Patanjali Foods announced its board's approval to acquire Patanjali Ayurved's non-food business for Rs 1,100 crore. The acquisition, structured as a going concern sale, will bring Patanjali Ayurved's established dental care, skin care, home care, and hair care products under the Patanjali Foods umbrella.
The acquisition includes assets like land, buildings, machinery, inventory, and infrastructure (including manpower and distribution networks) along with associated liabilities. Patanjali Ayurved's turnover for the fiscal year ending 31 March 2024, was approximately Rs 6,199 crore. The proposed acquisition is a related party transaction.
This strategic acquisition is expected to significantly boost Patanjali Foods' product portfolio with well-recognized brands, contributing to revenue and EBITDA growth.
Additionally, a separate 20-year licensing agreement has been established, with Patanjali Foods paying a 3% turnover-based fee on gross sales (minimum Rs 83 crore annually) to Patanjali Ayurved for continued brand use.
The consolidation of the "Patanjali" brand under Patanjali Foods is anticipated to create synergies in brand equity, product innovation, cost optimization, and operational efficiencies. This ultimately aims to solidify Patanjali's market share within the FMCG sector.
Following the board's approval, Patanjali Foods will now pursue final agreements and obtain necessary approvals to complete the acquisition.
Patanjali Foods shares fell 2.36% to settle at Rs 1659.60 on 2 July 2024.