Patanjali Ayurved, founded by controversial yoga guru Ramdev, has come under fresh scanner after it emerged that it pumped in Rs 325 crore in companies that have zero operations.
A report by CNBCTV18.com said that whilst there is nothing unusual for big corporates to invest in subsidiaries, Patanjali’s “investments in businesses with zero operations and at a premium” raised serious questions.
Highlighting a case in example of one Delhi-based Verve Corporation, owned by Patanjali, the report by CNBCTV18.com said, “Verve is part of a byzantine collection of subsidiaries that PAL (Patanjali Aurved Limited) has invested nearly Rs 325 crore in recent years. PAL has as many as 21 private limited companies and 26 partnership firms listed under ‘disclosures of transactions between related parties’ in which it has a controlling stake.”
The website added, “Many of these entities have three things in common. One, they have no commercial operations. The only income they earn is through interest on funds parked in banks or any other financial instrument. Two, they have been incorporated through a maze of transactions. Three, they underwent at least one name change.”
It said that after reviewing hundreds of documents, it had found that not only did Verve Corporations share its addresses several other business entities, the company did not even have a signboard outside its office.
The report also went on to state that Patanjali’s company records showed that only four its subsidiaries had operations. The website added, “Many of these entities have three things in common… they have no commercial operations. The only income they earn is through interest on funds parked in banks or any other financial instrument. Two, they have been incorporated through a maze of transactions. Three, they underwent at least one name change.”
The news has evoked strong reactions from journalists and commentators on social media. Journalist ParanjoyGuha Thakurta tweeted, “The Patanjali Mystery: investments in a string of businesses with zero operations – the government conveniently looks the other way. Modiji’s friend Baba Ramdev zindabad!” “The dark side of Ramdev’s ever expanding empire — dozens of shell companies created/acquired thru multi-layered share transfers to allegedly launder hundreds of crores,” wrote journalist Rajesh Mohapatra, who added that it was ‘time the govt investigated Patanjali’s finances, deals.’
Salman Anees Soz of Congress wrote, “Kudos to the team that has done such a detailed analysis of, frankly, very shady transactions by Patanjali. A lot of investments in companies with zero operations. Shell companies galore. Where is the money going?”
Patanjali has emerged as the biggest disruptor in the lucrative FMCG sector in India in the recent years. The company’s growth gave real cause for concern to other established FMCG giants. However, the company’s growth appears to have plateaued in the recent months. Patanjali’s Managing Director and Ramdev’s close friend, Acharya Balkrishna, had recently blamed Prime Minister Narendra Modi’s GST for the drop in company’s growth.
“We have closed the year around the same level as the previous fiscal year’s revenue,” Balkrishna had told Mint adding that “Lingering effects of the demonetisation and the implementation of goods and services tax (GST) impacted growth.”