Patanjali's slowing growth concerns and a major fraud at Crompton Greaves, all covered in today's taaza taaza newsletter.

Things are getting spicy🌶️ folks...


Slowdown Concerns

Is it just me or have Patanjali ads suddenly gone off air?

Oh wait, It’s not me. Seems like they are actually cutting ad spends and also, it looks like the heady growth days for Patanjali are now coming to a close.

The Story

Most people equate Patanjali to a startup. A startup that’s disrupted the market in a big way since the turn of this decade. However, what they often don’t tell you is that it is still a very traditional business doing things the old traditional way.

It’s just grown really really fast. And when you grow as fast as Patanjali did, it can give rise to a few interesting problems. And we’ve made a nice little compilation from a whole host of news websites📰 to explain the matter at hand.

Problem 1 — Quantity over Quality

When you aggressively push to expand your business, it’s kind of obvious to expect some bad apples slip through the cracks. However, Patanjali’s expansion spree was a whole different beast altogether. They have had to grow exponentially across categories. Meaning they have had to sell a lot of very different things in a relatively short amount of time⏱️.

And in the pursuit of building a massive network of third party suppliers to cater to the burgeoning demand, Patanjali seems to have let a lot of bad apples slip through the cracks.

Problem 2 — GST and tax invoicing

When it was time to revamp the old tech systems to get their tax invoicing right, Patanjali seems to have been a bit behind competition. Again, something that could be directly attributed to the fact that they have had to grow so much in such a short amount of time.

Problem 3 — Supplies

When you grow exponentially it kind of becomes hard to manage the 3500 dealers you’ve partnered with. Especially considering you are working with massive orders all the time. Imagine a franchise partner in Bangalore waiting for a fresh batch of toothpaste only to find out it’s not coming in this week. A crunch like this can leave a very bad taste and it’s not gone down well with a lot of people.

And that means consumers have had to go back to the good old Colgate’s and Pepsodent’s. Or in most cases, Ayurvedic variants from the likes of HUL and P&G.

And Baba Ramdev’s Patanjali?

Well, let’s just say it’s on a rough patch for now.


Fraud at Crompton Greaves

With the economy now in doldrums, it seems like the time is just right for skeletons to climb out the closet and stand up straight. A couple days back CG power and Industrial solutions (read as the people from Crompton Greaves) said there may have been serious accounting lapses in the firm.

So here’s our dummy’s guide on what the company has had to say about the whole matter

  1. In a bid to serve the interests of a few powerful people in the company, it's possible that we (CG Power) executed a few sneaky transactions that didn’t really serve our own interest. And yeah that means these things weren’t in our shareholders' interests too. Oops!🙊
  2. The company might have loaned money to other companies closely related to it so that they could be better off it. Also, we might have hidden this bit in our accounting statements. Yeah. Sorry.
  3. Also, we may have said we made losses on a few things when in fact we didn’t and that means our company should have been worth a lot more than what it says.
  4. Actually, you know what! We might have done it so that money could be routed to other people so that they could get away with it. Okay. Maybe its not worth that much any more. Really sorry! 🙇
  5. Will you believe me if I were to say that this happened without the knowledge of the owners? Please?

Yeah... That's what happened!

Anyway, so when this news about a potential 1000 Cr. fraud hit newsstands, investors bailed and  the stock came crashing down 40%.


Tweet of the Day

Also when people found out, the troubled Yes Bank owned about 12.8% in the company, their stock took a beating too.

What else happened yesterday?

  • Trump wants a 1 percentage cut in interest rates. And he wants quantitative easing with it. Meaning he wants the Fed to throw more money into the system like there is no tomorrow.
  • Also, if you aren't yet following the whole controversy around the government wanting to link Aadhar to your social media account. Maybe you should read this

Until tomorrow then...