Patanjali Foods to step up ad spends, hire senior executives: report
Premium- In FY22, Patanjali Foods total income stood at ₹24,284.38 crore.
NEW DELHI: Patanjali foods—the fast moving consumer goods arm of Patanjali Group plans to step up advertising spends and hire senior executives to lead various categories as it plans to reposition itself from a commodity business to a broader FMCG and health foods business, according to a report by Edelweiss Securities.
The brokerage met the company’s top management including Sanjeev Asthana, CEO, Patanjali Foods and Swami Ramdev, non-executive director at the company.
“The company guided it wants to reposition itself from a commodity business to an FMCG and FMHG business. In FY22, its FMCG business made up 10% of sales while the commodity business contributed 88%. The company intends to change this to an equal mix in five years. Accordingly, it aims to channelise the bulk of food profits to transform itself into an FMCG or FMHG-focused player," analysts said in a report on Patanjali Foods.
Patanjali Foods was formed after the acquisition of Ruchi Soya by Baba Ramdev-led Patanjali Ayurved for ₹4,350 crore through an insolvency procedure in 2019.
Earlier this year—Ruchi Soya Industries was renamed Patanjali Foods Ltd. In fact, Patanjali Ayurved also divested its food retail business to Ruchi Soya for ₹690 crore. The acquired food business comprised more than 242 products, including ghee, honey, spices, juices and atta. In FY22—Patanjali Foods total income stood at ₹24,284.38 crore. It largely sells packaged foods and staples such as edible oils, pulses, biscuits, honey etc.
Patanjali emerged as competition to existing players in the market including Hindustan Unilever Ltd, Colgate-Palmolive India and ITC after it launched a range of fast moving consumer goods—stealing market share from incumbents.
Analysts at Edelweiss said that Patanjali’s disruption in a few product categories and initial successes have helped it build a base in the market. “Headway hereon is contingent on its showing in cut-throat FMCG and FMHG, and expansion in promising categories such as nutraceuticals and spices. Palm oil foray can be a huge value creator," they said.
The company also plans to increase its advertising spends, which would lend impetus to growth, according to the management. For the foods business, Patanjali plans to hire a head for each sub-category. Patanjali is also open to acquisitions to drive future growth, according to the report.
Meanwhile, the company’s performance would be driven by big categories such as ghee, premium edible oil, biscuits, and ayurvedic products (aloe vera, amla juice, etc). “Aggressive expansion in promising categories such as nutraceuticals and spices would be the icing on the cake," analysts at Edelweiss said.
The company is also targeting to secure a dominant market share in five years in palm oil plantations. Meanwhile, in the wake of the pandemic, there has been strong awareness about immunity-boosting products such as chyawanprash, honey, ghee and ayurvedic health supplements, the analysts said.
Last week, Baba Ramdev announced plans to list four Patanjali companies on Indian bourses over five years including Patanjali Ayurved, Patanjali Medicine, Patanjali Wellness and Patanjali Lifestyle.
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