Baba Ramdev’s Patanjali Ayurved has faced a major setback for the year ended March 2018 as it reported a drop in its sales and profit. All this has happened because of stiff competition from rivals, as most multinational companies who were competing with Patanjali had launched natural and herbal products, as well as Patanjali, was also struggling with its own distribution issues following goods and services tax rollout.
The Haridwar-based company’s revenues dropped 10 per cent to Rs 8,135 crore in the last fiscal from Rs 9,030 crore in 2016-17. As per provisional data sourced by CARE Ratings, Patanjali’s net profit more than halved at Rs 529 crore in FY18 from Rs 1,190 crore a year earlier. There is a sharp slump in the company’s profitability margins, with the profit before interest, lease, depreciation and tax (PBILDT) margin falling to 11.9 per cent in FY18 from 18.7 per cent in FY17 due to rise in overheads and ongoing expansions, higher distribution and selling expenses.
A report says, “The decline in turnover was primarily because of the company’s inability to timely adapt to the GST regime and develop infrastructure and supply chain.”
As per the analysts, the sales and profit are mainly affected because Patanjali has appointed separate distributors for several business verticals such as personal care, staples, and biscuits among others, which affected in servicing stages. They mentioned, “Growth slowdown in Patanjali is a direct result of poor management of trade channels and lack of a coherent advertising strategy. Splitting distributors according to product categories has also complicated retailer servicing.”