LVMH May Take Baba Ramdev’s Patanjali from ‘Swadeshi’ to ‘Videshi’ Funding

Global MNC LVMH wants to buy stake in Patanjali Ayurved Ltd.  Whether it was an alleged cheaper land acquisition in Nagpur or manufacturing products similar to the leading products available in the market or selling substandard products in Nepal, Baba Ramdev’s brand Patanjali Ayurved has always been surrounded with the controversy.   And now it seems that the controversy has erupted again over its funding sources.

LVMH Moët Hennessy Louis Vuitton SE, better known as LVMH is ready to fund USD 500 million, as the company believes that Patanjali is one of the fastest growing FMCG brands in India and is giving stiff competition to its competitors like Unilever, and other personal care brands.

Ravi Thakran, the managing partner has explicitly said that “”We would love to work with him if we can find a model,” However, “I know his model is not to work with multinationals and with foreign money.”

Why LVMH keen to fund Baba Ramdev’s Patanjali Ayurved?

Even after facing several disruptions in form of lawsuits, Patanjali is growing by leaps and bounds. The company is expanding its business like never before. After tasting the success in the FMCG sector, yog Guru Baba Ramdev is heading towards the infrastructure sector and is planning to diversify into solar power equipment manufacturing, a burgeoning sector that is highly dependent on the Chinese imports.  The company plans to invest 100 crore in solar equipment manufacturing and 10,000 crore in proposed food park in Telangana.

Today, it has become one of the most influential brands in the country.  Patanjali retailing empire is growing due to the increased demand for herbal products in India. To leverage the benefits and to make it a global brand, Thakran wants to buy a stake in the company. Though he confirms that it might be a challenging task because it could break the tradition portrayed by Baba Ramdev of shuddh desi brand!

Acharya Balakrishna’s Response on the Deal?

Acharya Balakriskhna, MD of Patanjali Ayurved has clearly mentioned that it will not sell a stake to anyone but they are ready to discuss the deal with L Catterton.  According to the sources, Patanjali is looking forward for Rs 5,000 crore loans in Indian currency and at a competitive rate of interest. The loan amount would be utilized to set up plants in Greater Noida, Chattisgarh, Nagpur, Haryana, Rajasthan and Arunachal Pradesh. Here’s what he discloses to ET.

“We won’t accept any money in equity or shares but when the country is using foreign technology for progress and if foreign money comes and gives us on our conditions we will accept,” Balakrishna said to ET.

Begining of the End of Swadeshi Movement?

Patanjali brand gained momentum by targeting the Indian sentiment “ Hindi Hai Hum, Hindustan Humhara, but definitely this step of Baba Ramdev and Acharya Balkrishna will give a jolt to its empire.  Baba Ramdev has always marketed Patanjali Ayurved as an engine to use Swadeshi products and keep the wealth of the country in the country itself. Today, the brand is successful owing to it’s ideology, but this funding will definitely sweep away the momentum raised by him and let its competitors do negative publicity and eat the market share.

Though there might not be any dilution of equity to foreign investor but even a loan will take the money out of the country in form of interest. Patanjali shall avoid any such move which can be dangerous to its brand image.

What do you think? Will it be an end to the Swadeshi strategy that the company adopted to surge ahead?