000 local farmers as well as thousands across the State through its supply and retail chains. His target is ambitious — production of a wide range of goods worth over Rs 10,000 crore per year, including nutrition and kitchen essentials, cosmetics and ayurvedic products. The yoga guru also envisages Patanjali’s involvement in marketing and sale of indigenous products of the State, including handloom, eri and muga silk, cane and bamboo furniture and other agri-based products. Significantly, he has promised to take up with Prime Minister Modi the issue of benefits under the North East Industrial and Investment Promotion Policy — which remains suspended and is scheduled to expire in 2017. The fact is, this is Baba Ramdev’s second foray into Assam. In 2014, the Bodoland Territorial Council (BTC) allotted Patanjali Yogpeeth Trust around 3,828 bighas land in Chirang district to set up the country’s largest herbal medicil plants farm and factory, but the project remains stalled with activists protesting that it will result in eviction of a number of families.

Though blessed with bountiful tural resources, big-ticket investments based on suitable models have long eluded Assam. The long-standing law & order problem has in fact caused a steady flight of capital from the State. There are all-too-frequent complaints against several projects set up here by outsiders, that their agenda is short-term and exploitative. It remains to be seen whether the Patanjali Group takes a different approach, but hopes are bright. Having built up a countrywide clientele for its ayurvedic formulations, the Patanjali Group has been taking rapid strides in the FMCG sector as well. Riding on its twin marketing slogans of ‘no chemicals’ and ‘swadeshi’, Patanjali is all set to become a Rs 5,000 crore FMCG group this year, having seen its revenues grow at 55 percent annual rate for the last three years. It has around 50 manufacturing units, with 5000 retail outlets and 10 lakh shops across the country selling its products. Its brand ambassador Baba Ramdev dreams of going into e-commerce and scaling up production facility to Rs 1 lakh crore in the next 5 years. It is giving a run for the money to long established majors by focusing on mass market products priced at cheaper rates, challenging the market trend towards high value premium products. It has based itself on a loyal consumer base, thereby relying little on advertising or glitzy packaging; it has avoided a formal magement structure, going in savings in distribution margins and low overheads. This model has given it significant cost advantage, and helped it price products competitively. But there are concerns over its closely-held ownership and fincing pattern, whether it is spreading its energies too thin over multiple products. Even more than the Patanjali plant near Tezpur, what is more important for Assam will be a study of this new business model, and whether it can be replicated profitably in the State.

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