Story of a billionaire who studied at Gurukul
Every day some 300 trucks roll out of a 150-acre manufacturing complex on the outskirts of Haridwar, one of India’s holiest cities. The cartons of juices and herbal candy, toothpaste and soap, flour and spices, and a variety of herbal medicines to cure seemingly everything, including headaches, arthritis, asthma and high LDL cholesterol, are destined for sale in every corner of the country.
This plant, its biggest, supplies roughly 60% of the output of India’s fastest-growing consumer goods major, Patanjali
Ayurved. Its revenue grew nearly tenfold in the four years to the March 2016 fiscal year, to $758 million. The feverish growth has minted one of the country’s newest billionaires, Acharya Balkrishna, who owns 98.5% of the unlisted company, with an estimated wealth of $2.5 billion.
Balkrishna’s office is in a corridor of a sprawling 200-bed ayurved (traditional Indian medicine) hospital, a short drive from the factory. Across the street is a 10-acre nursery he oversees where nearly a thousand varieties of plants are grown and studied, with a new research lab meant to explore, among other things, the impact of certain herbs on animals.
“What you see today is not what it has always been,” says Balkrishna, 44. “Even in philosophy they say you shouldn’t trust everything you see. Either it will be less or more.”
Balkrishna certainly started out with a lot less. His parents are natives of Nepal, but his father was working as a guard at an ashram in Haridwar when Balkrishna was born, one of six brothers. They moved back to their village in Nepal soon after (and remain basic farmers, he says), but Balkrishna returned to India at age 12, attending various gurukuls (residential schools of the type that were the primary precolonial means of education in India). It was at one of those gurukuls in 1988 in Haryana that he met the person widely known today as yoga guru Baba Ramdev, with whom he built Patanjali.
The two hit it off and kept in touch via letters, reuniting at another school a year later. After their formal education ended, Balkrishna moved around India to study plants and their medicinal value, a key element of ayurveda.
In 1993 he and the slightly older Ramdev were living in the Himalayan caves of the Hindu pilgrim town of Gangotri, a popular haunt among holy men and ascetics near the source of India’s holiest river, the Ganges. In his telling, because of his knowledge of herbs Balkrishna would get frequent requests from visitors for medicines for common ailments. That planted the seed for what was originally a charitable supplier of ayurvedic medicines and treatment.
“When we were students we never thought we wanted to become very big businessmen or make a lot of money, that was never our mind-set,” says Balkrishna, who has a large portrait of Ramdev (there’s seemingly one in every room on the company’s premises) embossed in metal behind his desk. “We didn’t come from any major family background. Had that been our thought, we would never have gone to a gurukul. Everyone knows by going to a gurukul and studying Sanskrit, no one becomes rich. We went to a gurukul thinking we’ll become experts in our ancient texts and philosophies.”
The duo registered a charitable trust in 1995 and, they say, carried their medicines to neglected and troubled parts of the country. The initial medicines were folk herbal cures. They’d also buy more complex medicines from ayurved pharmacies to hand out. “We’d pile medicines on our heads and then go by bus and train to distribute them,” Balkrishna says.
Ramdev started hosting small yoga camps across the country that by 2002 had found a spot on a couple of religious channels. Out of that grew Vedic Broadcasting, a company through which they own five TV channels that would become Ramdev’s medium for reaching a vast audience to extol yoga and ayurved. Followers would ask for cures for various ailments, so Balkrishna brought ayurved doctors as well as minitrucks loaded up with medicines to the camps. The yoga camps begat clinics, a chain of which today is a key retail outlet for Patanjali’s medicines and consumer products.
“There was no commercial planning. It was all driven by demand from people that we responded to,” Balkrishna says.
But the duo had momentum for larger-scale production and sale. They already owned the 50 acres of the land where their factory is today. With the parcel as collateral and a handful of well-off followers as backers, they secured a $40 million loan from state-owned Punjab National Bank to get the business going. Early on they also decided to keep the shareholding close. Since Ramdev had taken a vow of asceticism, the lion’s share went to Balkrishna.
Fresh-faced and chatty in his signature all-white outfit of a sarong and tunic, Balkrishna expounds on controversies surrounding the business and its brand ambassador.
The first big one came in 2005. Brinda Karat of the Communist Party of India accused Divya Pharmacy, a business unit of the charitable trust, of paying workers poorly and of using dubious materials in its medicines. Others suspected it was merely repackaging products made by established firms. (The company denied the allegations.) Divya had just set up a new lab, and in response to the media frenzy that followed the charges, Balkrishna recalls, the company showed its modern operation on camera. Demand jumped. In 2006 Patanjali Ayurved was registered and within a year started manufacturing products at Haridwar such as gooseberry juice, shampoos, soaps and toothpaste in plants aided by state tax breaks given to manufacturers.
A second major row took place in 2011 when a Congress Party-led coalition was in power and the current Indian government’s Bharatiya Janata Party was in opposition. This was the summer of discontent when, after a wave of political scandals, activists from across India joined together to protest corruption. Ramdev was among them (though Balkrishna exaggerates Ramdev’s role as being central). One night police surrounded Ramdev and his supporters. To evade arrest, he swapped his saffron robe for a woman’s traditional outfit but was caught on camera, resulting in a rare moment of public ridicule. (The company says there was a plot to assassinate him and his attempted getaway was to avoid that.) At the time, Ramdev swore to find a way to defeat the Congress Party and says he was instrumental in nominating the current prime minister, Narendra Modi. (Others say Modi’s Hindu nationalist allies have given Ramdev a critical boost.)
Soon after the midnight police bust, scores of charges were filed against Patanjali and its management, with allegations ranging from money laundering to tax evasion. Balkrishna was imprisoned for a month on charges of carrying a false passport–the government said he was a Nepali passing himself off as an Indian. Some of these cases, including the tax evasion and the false passport, are ongoing. (The company denies the charges.)
Although some charges were dropped after the Modi government swept into power in 2014, Patanjali and its management had a trying time. Balkrishna recalls a phase when, out of fear that the government might plant drugs in the factories, he hired sniffer dogs to scout not only the premises but also employees’ lunch boxes to ensure no one was attempting sabotage.
Today Balkrishna tells these anecdotes with a triumphant laugh. “First Brinda Karat went after us, and now she and her party are nonentities; then the Congress went after us, and now they are out of power,” he says. “The benefit was that the nation came to trust Patanjali. We grew, thanks to these politicians. The feeling was that had we been wrong, we’d have been finished, but because we’re still standing that shows we weren’t wrong and our products were good.”
Sure enough, officially reported net profit has swollen from $11 million in March 2012, at the peak of the company’s troubles, to $105 million in March 2016. The company employs nearly 20,000 people and sells products in 11,000 of its own stores. It recently tied up with one of the largest retailers in the country–entrepreneur Kishore Biyani’s Big Bazaar.
“Patanjali has shaken up the Indian FMCG [fast-moving consumer goods] sector by growing at an unprecedented pace, transforming from the sidelines to dominating boardroom discussions of FMCG companies,” Credit Suisse analysts said in a June report.
But this can give rise to complications, warns Arvind Singhal, chairman of Technopak Advisors, consumer products and retail consultants. “When you have such an extraordinary growth, you need to build your supply chain for sourcing and procurement, and your vendors need to be compliant,” he said. “Patanjali is not fully cognizant of the challenges of this. There’s no way that you can grow at this pace and have your supply chain grow with you.” The company says it is focused on its supply chain, but on the recent tour this reporter spotted several cartons of Patanjali competitor Amul’s ghee. (Balkrishna said his operation had run out, so it had bought these to mix in its products.)
Ramdev, now a fixture in Indian media, learned early the power of using the media to send a message. “Journalists ask questions, and you get time and space to say what you want,” he says. (Sure enough, he video-recorded the FORBES ASIA interview and will run it on one of the five Patanjali TV channels.) He has a new message for foreign investors, who he assumes are regular FORBES readers: Patanjali is planning to launch within the year a line of fashion and workout wear, including gym and yoga attire. “Brands like Lee, Adidas, Puma, Reebok–I don’t have good news for them as we will soon give them a run for their money.”
As brand ambassador for Patanjali, Ramdev has urged his followers to show their patriotism by buying only products made by companies that are fully Indian-owned. Goods made in India by foreign companies don’t qualify. “Why should these companies take the profits out of the country,” he says, likening them to the colonialist East India Company.
The duo represent a contradiction between a self-prescribed ascetic life and one demanding modern-day business savvy. Balkrishna doesn’t take any salary, nor do some others in the top management, he says, but he and Ramdev each travel in white Range Rovers. They’re globetrotters for their endeavors (Balkrishna’s favorite place is Scotland, where Patanjali has an ashram on an island that was donated). They live simply–Balkrishna in a bungalow in the ashram where the duo registered their charitable trust back in the 1990s, Ramdev across the street from the charitable hospital they run.
But they are keen on social media: Ramdev has 7.3 million likes on his Facebook page and 6 million followers on Twitter; Balkrishna has 4.4 million on Facebook and 330,000 followers on Instagram. As Balkrishna took FORBES ASIA on a tour of Patanjali’s factory buildings and his special concern, its nursery, his security detail was taking pictures with his iPhone–a gift from a follower–that Balkrishna would quickly upload to social media and then monitor for comments, likes and shares.
Back to business: Balkrishna talks of the company’s goals to open factories within two fiscal years in seven states across India, totaling at least 1,200 acres, including one plant meant only to make products for export. The company plans to borrow $600 million from its original Punjab bank as well as other Indian majors.
By expanding into new products and countries, isn’t Patanjali on track to become a typical Indian conglomerate? Balkrishna smiles once more: “We want to use this wealth to serve others and not ourselves. But at the same time we don’t believe in giving things for free because, if we did that, within a year we’d be back to going around with a begging bowl. We need the wealth to serve the people.”
