Patanajali Foods on Monday said its board has approved the proposal to buy its parent Patanjali Ayurved's non-food businesses for ₹1,100 crore in five tranches.
Patanjali Ayurved’s non-food businesses include hair care, skin care, dental care and home care.
Patanjali Foods has also entered into a licensing agreement with Patanjali Ayurved and will pay a 3% turnover-based fee, subject to a minimum yearly payment of ₹83 crore, for the use of the intellectual properties of Patanjali Ayurved. The turnover of Patanjali Ayurved for the year ended March 31, 2024 was ₹6,199 crore.
The acquisition of non-food business undertaking as a going concern on a slump sale basis will result in expansion of the product portfolio of the company, Patanjali Foods says in a stock exchange filing.
This strategic initiative for acquisition of home and personal care business shall strengthen the company’s existing FMCG product portfolio with an array of brands that will contribute to significant growth in revenue and EBITDA, it says.
The proposed transaction falls under the related party transaction. Patanjali Ayurved is one of the promoters of Patanjali Foods. Ram Bharat, managing director and one of the promoters of the company, is also a director of Patanjali Ayurved. Acharya Balkrishna, one of the promoters and chairman of Patanjali Foods is managing director of Patanjali Ayurved and holds 98.54% of the paid-up equity share capital of Patanjali Ayurved.
Patanjali Foods will acquire the entire home and personal care business of Patanjali Ayurved on a going concern basis, and includes all the assets and liabilities attributable to the business, relevant employees, distribution network, contracts, licences, permits, consents, and approvals.
This comes months after Uttarakhand State Licensing Authority apologised to the Supreme Court for non-compliance with the top court’s orders against Baba Ramdev’s Patanjali Ayurved in the misleading advertisements case.
The state regulator has suspended the manufacturing licence of 14 products of Patanjali Ayurved for "repeated violations" of the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954. These include 'Swasari Gold', 'Swasari Vati, Bronchom', 'Swasari Pravahi', Swasari Avaleh, Mukta Vati Extra Power, Lipidom, Bp Grit, Madhugrit, Madhunashini Vati Extra Power, Livamrit Advance, Livogrit, Eyegrit Gold and Patanjali Drishti Eye Drops among others.
The Supreme Court had earlier refused to accept the apology of Ramdev and Patanjali Ayurved managing director Acharya Balkrishna in response to notices asking to show cause as to why contempt of court proceedings should not be started against them for violating the top court’s directive.
The top court’s ruling came following a petition by the Indian Medical Association (IMA), which accused the company of claiming to completely cure sugar and asthma, among other illnesses with yoga.
