Patanjali Foods to acquire non-food business from Patanjali Ayurveda for Rs 1,100 crore


Patanjali Foods Ltd, which primarily deals in edible oils, on Monday (July 1) said it will acquire the entire non-food business from Patanjali Ayurved Ltd (PAL) for Rs 1,100 crore.

The board of directors of Patanjali Foods approved the deal, pending necessary approvals from shareholders, lenders and regulatory authorities on July 1, 2024. The acquisition includes PAL's hair care, skin care, dental care and home care businesses, along with all related assets and liabilities.

The non-food business operates from the manufacturing plant located at Patanjali Foods & Herbal Park in Haridwar, Uttarakhand. PAL's turnover for the year ended March 31, 2024 was around ₹6,199 crore.

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This acquisition qualifies as a related party transaction as PAL is one of the promoters of Patanjali Foods. The key persons involved include Ram Bharat, Managing Director of Patanjali Foods and Director of PAL, and Acharya Balkrishna, Chairman of Patanjali Foods and Managing Director of PAL – who holds 98.54% equity of PAL. The deal has been done on the basis of fair value and fairness.

The acquisition falls under the fast-moving consumer goods (FMCG) industry and is aimed at expanding Patanjali Foods' product portfolio. The transaction is subject to approval from the Competition Commission of India (CCI) and shareholders, the effective date of which will be determined after receipt of these approvals.

The total consideration for the acquisition is ₹1,100 crore, payable in installments as per the terms of the business transfer agreement (BTA). The first installment of ₹220 crore will be paid within 10 business days of receiving CCI and shareholder approval, as well as lender approval from State Bank of India. Subsequent payments will be made, with the final installment of ₹55 crore being payable upon transfer of all assets belonging to the business undertaking.

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Further, the Board of Directors of Patanjali Foods has approved the licensing agreement with Patanjali Ayurveda to use the licensed intellectual property of PAL, subject to necessary approvals.

The agreement sees Patanjali Foods, the licensee, taking over licensing rights from PAL, the licensor, which had a turnover of approximately ₹6,199 crore for the year ended March 31, 2024. This transaction qualifies as a related party transaction as PAL is one of the promoters of Patanjali Foods.

The licence agreement will come into effect once the infrastructure of Patanjali Foods is ready, with the licence fee fixed at 3% of the actual gross sales value of the products with a minimum annual payment of Rs 83 crore.

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This arrangement is conducted on the basis of fair value and equity. No shares are being purchased under this agreement – instead, it focuses solely on licensing rights and related payments.

Patanjali Foods Ltd shares closed at ₹ 1,699.65, up ₹ 108.30 or 6.81% on the BSE.

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