Patanjali Ayurved Ltd (PAL) is one of the promoters of Patanjali Foods. File
| Photo Credit: Reuters

Edible oil major Patanjali Foods Ltd on July 1 said it will acquire Baba Ramdev-led Patanjali Ayurved’s home and personal care business for ₹1,100 crore, as part of its efforts to become a leading FMCG company.

Patanjali Ayurved Ltd (PAL) is one of the promoters of Patanjali Foods. The acquisition falls under related party transactions being undertaken on a fair value and arms’ length basis.

In a regulator filing, Patanjali Foods informed that the board has approved the “acquisition of the entire non-food business undertaking i.e. hair care, skin care, dental care and home care carried out by PAL, including but not limited to all movable assets, immovable properties, contracts, licenses, books and records, employees and certain assumed liabilities of PAL through a slump sale arrangement on a going concern basis”.

This is subject to the approval of shareholders, lenders and other necessary approvals. The company will have to get approval from the Competition Commission of India.

“The consideration for the acquisition shall be ₹1,100 crore, payable by the company to the seller in tranches…,” it added.

Patanjali Foods will pay the entire amount in five tranches.

Patanjali Foods CEO Sanjeev Asthana said the company would fund this deal through internal cash reserves.

He said the deal is expected to be concluded in the current quarter.

Mr. Asthana said the company will acquire major brands like Dant Kanti and Kesh Kanti.

“The turnover of the business which we have acquired was around ₹2,800 crore last fiscal year,” he said, adding that the deal would boost the company’s revenue and net profit.

In the filing, Patanjali Foods, erstwhile Ruchi Soya, said the deal will accelerate the company’s transition into a leading FMCG company.

The home and personal care business of Patanjali Ayurved currently has strong brand equity in India’s FMCG space and enjoys a loyal consumer base, it added.

Presently, it caters to four key segments – dental care, skin care, home care, and hair care.

Patanjali Foods and Patanjali Ayurved have also agreed to enter into a licensing agreement, permitting the company to use the trademarks and associated intellectual property rights, owned by the latter.

“The transfer of the home and personal care business has been mutually negotiated between the company and Patanjali Ayurved (basis valuation exercises conducted by independent valuers) for a lump sum consideration of ₹1,100 crore only”.

The acquisition will lead to a consolidation of the ‘Patanjali’ brand FMCG products portfolio.

“The acquisition will bring along with it multiple key synergies in terms of brand equity and enhancements, product innovations, cost optimisation, infrastructure & operational efficiencies and positive impact on market share,” Patanjali Foods said.

Pursuant to the approval of the board, Patanjali Foods will now take the necessary steps to execute the definite agreements in connection with the acquisition as well as apply for necessary approvals integral to the transaction.

Separately, a licensing arrangement for a 3% turnover-based fee along with other conditions has been agreed upon between Patanjali Foods and the PAL.

Patanjali Foods, which the PAL acquired through an insolvency process, had posted a total revenue of ₹31,961.62 crore in the last fiscal as against ₹31,821.45 crore in the preceding year.

New Delhi:

Patanjali Ayurved co-founder Baba Ramdev; the company’s top executive, Acharya Balakrishna; and the centre were reprimanded by the Supreme Court Tuesday during a hearing on misleading advertisements, including those that disparage modern medicine and medical practitioners.

Ramdev and Balakrishna were rapped for “absolute defiance” after filing improper versions of affidavits demanded by the court, while the centre was asked why it “chose to keep its eyes shut” despite Patanjali claiming Western medicine offered no protection against the COVID-19 virus.

A bench of Justice Hima Kohli and Justice Ahsanuddin Amanullah also asked the Ministry of AYUSH why it had not acted against Patanjali after “shocking” ads belittling contemporary medicine.

“We have questions for AYUSH…COVID was in 2022 and you (the centre) stated these (ayurvedic medicines) were, at best, a supplement to the main (the vaccines)… but this was not publicised… you did nothing to make this known. It was a critical period,” Justice Kohli said sternly.

READ | “Be Ready For Action”: Court To Ramdev In Misleading Ads Case

This is the second time in three months the centre has been rebuked; in February, the Supreme Court said “the government is sitting with its eyes closed” and demanded immediate action against “false” and “misleading” advertisements. “This is very unfortunate…” the court had said then.

The court then also urged the centre to find a remedy to the issue of misleading medical ads.

The court today also ripped into Ramdev and Balakrishna for the causal manner in which an affidavit – offering an unconditional apology for the ads – was filed last month. A furious court called the affidavit “indefensible” and “humbug”, and even suggested Patanjali Ayurved could be guilt of perjury.

READ | Patanjali’s Apology Day After Court Summons Ramdev In Ads Case

“You should have made sure the solemn undertaking should have been in letter and spirit. We can also say we are ‘sorry’… for not accepting it (the apology)… it is more of a lip service,” the court said.

The court was angered that Patanjali had, prima facie, continued to run ads ruled as misleading last year. The claim that the company’s media unit was unaware of the court order was dismissed.

“…every order passed by courts across the country has to be respected. This is absolute defiance,” a bench of Justice Hima Kohli and said, after Patanjali Ayurved’s lawyer folded his hands in apology.

“You have to abide by every undertaking given to the court… and you have broken every barrier,” a clearly displeased court told both Ramdev and Balakrishna, who were ordered to be present.

Responding to the court’s strong words, Solicitor-General Tushar Mehta acknowledged “what has happened should not have happened”. “It appears (that) the way the affidavits should have come… it has not come,” he told the court, underlining, however, that the centre could not take sides.

READ | Yoga Guru Ramdev Summoned By Court Over Patanjali’s Misleading Ads

“What I am suggesting is… if Your Lordships permit… then I can sit with the counsel (for Patanjali) and (decide) what can be done,” he continued, to which the court said, “We will decide that.”

Ramdev and Balakrishna have been given “one last chance” and must file the affidavits, in a proper manner, in one week. They must also present when the court hears this matter next – on April 10.

The top court is hearing a contempt case against Patanjali Ayurved over publication of advertisements making false claims about its products and their medical efficacy.

On February 27 the court had directed Patanjali to stop all electronic and print ads giving misleading information, with immediate effect.

READ | Court Warns Ramdev, Patanjali, Tells Them To Stop “Misleading” Ads

The case began last year after the Indian Medical Association filed a petition claiming a smear campaign by Baba Ramdev against the Covid vaccination drive and modern medicine.

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