New Delhi: After giving multinational consumer products makers a run for their money in India, yoga guru Baba Ramdev is taking the fight to overseas markets.
Ramdev’s Patanjali Ayurved Ltd is looking to set up a production unit in Sahibganj, a district in Jharkhand that the central government plans to turn into a multi-modal hub with direct connectivity through roads, waterways and air with neighbouring countries.
The company, which sells everything from shampoo and toothpaste to biscuits and noodles, and rice and wheat to honey and ghee, is in talks with both the central and Jharkhand governments to pursue its ambition.
“Patanjali is in talks with the Inland Waterways Authority of India and shipping minister Nitin Gadkari to use the Sahibganj multi-modal terminal for export of its products to East Asian countries like China, Myanmar, Bangladesh and others. By using the inland waterways, the company will save on its logistic costs for exports and the idea is to capture the East Asian market by competing on price and quality,” said a senior central government official on condition of anonymity.
The planned overseas expansion is in line with the government’s Act East policy, which emphasises ties with India’s immediate neighbourhood and in the Asia-Pacific.
Sahibanj “is a strategic location,” a spokesperson for Patanjali Ayurved said. “We are in discussion with the Jharkhand government for the industrial development of the state.” Sahibganj, which is the only district in Jharkhand where the Ganga flows, will give Patanjali direct access to Bangladesh and Myanmar.
The Sahibganj multi-modal terminal planned under the Ganga Jal Marg Vikas Project will have a handling capacity of 2.28 million tonnes per annum and the first phase of construction is likely to be completed by 2019. Sahibganj is already attracting interest from industries like cement, coal and thermal power and packaged consumer goods retailers like Big Bazaar.
To be sure, Patanjali has been exporting to the UK, US, Canada and Mauritius, which are home to large Indian-origin populations, for the past couple of years, but in limited quantities.
According to the Patanjali spokesperson, the company has, in the recent past, received offers from countries like the United Arab Emirates, Iran and Azerbaijan to retail its products in those markets but it hasn’t done so.
The East Asia region is a huge market, said Pinaki Ranjan Mishra, partner and national leader at consultancy firm EY. “Some of the Indian companies have done well in some of these markets. Also, these are relatively easier markets to crack, unlike the African region. Considering the government’s policy measures and stance on ASEAN (Association of Southeast Asian Nations), they may get some support as well,” Mishra said.
Mishra, however, was skeptical about its success in China. “It’s a bold move, and probably a bet that the company is taking. While Chinese people are fond of traditional things or products, they tend to prefer western companies for FMCG products.”
Abneesh Roy, analyst with Edelweiss Securities Ltd, agreed. “China is a tough market. No Indian FMCG companies have managed to crack that turf so far. There’s not much Indian expats in China who could be the first consumers for Patanjali products.”
But, Mishra said, Ramdev may manage to dent the Chinese market with his mastery over yoga, which is universally accepted.
Ramdev has repeatedly said on public forums that India could improve its ties with China through yoga – through which Ramdev has built a following of millions in India.
Sahibganj is not new territory for Patanjali. The company already has two centres in Sahibganj for distribution and retailing of its herbal medicines and packaged goods products, according to the Patanjali spokesperson.
Besides the proposed factory at Sahibganj, Patanjali has started work to set up a production unit in Assam that would cater to the north-east and eastern parts of India and neighbouring countries such as Bhutan. Patanjali already has a production partner in Nepal and sources herbs from Nepal for its Indian factories.
Patanjali, which claimed to have earned Rs5,000 crore of revenue in the year to 31 March, 2016 and said it hopes to double that in the current year, has a factory in Haridwar (Uttarakhand), and has started work to set up plants in Uttar Pradesh, Madhya Pradesh, Maharashtra and Jammu and Kashmir.
In April 2016, Acharya Balkrishna, Ramdev’s close confidant and managing director of Patanjali Ayurved, said at a press conference that the company will spend more than Rs1,000 crore to set up new production units and Rs150 crore on a research and development facility