Patanjali Makes Up Nearly Half Of The Lost Ground In One Quarter

Unaudited provisional revenue rose 2 percent year-on-year to Rs 8,300 crore in the year ended March, people aware of the company’s financials told BloombergQuint on the condition of anonymity as they are not authorised to speak to the media.

The company had reported a revenue of Rs 4,632 crore in the nine months ended December 2018, BloombergQuint reported earlier. What that means is the maker of Dant Kanti toothpaste and Kesh Kanti shampoo posted nearly 44 percent of its yearly sales in the last quarter of the previous fiscal.

Its profit after tax for FY19, however, fell 25.6 percent to Rs 255 crore, the people quoted earlier said.

An email sent to Patanjali Ayurved on its financials didn’t elicit any response.

Patanjali had been saddled with unsold inventory of non-food products with more than two years of shelf life as it failed to quickly recover from the disruption caused by goods and services tax. In FY18, the company’s revenue declined by more than 9 percent as its back-end was not ready on time for GST. Its distributors also took time to transition to the new tax regime introduced in 2017, and the company’s troubles continued for the much of the last fiscal.

But to clear the stock, the consumer goods maker offered higher margins to distributors willing to pick up more stock, a distributor in the western region said on the condition of anonymity. While the company usually offers 8-20 percent margin depending on the product, it paid additional 3 percentage points under a quantity purchase scheme, the person said, adding that Patanjali also took back old stock lying with bulk sellers.

The company, according to a Brickwork Ratings report released in March, has 110 super distributors, which supply to 4,000 distributors. It also sells directly through around 5,000 exclusive stores, the report said. Besides, Amazon, BigBasket, Flipkart, Paytm-Mall, Grofers, Shopclues and Snapdeal retail the company’s products.

The company grew at a breakneck pace till GST stalled the momentum. Patanjali’s revenue rose more than fourfold in three years through March 2017, and it even aimed to overthrow market leader Hindustan Unilever Ltd. and No. 2 ITC Ltd. by selling everything from staples to salt. But while others managed to recover from the disruption caused by GST, Patanjali didn’t. Also, rivals also came up with ayurvedic and herbal products, negating the threat posed by the company to some extent.

While higher margins may have helped in the quarter ended March, according to Alpana Parida, brand strategist and managing director at DY Works, Patanjali’s brand has taken a beating in the last few year. “They grew too fast and the company failed to provide consistent quality to the consumer,” Parida told BloombergQuint. Still, core loyalists remain with it, she said.