MANAGEMENT 101

“Babaji only wants to sell”: A former CEO reveals the inner workings of Patanjali

Quartz india
Quartz india

Ayurveda giant Patanjali’s rise to success has been nothing short of a phenomenon.

The Haridwar-based company, which sells everything from herbal soaps and shampoos to ghee and honey, has become a favourite among millions of Indian households, chipping away at the dominance of big multinational firms.

Yet, few know about the inner workings of the Rs10,000 crore behemoth founded in 2006 by Acharya Balakrishna and yoga guru Ramdev. The latter rose to fame doing yoga asanas on TV in the mid-2000s, before playing a role in the anti-corruption movement that swept the country earlier this decade, gaining many political enemies in the process.

In a recent interview with the Mint newspaper, SK Patra, a former CEO of Patanjali and former president of Patanjali Food Park, revealed Ramdev’s ability to strike deals, win-over vendors, and coerce employees into doing their work as seva, or service.

“…Baba Ramdev is a very keen listener, very fast learner and he is very sharp. It’s one of his strongest qualities. He may not know things himself, but he listens carefully,” said Patra, who led Patanjali from 2011 to 2014.

For instance, Ramdev struck a unique marketing deal with a media company, recalls Patra. “At that time he used to think advertising is a waste of money. I had to fight hard for even a small budget of Rs20 crore with him. But when he understood that I really believed in the importance of advertising, he went and struck his own kind of deal—a sort of ‘barter’ where he gave chyawanprash worth Rs2 crore to a media house owner in exchange for Rs4 crore of advertising in their newspaper!”

But managing the company was a challenging task.

Patra, a former Indian Institute of Technology-Kharagpur and Indian Institute of Management-Ahmedabad graduate who took charge even as the promoters were at war with the government, said that he was given a mess to clear. Driven by Ramdev’s ambitions to launch more products and compete with multinationals, Patanjali had forayed into one category after another without systems or processes in place, he said.

This resulted in inefficiencies: New machinery was left unused, staff was untrained, and the business lacked standard operating procedures. For instance, a flour mill capable of producing 100 tonnes a day was producing just two tonnes, Patra recalled.

And while Ramdev was busy declaring war on multinationals, Patanjali lacked the manpower and execution ability to compete. “…the challenge was to convince Baba Ramdev—who was already railing against the multinational companies even back then—that he could say whatever he liked about them, but if he wanted to succeed, he would have to adopt their best practices,” he said.

As a result, recalls Patra, under whose management the company’s turnover swelled from Rs317 crore to Rs2,500 crore, “it took a lot of chartered accountants to separate the entangled mess of companies, construction workers to put a wall in the food park to establish it as a separate entity, (and) hiring experts to draft standard operating procedures for all the fancy machines that Baba had imported but which his workers were unable to use efficiently.”

Yet, behind the professional discipline brought about by Patra, who devised 30 functions ranging from sourcing to research & development, it was Ramdev who took all the decisions—big or small.

“Baba Ramdev largely drives the company. He is involved in all the most important decisions—what to make, how much to make, when to make, how much to sell for. He personally tries out every single product and approves it. The company also does not care very much about profits. Babaji only wants to sell,” said Patra, who quit the company in 2014 over irrevocable differences with the management.

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