In my report for The Reporters' Collective I found: Ramdev and associates run a  tax-free charity organization that, instead of doing its charity work, became an investment parking spot for the Patanjali empire.

It never fulfilled the purpose for which it was granted tax-exemption.

Indian authorities have acted against minor transgressions. Of NGOs straying from their stated objectives.

But Patanjali empire remained untouched. And its tax-exempt status intact.

Stay with me as I unravel the details. To read the story, click here.

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Back to the story.

In 2016, four people linked to the Patanjali group set up Yogakshem Sansthan. They said the charitable organization would set up yoga, ayurveda and health care centers for the poor and educational institutes for skill development of children.

But this charity didn't do anything that it proclaimed.

Within two years of being set up, the group put the charity to use for parking investments.In 2018, it received a big donation- over 2 crore shares in Patanjali Ayurved Limited (PAL). Worth over Rs 79 crore.

Patanjali Ayurved is the flagship company of Patanjali empire. It sells wide-ranging ayurvedic products- nutraceuticals to cosmetics.

That year its revenue from sales was Rs 8,136 crore.

PAL's shares were donated to Yogakshem by Ramdev's close associates- Acharya Balkrishna and Swami Muktanand (who passed away in 2022), and 6 firms owned by them.

Most of these shares were donated by Balkrishna who owned 98.54% of Patanjali Ayurved at the time.

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Was this an altruistic donation?

Within 24 hours of donating shares in Patanjali Ayurved to Yogakshem Sansthan, Ramdev, Balkrishna and Muktanand took over control of the charitable company.

They did so in two ways.

One, that 100% ownership of Yogakshem was transfered to Patanjali Sewa Trust, a trust set up by Ramdev and associates. Ramdev got 1 share in Yogakshem as nominee shareholder.

Two, the three of them were made additional directors in the charity.

During the same period, Ramdev told media that Patanjali Sewa Trust would be the sole holding entity of the Patanjali empire.

Media reported, "Patanjali Ayurved will be turned into a non-profit entity as it seeks to plough back earnings from its businesses into charity.”

But that did not happen.

Yogakshem had neither done any charity work till the time, nor would it do so in the years after it got PAL's shares and Patanjali Sewa became its owner.

No yoga, ayurved or health care centers for underprivileged people were set up.

A few months after, the previous owners were removed from their managerial posts as well.

Ramdev, Balkrishna and Muktanand assumed full control of Yogakshem Sansthan.

Why would Balkrishna and Muktanand donate shares in PAL but control them indirectly through Yogakshem?

We asked Balkrishna, but didn't receive a response.

There was also a discrepancy in this donation of shares. While Yogakshem showed in its account books that it had received the donation, PAL's financials continued to reflect Balkrishna as the owner of the shares.

Finally, after three years, Yogakshem said in its balance sheet that the share transfer had been reversed. Because Balkrishna had pledged his shares as collateral with banks. And the banks did not permit the moving of collateral from Balkrishna to Yogakshem.

That was the story of a failed attempt to park Patanjali Ayurved's shares with Yogakshem Sansthan.

But as soon as the share donation was reversed, Yogakshem was presented with another opportunity to lend a hand to consolidate Patanjali empire's business.

It received another donation. Rs 42 crore worth of shares in Ruchi Soya (Patanjali Foods).

Patanjali Consortium had acquired the bankrupt fast moving consumer goods company in December 2019.

This acquisition was controversial- the lender banks of Ruchi Soya that had to recover their money gave hefty loans to Patanjali to buy the insolvent company.

Adani Wilmar withdrew from the race to buy out Ruchi Soya.

The acquisition was way too easy for Patanjali.

One of the entities in the Patanjali Consortium that took over Ruchi Soya was Divya Yog Mandir Trust. It got 6 crore shares in the company.

This is the trust that donated all of its shares in Ruchi Soya to Yogakshem in FY 2020-21.

This donation revealed a pattern.

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After Divya Yog Mandir donated shares to Yogakshem, it got 60% shares in the charity. Effectively, it became an indirect owner of the shares it had donated.

This roundabout way of ownership is typical of businesses that want to obfuscate ownership and wealth of owners.

Meanwhile, Yogakshem Sansthan continued to be idle when it came to fulfilling the purpose for which it was created in the first place.

Its shareholding kept shifting hands from one Patanjali entity to another. Those who donated to the charity got ownership in it.

Time passed, Yogakshem did not serve the nation in any way. It did not serve underprivileged people. It did not nurture any skills in children.

Then came the 2022-23 fiscal.

In this financial year, the charity earned Rs 30 crore from its shares in Ruchi Soya.

Tax laws mandate that a charity should spend at least 85% of its income on its stated charitable purpose in order to claim tax exemption.

Yogakshem did not satisfy this condition.

In the year, it spent only around 60% of its income. It donated Rs 19 crore to undisclosed entities for unknown purposes.

And it ended up paying over Rs 10 crore in tax.

In effect, it worked just like any other business. Earning from business and paying tax like one.

Tax authorities can revoke tax-exemptions of charitable organizations that do not fulfil their objectives and do not utilize their tax exempt status.

But Yogakshem Sansthan still enjoys a tax-free status.

It continues to hold a 16.5% stake in Ruchi Soya, according to latest available records of the FMCG company.

Ramdev and his associates' tall claims of working in the interest of the nation turned out to be misleading, just like their advertisements.

Six months ago Shreegireesh and I did a two-part series on Patanjali's web of shell companies, set up for promoting Ayurveda, that instead turned into real-estate firms trading Aravallis forests. You can read them here.

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