JHS-Patanjali Airport Stores Deal A ‘Relationship Binder’ And Not A Profit Churner
JHS Svendgaard Laboratories Ltd.’s new tie-up with consumer goods maker Patanjali Ayurved to set up exclusive retail outlets at airports is aimed at strengthening the existing relationship over garnering profit.
"We don't know the potential of these stores,” said Nikhil Nanda, managing director and chief of JHS Svendgaard told. “We can't say for sure whether it will be a very profitable venture till all stores are up and running. But it definitely is a strong relationship binder,” he told BloombergQuint in an interview.
JHS is already in a pact with Patanjali where it manufactures oral care products for the Baba Ramdev-founded company. Under the new deal, JHS will set up Patanjali retail stores at Indian airports. JHS will bear the cost and in turn have exclusive rights to run the stores, Nanda said. Patanjali has also promised a fixed payment to the company to ensure they don’t run into losses. Any profit generated will get distributed between the two companies, Nanda said without disclosing the ratio.
This deal further cements our existing relationship. So we become a larger partner with them in the overall business plan.Nikhil Nanda, MD & CEO, JHS Svendgaard
The first of such stores was opened at the Delhi airport in January this year and has been profitable from day one, Nanda said. “We started at a certain number, assumed a certain number and have already surpassed it within three months.”
However, the profitability will vary between stores depending on the footfalls different airports receive, he added.