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Baba Ramdev: Patanjali needs to borrow Rs5,000 crore to support expansion

LiveMint logoLiveMint 27-09-2017 Sounak Mitra

New Delhi: Yoga guru-turned-businessman Baba Ramdev on Wednesday said his company Patanjali Ayurved Ltd will need to borrow Rs5,000 crore to expand production capacity to support growth as it aims to become the largest packaged goods company in the country by March 2019.

“Patanjali’s revenue will be more than HUL’s (Hindustan Unilever Ltd) in 2018-19. To support this growth, we’ll need to borrow over a period of time,” Ramdev said, adding that his dream is to emerge as the “largest packaged goods company in the world by 2020-21”.

Ramdev’s target looks scarcely credible. Hindustan Unilever, the country’s largest packaged goods company, has reported revenue at Rs34,487 crore in the year ended 31 March 2017, according to the company’s filings. In comparison, Ramdev’s Patanjali posted revenue of Rs10,561 crore during the same year, doubling from around Rs5,000 crore the previous year.

Ramdev, however, had said at a press conference on 4 May 2017 that Patanjali’s sales will double by 31 March 2018. He said Patanjali has the potential to cross a “turnover of Rs1 trillion in the next 3-4 years”.

“Patanjali has the potential to become a Rs2 trillion company,” said Ramdev, speaking at an event organized by the All India Management Association.

Patanjali, which currently has very low debt of around Rs300 crore, is in discussions with banks for loans. However, the company is unlikely to go for “structured debt or an equity-linked fund-raise option”, clarified a spokesperson of the company.

Mint on 22 September reported that Patanjali has hired investment bankers to raise Rs1,000 crore and is weighing equity-linked fundraise options.

In the next two years, Ramdev said, Patanjali will have its own manufacturing units across the country that would cumulatively be capable of producing goods worth Rs1 trillion per annum. During the past year, Patanjali has announced plans for setting up more than 15 factories across the country.

Getting loans, however, may not be an issue for Patanjali, given its liquidity and growth rate. Credit rating agency Icra Ltd, in January, upgraded Patanjali’s credit rating on strong performance and increasing brand penetration, among other reasons.

Ramdev said that the government should remove the goods and services tax (GST) on by-products of cows, or products that are made out of cows’ milk.

Like he has done before, Ramdev did not let go of a chance to accuse foreign companies operating in India. “MNCs (multinational corporations) have ruined the health of Indians. We need to stop that. Patanjali is not just for selling products, but for saving our own country,” he added.

During the past year, Patanjali has accelerated its pace of diversification. After packaged food, Ayurvedic medicines and cosmetics, Ramdev’s company last month announced its foray into the private security business and the branded apparel market. The company is also launching packaged drinking water this Diwali, targeting sales of Rs1,000 crore by 31 March 2019, Mint reported on 30 August.

According to 3 August report in Mint, Patanjali plans to start selling branded apparel for men, women and kids starting April 2018, with a target to generate sales of Rs5,000 crore in the first year.

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