Baba Ramdev: Untold story of the godman turned business tycoon

On 4 May 2017 the Patanjali group of companies doubled its revenues to ₹10,561 crore in one year, making it the second largest FMCG company in the country, second only to Hindustan Unilever, which leads the sector with revenues of ₹30,782 crore.

But Unilever should not be complacent. Ramdev is coming up fast, and has a new target: he promises to double revenues to ₹20,000 crore by May 2018.

In a single year Ramdev has already leapfrogged past giant companies such as ITC (₹10,339 crore in revenues), Nestlé India (₹9,159 crore), Godrej Consumer Group (₹9,134 crore), Britannia Industries (₹8,844 crore), Dabur (₹7,691 crore), Tata Global Beverages (₹6,963 crore), and Marico (₹5,918 crore)… Ramdev’s best-selling products included ghee, leading revenues at ₹1,467 crore, Dant Kanti toothpaste at ₹940 crore, Ayurvedic medicines at ₹870 crore, hair oil at ₹825 crore and herbal soap at ₹574 crore.

So how has this happened? Ramdev has cannibalized the market shares of the top-selling products of the blue-chip FMCG companies – in product segments that are fast-selling to begin with such as honey (top selling Dabur product), toothpaste (top-selling Colgate product), noodles (one of Nestlé’s best-sellers) and ghee (competing with Amul, Gowardhan), and carved a place for Patanjali on the shelves next to these products.

Ramdev promotes most of them as ‘natural’ alternatives to the chemical-infused counterparts peddled by multinational corporations.

Once he is on the shelf, the high level of public recognition of him and trust in his brand propel him to the top, allowing him to skim from the multinationals, whom he indignantly brands as ‘anti-national’. ‘There is a certain guilt he’s managed to create about buying from multinational companies, when there is a perfectly good indigenous alternative available,’ says Gunendar Kapur.

At the other end of the product spectrum, where margins are not all that high, Ramdev is making a massive splash in food staples such as wheat flour, multi-grain flour and cooking oils. Promising to deliver consistent, adulteration-free quality, he has easily drawn customers away from their local baniya, or grocer, who sells unbranded produce.

Ramdev has managed to keep his prices spectacularly low for the following reasons.

First, because of cheap labour. The average Patanjali worker on the factory floor earns ₹6,000 per month for twelve-hour shifts, six days a week.

Ramdev terms working for Patanjali as seva for the benefit of the nation, of swadeshi, of ‘Indian heritage’. The ordinary rules of the labour market don’t apply here.

Second, owning two television networks has granted Ramdev a terrific advantage, keeping his advertising expenses low. In an April 2017 article, The Economist wrote, ‘The company is able to offer customers good value partly because it spends only 2–3% of revenue on advertising [consumer firms typically spend 12–18%] . . .

Patanjali grew by word of mouth and sells everything from detergent to cornflakes and hair oil under its own name.’ But it did not just grow by word of mouth. Aastha and Sanskar take him into the living rooms of his target audience every day, all day.

Third, ‘he keeps his margins low’, explains Kapur. While most multinational companies need a margin of 50 per cent to recover high advertising costs and post a 15% profit (after tax), ‘Ramdev’s margins can be as low as 2-3%’, he says. ‘Companies in the organised sector cannot afford to function like that.’

Last is the group’s general disregard for the law.

Ramdev made a telling comment during a ‘Nation-Building Meet’ in Delhi in March 2013. Addressing eminent citizens, which included BJP member and eminent lawyer Ram Jethmalani, Ramdev lamented the state of the nation where it could take up to ‘seven years for Tatas to get permissions’.

He continued, laughing, ‘Hamein to permission milti hi nahin hai . . . bina permission ke hi kaam kar rahe hain.’ (I don’t get any permission at all. I am working without them.) But while Ramdev laughed as if it were a joke, the intellectual elite of Delhi were not amused. Sensing the disapproval of his audience, he tried to explain himself, ‘Tata ko agar saat saal lagenge, to Baba ko to sattar saal lag jayenge. Tab tak to mein mar jaaonga!’ (If it takes the Tatas seven years to get permission, it will take Baba seventy years. By that time, I will be dead.) Ramdev laughed again, a little uncomfortably, hoping to get someone in the audience to respond with a chuckle. No one did.

That unguarded comment, so unusual for Ramdev, the master of optics, was revealing of his general disregard of legal boundaries. His long years of practice of performing for the cameras had trained him to know what to say and when to say it.

For instance, on 16 April 2014, at an electoral rally, Mahant Chandnath, a candidate standing for election in Alwar, Rajasthan, leaned towards him on a rally stage and said, ‘…paise lani mein badi dikkat ho rahi hai... humare pakde bhi gaye.’ (Someone is having a lot of trouble bringing some money... some of ours got caught too.) Not knowing the cameras were picking up every word, Ramdev tapped his hand to stop him from speaking and whispered smilingly, ‘Chup raho. Yahan baat mat karo... bawre ho kya? Yahan baat mat karo.’ (Keep quiet. Don’t talk here. Are you crazy? Don’t talk here.)…

In December 2016 the Haridwar district court slapped a fine of ₹11 lakh on Patanjali Ayurveda for misleading advertising and passing off products manufactured by others as their own.

But such deception is nothing new. Ramdev has being doing so, according to Haridwar residents, from the days when he first set up his ‘clinic’ under Balkrishna in Shankar Dev’s Kripalu Bagh Ashram.

On 18 April 2017 the Indian Express reported that the Food and Drug Administration of Haryana had found Patanjali ‘cow ghee’ to be ‘substandard and unsafe’. They had conducted the tests in October 2016 and revealed their reports only in response to an RTI filed by the newspaper. Any other company would have been scrambling to do damage control and recalling products from the market.

In May 2015, when Nestlé’s Maggi noodles were dubbed ‘unsafe and substandard’ because of the presence of MSG and lead in it, Nestlé responded with a recall of products worth ₹320 crore, an apology to its consumers, and a reiteration that the company wanted to make safe products for its customers.

On the other hand, Ramdev seemed to have no intention of accepting responsibility. A Mint article reported that a Patanjali spokesperson had scoffed that the report ‘did not make sense’ because the existing standards set by FSSAI ‘are based on available products and not cow ghee. Contents in cow ghee are different from the ghee other companies sell. We are the first company to bring cow ghee in commercial market. There is no standard for cow ghee... so it does not make sense.’ Patanjali had decided to brazen it out.

The spokesperson’s comments do not respond to the charges that their product was found to be ‘substandard and unsafe’. Instead he lied: the fact is that several other companies do produce cow ghee—Gowardhan, Mother Dairy, Anik, Madhusudan, Milkfood, Healthaid, Gopaljee Ananda, Nestlé, Britannia and Amul.

And, finally, can the company that procures tens of thousands of tonnes of white butter a year from millions of milk producers around the country be completely sure that their ghee is ‘cow ghee’ at all? The simple reality is that there is a standard for ghee—cow ghee or otherwise—and in April 2017 Patanjali’s ghee failed to meet it.

A week later, on 24 April 2017, the Economic Times reported that the Canteen Stores Department (CSD), selling 5,300 products to 12 million consumers serving in or veterans of India’s defence forces, suspended the sale of Patanjali Ayurveda’s amla juice from their 3901 stores. It had done so after the Central Food Laboratory in Kolkata tested samples and deemed it ‘unfit for consumption’.

The company’s official response was classic Patanjali: they claimed that since amla juice is a medicinal product, it should have been tested according to the standards of the ministry of ayush, and not the FSSAI regulations. Yet, common sense suggests that the rules governing medicinal products are likely to be more stringent than rules governing food products.

Despite these constant question marks over Patanjali products, Indians continue to place their trust in the company. Their faith in the saffron-robed Ramdev remains intact because he repeatedly, self assuredly and charmingly reassures them that he, in the great tradition of Hindu sadhus, is running this company as a service to the nation. ‘I sleep on the floor, I am a fakir... all the profits are going to charity. I don’t own anything in my name... don’t trust the multinationals or stooges of other corporations who defame me. They are doing so because they cannot stand the success of Patanjali.’

Extracts taken with permission from Juggernaut; 248 Pages; ₹ 299 Price

On August 4, 2017, a Delhi court had clamped an injunction on this book. The order was passed without giving the publisher and the author an opportunity to state their version of events, reportedly to avoid “the delay which would be caused during the process of serving the notice and hearing the defendants”. The injunction was recently lifted