Patanjali founder and yoga guru Ramdev had termed the GST rollout by the Centre’s Narendra Modi government a ‘historical and positive’ step last year. A year later, it has emerged that the introduction of GST has had a crippling effect on Patanjali sales for the first time in five years.
The key reasoning the causing the Patanjali sales to go down for the first time in three years is the GST, which left the distribution network of the homegrown consumer goods maker broken. According to a report by Care Ratings, Patanjali’s standalone consumer goods revenue declined more than 10 percent to Rs 8,148 crore in the year ended March 2018—the first time since 2013. “The decline was primarily because of its inability to adapt in time to the goods and services tax regime and develop infrastructure and supply chain,” a report by Bloomberg said.
The reported quoted a key Patanjali source, who said that the technology back-end in the company founded by Ramdev was simply not ready for the GST-related inventory and invoicing management in time. Patanjali’s spokesman SK Tijarawala conceded that distributors were slow to transition to the new indirect tax system.
Earlier this month the Haridwar-based company had forayed into the fast growing branded apparel segment through its brand ‘Paridhan’ and expects a sale of around Rs1,000 crore next fiscal. Patanjali, according to a report by PTI, had then said that it planned to open around 100 outlets of Paridhan by the end of this fiscal and have a network of around 500 stores by March 2020, mostly on franchise model.
In May, Janta Ka Reporter had reported how the sales growth of Ramdev’s Patanjali has come to a grinding halt and the company’s Managing Director Acharya Balkrishna had blaming Prime Minister Narendra Modi’s demonetisation and other economic policies such as the GST rollout.
“We have closed the year around the same level as the previous fiscal year’s revenue,” Acharya Balkrishna, managing director of Patanjali had told Mint adding that ‘Lingering effects of the demonetisation and the implementation of goods and services tax impacted growth.’
Patanjali had reported rapid growth in the recent past. Ramdev had predicted last year that he would continue to “double revenue every year” to cross Rs 20,000 crore in the year ending March 2018. He had also predicted that the growth of Patanjali would also cross the annual revenue of India’s largest packaged goods company Hindustan Unilever Ltd by 31 March 2019.