Swadeshi Punch

Led by Patanjali, homespun brands have overshadowed their multinational peers in FMCG, apparel, food and beverages, reports Sudeshna Banerjee

Swadeshi Punch
Swadeshi Punch
There was a time in India when ‘phoren’ was regarded as in. FMCG, clothes, wellness, apparels, the brand recall of all things made out of India, were considered as the touchpoint of success.
This period, needless to say, precedes the rise and rise of Patanjali. Such has been the dominance of the saffron clad Baba Ramdev’s swadeshi thrust that it would be a myth to proclaim any longer that big brands are all foreign.
As a matter of fact, the wide-ranging impact of some desi companies like Patanjali, in the last couple of years, have left a deep imprimatur on the very minds of Indian consumers.
It’s no surprise that many desi companies have overshadowed their multinational peers when it comes to healthcare, wellness and medicine, consumer products, apparel and food and beverages.
These brands are more than just commercial successes; they are now worthy of being analysed by B-School eggheads, not just in India, but even at internationally acclaimed universities.
Yoga guru Baba Ramdev-led Patanjali Ayurved Ltd’s recent announcement to foray in apparel, food and beverages and education, while claiming to double its exponential growth, is nothing less than a blockbuster.
Thus there is no surprise if the hawker at the busy ITO traffic signal in central Delhi sells clay tawa using Ramdev’s brand name, with an eye on the fast buck. The Yoga guru has become a cult figure in the so-called corporate swadeshi movement.
According to an extensive research report by Assocham-TechSci, India’s FMCG market is expected to grow at an annual growth rate of 20.6 per cent.
Ramdev, while announcing Patanjali’s 2016-17 performance said he would double the company’s growth in the next fiscal. If that happens, it could well submerge the biggest multinationals, already under threat by his swadeshi wave.
Neither is the bearded yogi alone. Brands like Pulse candy, Lijjat papad, Amrutanjan and Rasna – well entrenched entities in their own right - are riding a similar high.
Financial Chronicle profiles a few runaway desi successes, tracking their growth trajectory and evaluating their success graphs.

Patanjali: Swadeshi wave
After achieving success as the man who took Yoga to the masses, then popularised Ayurveda before moving on to FMCG with a bang, Baba Ramdev apparently has more quivers in his arrow. He has now decided to enter the quick service restaurant (QSR) business as well.
Sweeping the nation with his brand Yoga and swadeshi wellness, in the process giving sleepless nights to the likes of FMCG behemoths ITC, HUL, P&G, Dabur, Godrej and Nestle to name just a few, Ramdev is now all set to target the Dominos, KFCs and the McDonald’s with desi healthy fast food. Ramdev’s planned QSR chain will have 400 recipes on offer.
After desi Jeans, this promises to be Patanjali’s next innovative endeavour. Global chains with their range of natural cosmetics, nutrition and personal care products, have good reasons to worry.
Based out of Uttarakhand, Patanjali recently recorded a whopping turnover of Rs 10,500 crore. It has the capacity to make products worth Rs 30,000 crore and plans to double that next fiscal.
While Baba Ramdev is the self-proclaimed “unpaid ambassador” at Patanjali, his childhood buddy Acharya Balkrishna, holds 97 per cent of the company’s shares.
“Patanjali has broken the stranglehold of multi-national companies,” Ramdev has said, adding, “I want India to be free of the hold of foreign companies.”

In just about a decade, it has emerged as one of the top FMCG players in the country. It has created its own rules and re-written others - especially around branding and distribution - both fundamental to success in consumer products.
Such has been his impact that Hindustan Unilever, India's largest FMCG giant, was compelled to launch a raft of Ayurvedic-based personal care products.
Patanjali's CEO Acharya Balakrishna has already entered the Forbes list of billionaires, debuting at 814. His net worth stands at $2.5 billion.
A survey by competitive intelligence and research company ValueNotes, says that Baba Ramdev has built a mammoth fan following around the themes of yoga, health and swadeshi.
The supporters, being early adopters of medicinal and FMCG products, allowed Patanjali to experiment with a wide range of products; in a sense, they became unpaid marketers.
In turn, they `empowered’ a vast number of their fans and sympathisers to become dealers/franchisees. This helped Patanjali reach customers across India. All products sell under a single brand, which has grown so big that mainstream retailers also want to get on to the Patanjali bandwagon. Many already have separate sections dedicated to Patanjali products.
In a business where brand and distribution take decades to build, Patanjali's phenomenal growth resembles that of India’s successful e-commerce companies.
For the yoga guru, the world is a stage. After giving multi-national consumer product makers a run for their money in India, he also has the stomach to take the fight to overseas markets.
Patanjali Ayurved Ltd is setting up a production unit in Sahibganj, Jharkhand, as a multi-modal hub with direct connectivity through roads, waterways and airways with neighbours China, Myanmar and Bangladesh, among others. It has been exporting its products to the UK, US, Canada and Mauritius, targeting the substantial Indian diaspora.
Patanjali says it has received offers from United Arab Emirates, Iran and Azerbaijan to retail its products.
The company has set up another production unit in Assam to cater to the eastern parts of India and Bhutan. It already has a production partner in Nepal to source medicinal herbs and plans to set up units in Uttar Pradesh, Madhya Pradesh, Maharashtra and Jammu and Kashmir.
DS Group: From impulse to Pulse
A bright green raw mango candy is making its presence felt, even as the government pushes its Make in India campaign. A brand, which has made its mark in a rather unknown market, is actually the candy with a tangy raw mango or aam panna taste. In merely eight months of its launch, Pulse became an Rs 100-crore brand, which in two years, climbed to over Rs 300 crore.

This particular candy was launched in mid-2015 by DS Group, manufacturers of Rajanigandha pan masala and Catch bottled water. While Ragnigandha remains the numero uno brand, Pulse has managed to create a place for itself.
Why 'Pulse'? Pat comes a glib one-liner: "Because it sets your pulse racing."
Recalls Shashank Surana, DS Group, vice president of new products: “We did a lot of R&D and found candy is the fastest growing sector. However, we found that the confectionary sector was rather stagnant despite vertical growth potential. We found kachcha aam or raw mango was the most favoured flavour, capturing 26 per cent market share. While raw mangoes captured 26 per cent of market, other mango flavours got 30 per cent and together they were more than 50 per cent of the candy confectionary sector.”
This revelation prompted an out-of-the-box solution – to package and sell a tangy mango candy. “We saw that mango was the favourite taste in India”, points out Shashank, adding, "In India, the common practice is to eat raw mango with something tangy. Whether it is 'aam panna' or a slice of raw mango sold on the roadside, it is incomplete without the tang or spices. That's how we got the idea of a powder-filled candy."
After two years of extensive R&D, they came up with Pulse with a powdered tangy centre and raw mango flavour on the top. “That amalgamation worked for the brand for that’s what the consumers wanted. They were used to this taste, but never had it as a candy”, he points out. Within a month of its launch, the demand was so high that roadside kiosks started selling it at a hiked 50 paisa per piece.
Despite a test-marketing drive launch in three states, Rajasthan, Gujarat and Delhi in April 2015, the product broke all records.
“The initial response was so overwhelming that we had to add two more outsourcing units after starting the first unit to cater to the demand. It took us about a year,” says Shashank.

To begin with, they faced a serious supply crunch. Today the company has seven outsourcing units in India. The Re 1 candy has clocked Rs 300 crore in sales, beating MNC blue chip munchies like Oreo and Mars bars, edging out another homegrown Parle.
Shashank says when Pulse was launched, 86 per cent of the industry was at 50 paise for a candy weighing anywhere between 2-2.5 grams. DS Group decided to go with Re 1 instead, and to justify the price the weight was increased to 4 grams. It worked.
The Indian candy market is growing at 12-14 per cent, with Pulse as the clear winner, making all other brands pale in comparison.
What really clicked was the combination of the right product and its distribution. The Group has introduced other flavours like guava and orange with a tangy taste. The response has been very encouraging. From roadside pan shops to modern confectionary stores, it is available everywhere.
The company is looking at a 20 per cent Y-o-Y growth. The intention is to foray in foreign lands that include Canada, UK, UAE and other parts of South Asia.
Pulse candy is present in Mustafa in Singapore and other Asian and Indian grocery stores across UK, US, Canada, West Asia and South East Asia. “ We are also in the process of registration with big chains. “Candy is an impulse buy, but we saw a lot of loyalty and it was not impulse but a “Pulse” buy,” Shashank quips. He has reason to.
Farzi Café: A unique palette
Is desi cuisine getting a global makeover? Well, evidence of it comes from the modern and dynamic food palette in Zorawar Kalra’s Farzi Café. This modern Indian bistro is attracting fans in their droves.
Needless to say the palette is interesting, with focus on flavour and texture - out-of-the-box combinations like Prawn Balchao in a kulcha, Chilly Duck in samosa, Galouti Kebab in a burger, Paan tucked into white candy floss shaped like Gujiya on the table.
Memorable desserts include tiny Baileys Lollypops served on a tree or Parle-G Cheesecake with rabdi and gems, to name a few engineered if mouth-watering delicacies.

A little over three years ago, Zorawar started Farzi Café. The aim was to create a food joint that could cater to Indian food for the young. “The youth generally prefer to eat burgers. Farzi Cafe brought in the change. It got the youth re-interested in desi food,” says Zorawar.
Farzi Café has become the biggest phenomenon in terms of modern Indian cuisine — even a genre. Everybody is trying that mix and match. They want to package and market the food, turning it into a global entity.
Zorawar believes it is the quality of food that brings repute to the brand. According to him, 99 per cent of Farzis (seven stores in all India and one in Dubai), are highly profitable, in excess of above 22 per cent margins.
“They are all doing over Rs 1 crore business in a year. The Dubai store is doing a business of over Rs 3 crore. By the end of the year we will have over 13 Farzis across the world,” boasts Zorawar. The chain plans its global odyssey by March 2018.
Within three years, they have grown over 400 per cent in terms of sales and a healthy corporate Ebitda margins above 10 per cent.
An MBA from Boston’s Bentley University, Zorawar claims to have imbibed the art of fine cuisine from father Jiggs Kalra, the ‘Czar of Indian Cuisine’.
In just three years, Zorawar’s Massive Restaurants has nine branches across five brands like Masala Library and Farzi Café, among others.
He plans to raise a corpus of over $20 million for internal expansion in the second round of funding in the next three months.
Zorawar has big plans. “We will do a combination of owning franchises for expansion. We already have a big international corpus of brands,” he says.
Parent company Massive Restaurants has touched Rs 200-crore revenue in a very short period of time. “We created some drastic changes to create a unique experience”, adds Zorawar. You bet he has.

AMRUTANJAN: Pain killer
The iconic pain relief balm was launched in 1883 by freedom fighter Dessodharaka Kasinadhuni Nageswararao Pantulu, better known as K Nageswara Rao.
Recalls S Shambhu Prasad, chairman and managing director of Amrutanjan Healthcare Ltd and the founder’s grandson: “It was formulated, using Ayurveda as a native alternative to western medicinal pain relief products forced upon Indian consumers during the colonial era.”
He adds: “The founding values of consumer satisfaction without side-effects, are the pillars this iconic brand stands for.”

In 1936, Amrutanjan became a public limited company with the name Amrutanjan Limited and Nageswara Rao popularised the balm by distributing it free-of-cost at music concerts. Indeed, it remains one of the oldest pain-relief balms still controlled by the founders.
With the tagline “ kick out pain”, traditional advertising has moved on to the social media platform. While modern systems like sprays and gels are in, the product formulation is pretty much the same.
For a 124-year-old brand, the multi-generational recommendation is what drives its core business. Also offering it at price points has helped, points out Shambhu.
Amrutanjan pioneered the “two-rupee balm”, offering it in sachets. The strategy was to make the balm available in different models. While special care has been taken to modernise consumer experience, the core values haven’t changed.

LIJJAT PAPAD: Crunchy taste
The Lijjat Papad rabbit who put the Kharram Khurram song on our lip has a very special place in our heart. What makes Lijjat papad’s journey so unique is not just its rags-to-riches tale, discussed threadbare in B-Schools. Much before the term gained coinage, it was truly, “Make in India”.
“It was a movement of women, by women and for women,” says Swati R Paradkar, president of the Shri Mahila Griha Udyog Lijjat Papad.
It all began in 1959 when seven women from a densely populated Girgaum in south Mumbai, gathered on the roof of a building to make four packets of papad.
They started with a borrowed capital of Rs 80 and today, nearly six decades later, Lijjat Papad is the combined effort of 45,000 women “members” across 82 branches, generating an annual turnover of Rs 1,600 crore.
These members are joint co-owners of the institution, which is governed by a central managing committee comprising 21 members drawn from its ranks.
“We are growing at 8-10 per cent per annum. We have plans to increase number of branches to 100 and scale up our strength to 50,000,” Paradkar adds.

The organisation, recognised by the Khadi Village Industries Commission as a village industry, retains just less than two per cent of its net profit for future business needs. The remaining cash is distributed amongst members.
When asked about the company’s success formula, Paradkar says, “All our members are from the grassroots and know local requirements. That is how we diversified into other products such as traditional masala, appalam and detergents.”
The company now exports its products to UK, USA, West Asia, Thailand, Singapore, Hong Kong, Holland, Japan and Australia.

RASNA: Orangie-orange
While every local soft drink brand crumbled under deep-pocket MNC pressure, Rasna stood strong, like the Rock of Gibraltar.
The onslaught of multi-national ready-to-consume soft drink brands would have relegated 40-year-old-plus home grown Rasna to the fringe category of a soft-drink concentrate. But it did not happen that way.

One of the earliest ‘Make in India’ brands instead is finding more fertile grounds to grow overseas. With presence in 53 countries, Rasna will soon launch its products in Latin America and become part of the government’s social sector initiative there.
“Some Latin American countries have large state-sponsored social sector initiatives for children. They provide drinks as nutritional supplements to school children at subsidised rates or free-of-cost. We are in talks with a few governments to be part of these programmes. With high freight charges as a major deterrent, we are seeking freight subsidies,’ says Piruz Khambatta, chairman and managing director of Rasna.
It will provide low-sugar vitamin fortified powder concentrates, similar to what it sells in the African markets.
Currently 30 per cent of the company’s sales come from exports, with a large chunk from West Asia and Singapore. In the US and Europe, Rasna sells ethnic flavours. “We are role models for Indian companies, who are Made in India and aim to fight multi-nationals,” says Khambatta, echoing Baba Ramdev.

From raw material procurement to packaging, the manufacturing is done in India. He feels the government must emulate the Chinese model and provide incentives to export-oriented businesses.
Rasna has two facilities in Gujarat dedicated to exports. It is adding a new plant at Chittoor. To the current capacity of 5 billion glasses per annum, Rasna will add an additional billion. The company has invested Rs 50 crore in this plant and commands more than 80 per cent share in the Rs 800 crore soft-drink concentrate market.
It is among the few domestic soft-drink brands that came up in the mid-1970s after Coca Cola withdrew from the market.
During the 1980s, Rasna enjoyed over 90 per cent market share with a good household consumer base and options like sherbets and squashes thrown in.
Post-liberalisation, as Coca Cola re-entered India and Pepsi announced its arrival, home-grown brands like Limca, Gold Spot and Thums Up found it hard to survive and were soon taken over by Coke. “Many killed their goose at that time, but I was happy keeping it for my golden egg,” Piruz recalls with a chuckle.
In the 2000s, there were several contenders for the soft-drink concentrate market. Kraft Foods launched Tang in India and Coke came up with its soft-drink concentrate brand Sunfill.
But Rasna continued to dominate the sweepstakes. “Coca Cola launched Sunfill, Unilever came up with Kissan powder and Pepsi tried the market with Tropicana powder. Tang sold off its factory and is still not doing well,” Piruz points out.
However, this category has not grown fast enough when compared with the soft-drink market. While the soft drinks market grew from Rs 13 crore in 1982 to Rs 14,000 crore in 2014, the soft drink concentrate market saw only a two per cent growth at around Rs 700 to 800 crore.
Rasna too made a few attempts to extend the brand to the larger market. It launched aerated fruit drink Oranjolt in 2000, with little success. The company has been reluctant to extend ‘Rasna’ brand to ‘ready-to-consume’ beverages. It launched Ju-C brand in that category in 2013, again failing to make a mark.
The company also entered the snacks market with a baked sweet snack brand Vitos. It now aims at a five per cent market share or Rs 250 crore in the Rs 5,000-crore market. This year it spent Rs 30 crore in brand promotion, using it to reach out to the target customer.

While the company is increasing visibility in organised retail to impress the urban customer, it is also reaching out to rural market that accounts for 30 per cent domestic sales with the help of Rs 2 sachet packets.
Says Pragya Singh, associate vice president, retail, Technopak Advisors: “Rasna has remained a children’s brand and those in their 30’s and 40’s can still relate to it. But competition is tough. The consumer too has evolved and the brand has to adapt to the changing situation.”

OYO: Experience counts
Think of budget travel, think Oyo – clean structured budget rooms starting at Rs 990 in all major Indian cities, Malaysia and now Nepal. Within three years of the launch, it has become a trusted name, simply for the consumer experience it offers. Ritesh Agarwal, founder & CEO, OYO says the aggregator partners with hotels to standardise and transform their rooms, all for offering the guests a better experience.
According to reports, the company is going to close $250-million funding round led by its existing investor Softbank.
Last time it raised around $62 million from Softbank in August 2016. Leading global investors like SoftBank Group, Greenoaks Capital, Sequoia Capital and Lightspeed India back OYO.
For Ritesh, the hospitality industry in India suffers from a major disconnect between demand and supply of quality living space. “Our aim is to create perfect equilibrium between location, comfort and pricing using our proprietary technology and skilled talent pool of hospitality experts, to deliver predictable, affordable and always-available hotel accommodation,” he explains.
Ritesh started his entrepreneurial journey with Oravel Stays, which was a platform for listing budget accommodations. In 2013, Oravel transformed to OYO.
Starting with a single hotel in Gurgaon in 2013, OYO expanded to over 200 cities by 2015, offering 70,000 rooms in its network. It plans to double its offering by the next fiscal.
He says OYO is a quirky and memorable name that resonates with young, tech-savvy customers. “We did not necessarily intend it to mean anything - along with the red logo it has caught on and today enjoys a very high brand recall,” explains Ritesh.
So far it has enabled over 40-lakh check-ins, being the largest budget hotel network in India. Recently, it introduced OYO Captains Concierge Service for hassle-free travelling and on-stay experience.
The firm also launched an outdoor campaign called MyOYOCity, showcasing the charm that Indian metros offer and how every Indian city is an OYO city.
The travel aggregator also introduced OYO Townhouse – a new category of neighbourhood hotels, designed to function as social hotspots to cater to city dwellers and a new generation of guests. With such local entrepreneurship on display, the foreigners are naturally on the back foot.

(with inputs from Sangeetha G & The Asian Age team)