Patanjali Ayurved Limited Company Analysis
Patanjali Ayurved Limited (PAL), registered under the company’s act 1956 with its registered office at New Delhi and three manufacturing units at Haridwar, Uttarakhand. The manufacturing units in Haridwar have the capacity to process ~ ton of raw materials, rolling out ~ products in medicine, food, cosmetics and toiletries. As part of the company’s future strategy to increase supply and target a larger customer base, PAL plans to set up manufacturing units in each State with an investment of about INR ~ million to INR ~ million. Patanjali products were available only in Patanjali branded stores and arogya kendras. However, since ~% of FMCGs are bought from mom and pop stores, they have appointed around ~ distributors to penetrate these outlets. In addition to this, PAL has also tied up with modern retailer Future Group in order to further Plan to roll out more in Uttarakhand, Uttar Pradesh, Bihar, Jharkhand, West Bengal, Chhattisgarh, Assam and Rajasthan.
The setting up of this food park helped them source raw material directly from the farmers and cut out the middle men. The food park is estimated to give healthy life to 400 million people and the propensity to reach 700 million people. The main objective of this park is to ease the supply of products to people in a way that farmers earn profit. It is swami Ramdev’s dream that farmers and labourers become self reliant and self-sufficient.
Patanjali has the aim to expand pan India due to which the company will be tapping on the franchise model to grow its network. As of February 2016, Patanjali has 5,000 franchise outlets and hopes to add another 1,000 more by the end of FY’2016. To open a franchise outlet of Patanjali, one has to invest INR 0.7-1.5 million, depending on whether they open a Arogya Kendra (health and wellness centre) or Swadeshi Kendra (non-medical outlet). The area prescribed for these centers would range from 300 to 2,000 square feet.
Financial and Operating Performance of Patanjali
• The revenue from the sale of PAL products increased from INR ~ million in FY’2010 to INR ~ million in FY’2015, achieving a CAGR of ~% during the same period.
• Personal Care segment contributed the highest to PAL’s revenue (~ %), amounting to INR ~ million in FY’2015.
• Nutrition and supplements came in second with a percentage of ~% and added INR ~ million to PAL’s overall revenue.
• PAL’s budding grocery segment accounted for a share of ~% of total revenue, amounting to INR ~ million in FY’2015.
• Home care (~ %), Ayurvedic medicines (~ %) and Health Care (~ %) contributed INR ~ million, INR ~ million and INR ~ respectively, to the overall revenues of the company. The sale of books, CD’s, Mp3, DVD’s and VCD’s are classified under the ‘others’ category and accounted for ~% of PAL’s overall revenue, amounting to INR ~ million in FY’2015.
PAL received one of its highest revenue from the city of Mumbai, accounting for ~% of overall revenue, amounting to INR ~ million in FY’2015. Delhi accounted for ~% of PAL’s revenue, amounting to INR ~ million in FY’2015. With a strong population base of 62.7 million (2013) and a rising per capita income, Gujurat has managed to contribute ~% to PAL’s revenues, amounting to INR ~ million in FY’2015. Bangalore and Pune had contributed ~% and ~% respectively, to PAL’s overall revenue, accounting to INR ~ million in FY’2015.
A major portion of online sales come from north and west India and PAL’s online website accounted for only ~% of total revenue, amounting to INR ~ million in FY’2016. A large number of Patanjali products are still available on the website of online retailers and hence their contribution to overall revenue accounted for ~%, amounting to INR ~ million in FY’2016. Offline stores have accounted for ~% of PAL’s overall revenue in FY’2016; amounting to INR ~ million Offline stores include Patnjali owned retail outlets, franchisee stores, modern retail outlets and kirana shops (mom and pop stores).
A surge in demand for Patanjali’s personal care products amongst the young female population has resulted in the company generating revenues of INR ~ million from individuals aged between 25-50 years.
Market Share of Patanjali Products in the FMCG Segment
The revenues from the honey industry increased from INR ~ million in FY’2010 to INR ~ in FY’2015, achieving a CAGR of ~% during the same period.
Dabur has the highest market share in the honey market, accounting for ~% of overall honey revenue in India. For the financial year 2015, Dabur’s revenue from honey totaled to INR ~ million. On the other hand, new entrant PAL has managed to seize ~% of market share, with revenues been evaluated at INR ~ million in FY’2015. The unorganized manufacturers accounted for a share of ~%, amounting to INR ~ million during the same period.
The revenues from the toothpaste market increased from INR ~ million in FY’2010 to INR ~ million in FY’2015, accounting for a CAGR of ~% during the same period.
The market offers huge potential as penetration and per capita consumption of oral care products are very low in domestic market. Colgate-Palmolive has emerged as the leader in the toothpaste segment with a market share of ~% and revenues evaluated at INR ~ million in FY’2015. PAL’s toothpaste offers both dental protection and dental beauty. The company has managed to clutch a share of ~% in the toothpaste market, which is a formidable achievement for PAL since its entry into the market in late 2012. It has managed to attain revenues amounting to INR ~ million in FY’2015. The unorganized manufacturers accounted for a share of ~% in the overall toothpaste market, accounting for INR ~ million in revenues.
New and innovative product launches have successfully catered to the consumers changing preferences which have helped the face wash segment propel from INR ~ million in FY’2010 to INR ~ million during FY’2015.
HUL has the highest share in the face wash segment and accounted for ~% of the overall face wash industry in FY’2015. The revenues generated by HUL for their face wash segment amounted to INR ~ million. Himalaya Drug Company trails behind HUL with a market share of ~% and revenues totaling to INR ~ million. With less than two years since its entry in the personal care segment, PAL has managed to garner ~% market share, accounting to INR ~ million in FY’2015. The unorganized manufacturers garnered a share of ~% share in revenue in the face wash segment and accounted for INR ~ million in revenue.
Revenues from the instant noodle market dropped from INR ~ million in FY’2015 to INR ~ million in FY’2016. The revenues of the instant noodle segment grew at a CAGR of ~% from FY’2011 to FY’2016. Nestle’s Maggi noodles obtained a market share of ~% in the overall instant noodles segment in FY’2016, with revenues of the company decreasing to INR ~ million in FY’2016. ITC’s yippee noodles market share increased to ~% in FY’2016, with revenues totaling to INR ~ million. PAL had managed to acquire a share of ~% in the instant noodle market and this can be attributed to its late entry into the market. Hence, it has managed to attain INR ~ million in revenue from the instant noodle market. The unorganized players in the instant noodle segmented accounted for a share of ~% in the instant noodle segment, accounting for ~ million in revenues.
The revenue from the biscuits and cookies market increased from INR ~ billion in FY’2010 to INR ~ billion in FY’2015, achieving a CAGR of ~% during the same period. Parle has managed to remain the market leader for many years with a share of ~% in the overall biscuits and cookies market. The company has earned INR ~ billion from the sale of its biscuits and cookies in FY’2015. Britannia trails behind Parle with a market share of ~%, amounting to INR ~ million in revenues in FY’2015. PAL accounted for a mere ~% market share, which generated INR ~million in revenue in FY’2015. The unorganized manufacturers of biscuits and cookies accounted for ~% of the overall market, amounting to INR ~ million during the same period.
The revenues from the hair oil segment increased from INR ~ million in FY’2010 to INR ~ million in FY’2015, achieving a CAGR of ~% percent during the same period. Marico has been the most dominant player in this market due to its famous coconut oil that has appealed to a vast majority of Indian customers. Due to this, it has seized a share of ~% in the overall hair oil market with revenues amounting to INR ~ million in FY’2015. Marico has not faced much competition in this segment as its competitor Dabur and Emami have only garnered a shared of ~% and ~% respectively. PAL’s late entry into the hair oil segment has resulted in its ~% share in the overall market and revenues amounting to INR ~ million in FY’2015. The unorganized manufacturers of hair oil accounted for ~% of overall market revenue, amounting to INR ~ million during FY’2015.
The revenues for PAL is projected to increase from INR ~ billion in FY’2016 to INR ~ billion in FY’2018 and will further double to INR ~ billion by FY’2020. While the revenues from the FMCG market is expected to grow at a CAGR of ~% to~%, revenues from PAL is anticipated to grow at a CAGR of ~% from FY’2016-FY’2020. PAL’s personal care and grocery products are expected to contribute approximately ~% to overall revenue by FY’2020. While the revenues of PAL continue to achieve formidable growth, its increasing expenditure on marketing and advertising (INR ~ million) coupled with its rising administration expenses will result in lower growth rates in the future as compared to the previous five years. PAL has proposed the launch of 250 mega stores in tier-1 and tier-2 cities which will also sell only Patanjali products.
Cow Ghee, Shampoo, Biscuits, Noodles, Honey, Dental Cream and Aloe Vera cream are projected to be the best selling products and contribute the most to the overall revenues of the company.
The increasing demand for cow ghee is expected to continue in the future, especially from the north and west region of the country. It has been forecasted that cow ghee will contribute ~%-~% to PAL’s overall revenue in FY’2020. Future projections indicate the increase in revenue contribution by honey to PAL’s overall revenue to ~%-~% by FY’2020. The rising demand from metropolitan cities and new variants of honey is expected to boost the revenue from the sale of honey in the future. Patanjali plans to increase their production capacity of amla juice from 6,000 to 8,000 liters per hour in order to meet the increasing demand for their fruit juices. It has been projected that the fruit juice segment will contribute ~% to Patanjali’s overall revenue by FY’2020. Future estimates indicate the share from the sale of chyawanprash to PAL’s overall revenue to range from ~%-~% by FY’2020, due to the narrow target population and the low consumption per individual (1-2 tablespoon per day).
It has been estimated that the biscuit and cookies segment will contribute ~%-~% to PAL’s overall revenue by FY’2020. The cream biscuits will be priced higher than the non-cream biscuits in order to target the middle and upper class population. It has been estimated that ~% of PAL’s overall revenues will arise from the sale of candies by FY’2020. Future estimates indicate the growth in this category, however, it has been forecasted that toiletries will contribute ~%-~% to Patanjali’s overall revenue. Hair oil and Patajali’s shampoo are expected to boost the revenues generated from the hair care segment and is projected to contribute ~%-~% to Patanjali’s overall revenue by FY’2020.
Source: https://kenresearchreport.wordpress.com/2016/08/30/patanjali-ayurved-limited-company-analysis-new-product-pipeline-and-brand-image-to-drive-company-growth-ken-research/
