CARE puts Ramdev on the mat

Ratings suspended for food & herbal park promoted by yoga guru's Patanjali Ayurved for failing to provide information about its operations

After run-ins with income tax authorities over alleged tax evasion, yoga guru Ramdev, better known as Baba Ramdev, now has rating agencies biting at his heels. CARE has suspended the ratings for a massive food and herbal park promoted by Ramdev's Patanjali Ayurved for failing to provide information about its business operations.

This is a year after CARE had reaffirmed its non-investment grade (BB+) rating to Patanjali Food & Herbal Park (PFHP) for long-term bank credit. PFHP had last disclosed its audited numbers in 2011-12, stating its operating income was Rs 11.16 crore and profit after tax Rs 2.75 crore.

The park began commercial operations in 2010 with Patanjali Ayurved, a key group company, holding 49 per cent; the rest was held by associate companies.

The self-styled yoga guru has a sprawling business empire, churning out food, medicinal products, cosmetics and toiletries under the Patanjali brand. The group's turnover is estimated at about Rs 500 crore, with four manufacturing plants producing about 500 different items daily.

While seeking funds for the park, Patanjali Ayurved had given an unconditional corporate guarantee to banks. Banking sources say the money raised by PFHP was Rs 25-30 crore.

Fund-raising in jeopardy
The food and herbal park was set up in Uttarakhand, with an initial investment of about Rs 200 crore. The suspension of ratings by CARE will mean Ramdev's possible plans to raise money for the park might be jeopardised. Typically, banks seek external ratings on companies seeking loans or financial guarantee.

The food and herbal park was intended to support Ramdev's plan to expand distribution of his products. The yoga guru had earlier said he wanted to reach every household by pushing his products into neighbourhood or kirana stores. That plan was undone, thanks to tax evasion charges slapped on him by income tax authorities a few years ago.

Despite this, in 2009, Ramdev laid the foundation stone of his food and herbal park in Haridwar, following a fillip provided in this segment by the central government in the 11th Plan. The government had approved the setting up of 10 mega food parks in the 11th Plan; in the 12th Plan, this was revised to 12 food parks. The amount set aside for the 12 parks was Rs 1,714 crore.

Patanjali had identified 90 acres at Padartha in Haridwar, where the food park would be established.