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Patanjali will need Rs 5,000 crore debt for expansion

Thursday 28th September, 2017

Article Details
Publication  Mint
Source  Sounak Mitra
CCM  70.29
Edition  New Delhi
Supplement   NA
MAV  235,408
Language  English
Page  1, 3
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PRADEEP GAUR/MINT
Patanjali needs Rs5,000 cr debt for expansion
Yoga guru-turned-busi-nessman Baba Ramdev on Wednesday said his company Patanjali Ayurved Ltd will need to borrow Rs5,000 crore to expand production capacity to support growth. "Patanjali's revenue will be more than HUL's (Hindustan Unilever Ltd's) in 2018-19. To support this growth, we'll need to borrow over a period of time," Ramdev said. See Page 3 Patanjali will need Rs5,000 crore debt to expand capacity, says Baba Ramdev
BY SOUNAK MITRA
sounak.m@livemint.com
NEW DELHI
Yoga guru-turned-busi-nessman 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
Babo Romdev.
March 2017, according to the company's filings. In comparison, Ramdev's Patanjali posted revenue of RslO,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 Rsl 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 had on 22 September reported that Patanjali has hired investment bankers to raise Rsl,000 crore and is weighing equity-linked fun-draise 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 Rsl 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 GST on by-products of cows.
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 Rsl,000 crore by 31 March 2019, Mint reported on 30 August.
Patanjali also has plans to start selling branded apparel from April 2018, with a target to generate sales of Rs5,000 crore in the first year.