Weak El Nino conditions likely next month, says IMD weather report

The southwest monsoon, which has been relatively quiet during the week that ended on August 29, isn't expected to show a big improvement in the next fortnight, with rainfall activity likely to be below normal from the second week of September. In its latest weather update, the India Meteorological Department (IMD) said that there was possibility of development of weak El Niño conditions in the last part of the four-month monsoon season, which began from June. Overall, the monsoon till August 30 has been 6 per cent less than normal, with several districts of north interior Karnataka, Rayalaseema, Bihar, Jharkhand, Saurashtra and Kutch staring at a shortfall. The rainfall, according to agriculture ministry officials, has been well-distributed, though overall quantum might have been low in some regions. This they said won’t have any impact on the overall production of kharif crops in 2018, which is poised for another record. On Tuesday, India said its overall foodgrains production in 2017-18 (July to June) was at an all-time high of 284.83 million tonnes, almost 2 per cent more than the last estimate that came in June, and 9.72 million tonnes more than 2016-17. The rise, however, hasn’t been beneficial for the growers because price of several commodities particularly pulses slumped due to bumper harvest.

Is Patanjali's FY18 Rs 20,000 crore revenue target realistic?

With a reported turnover of Rs 10,561 crore in financial year 2017 (FY17), Baba Ramdev and Acharya Balkrisha - led Patanjali Ayurved Limited (PAL) expects its revenue to hit Rs 20,000 crore mark in financial year 2017-18 (FY18).

Analysts, however, are sceptical and are of the view that Patanjali may not be able to achieve this steep revenue target in FY18 purely on the basis of growth in the FMCG segment given the current industry growth rates and that the revival in rural demand is still some time away.

"One must be mindful that this Rs 20,000 crore will also include commodity related products such as rice, wheat, edible oil, milk etc. Growth rates for pure FMCG products are likely to slow down. Patajnali is now quite big in products like honey, toothpaste, shampoos and hair oil. So from the base these pure FMCG products has created, doubling of revenue looks very difficult. The category growth rates will be around 13% at best. Though penetration into newer markets will help, doubling still seems a farfetched idea as of now," says Abneesh Roy, an analyst tracking the sector with Edelweiss Securities.
For the rural demand to kick in, analysts say the monsoon season this year will also be a crucial. That apart, companies are now in the process of catching up with Patanjali in terms of ayurvedic products. In this backdrop, Patanjali will find it difficult to double this huge revenue base it has already created.

"I have doubts whether Patanjali can achieve the Rs 20,000 crore revenue target it has set for itself. Volume-wise, the FMCG industry is growing in single digits (between 4% - 6%) for most players. For FMCG players, we need a good monsoon to act as a catalyst to trigger a demand revival. Even one good monsoon (last year) was not enough to revive the rural demand," explains G Chokkalingam, founder and managing director of Equinomics Research & Advisory.
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