Ramdev says Patanjali to be a notforprofit entity
We’ll not list Patanjali on the stock exchanges: Yoga guru
NEW DELHI: Yoga guru-turnedbusinessman Baba Ramdev said Patanjali Ayurved Ltd will be turned into a “non-profit” entity as it seeks to plough back earnings from its businesses into charity. “We will not list Patanjali on the stock exchanges. We will list Patanjali in people’s hearts. We are transforming Patanjali into a non-profit organization,” Ramdev said on the sidelines of a press conference. Patanjali has, since its inception, used all profits generated from business for charity, he added.
Patanjali Ayurved is a privately held company that is 98.6% owned by Ramdev’s close aide Acharya Balkrishna, who was ranked the 19th richest Indian by Forbes in 2017 with an estimated net worth of $7.3 billion. Ramdev does not directly own shares in the company.
As a first step, Ramdev has set up a charitable organization— Patanjali Seva Trust—which will be the sole holding entity for all companies that are part of the Patanjali Group, according to a group executive who did not want to be named. There are a few dozen registered firms in the Patanjali Group.
While Patanjali Ayurved manufactures and sells a host of consumer packaged goods—from pulses to ghee, biscuits to shampoo, juices to anti-ageing creams—the group has interests in a bunch of other businesses, including educational institutes, ayurvedic medicines and hospitals, to name a few. The company has also expressed interest in entering new areas such as infrastructure, solar power and apparel, among others.
There could be several reasons why Ramdev has set up Patanjali Seva Trust as the holding entity. “It could be an exercise to avoid inheritance tax that the government may impose in the future. A trust as a holding entity ensures succession of the firm’s assets, wealth preservation in perpetuity,” said Radhika Jain, partner, Grant Thornton India Llp.
Pranav Sayta, tax partner, EY, said just turning Patanjali Ayurved into a trust will not by itself give much of a tax advantage. “But if income generated from commercial operations is used in charitable causes as a set objective of the entity, the tax advantage is huge,” he said.
According to the Patanjali executive cited above, Ramdev has written a ‘Will’ for Patanjali group companies ensuring succession. “Ownership of Patanjali can never be transferred to anyone other than a ‘sanyasi’ (renunciate). The Trust structure is to ensure future of the business empire. After the demise of Baba Ramdev and Acharya Balkrishna, the company will be owned and run by sanyasis only,” the executive said.
In a statement, Ramdev said Patanjali’s main aim behind its activities was to do charity works of “over ₹ 1 lakh crore” in areas of education, health, yoga, ayurved, research, gau-seva (cow welfare) and services to the common man. “We have undertaken charity works to the tune of over ₹ 11,000 crore,” the statement added.
To be sure, the profit that Patanjali Ayurved has generated from its business so far is likely to be far less. In the year ended 31 March 2017, Patanjali doubled its revenue to ₹10,561 crore from ₹5,000 crore in the previous year. Patanjali’s meteoric rise was in the last two to three years. Its revenue jumped from ₹446 crore in 2011-12 to ₹2,006 crore in 2014-15.