Patanjali to invest Rs 5,000 crore in four units
Fast-growing swadeshi consumer goods company Patanjali Ayurved planned to start producing at four new facilities that would come up in 500 days at an investment of Rs 5,000 crore, the company’s Chief Executive Officer Bal Krishna told Business Standard. The Project 500 encompasses food and herbal parks in Gautam Buddh Nagar (Uttar Pradesh), Nagpur (Maharashtra), Tezpur (Assam) and Indore (Madhya Pradesh). The facility in Assam is expected to be operational by March and the other parks will start production by mid-2018. The food park in Uttar Pradesh, which would cater to the National Capital Region, would need an investment of Rs 1,400 crore in two phases, Bal Krishna said. The first phase would be ready by Diwali, he added.
An average sales growth rate of 82 per cent annually between 2011-12 and 201516 has forced yoga guru Ramdev’s company to depend on third-party manufacturers after its food park in Haridwar ran out of capacity. Patanjali, which has so far funded most of its growth from internal accruals, is now seeking to borrow from banks. “The ramp-up will increase Patanjali’s reliance on debt, which is expected to result in some increase in the gearing level,” credit rating agency ICRA said in a note. Borrowing from banks has become easier for Patanjali after ICRA recently upgraded its credit rating for fund-based facilities by two points from A- to A+. Patanjali has Rs 320 crore debt, of which Rs 300 crore is fund based. Any delay in completion of these capital expenditure plans could hamper Patanjali’s growth plans and impact its liquidity position, ICRA observed. Article By – Business Standard