Baba Ramdev's Patanjali Ayurved faces scrutiny over financial deals

By Ruchi Bhatia

India’s government has asked Patanjali Ayurved Ltd., a traditional medicine company co-founded by celebrity yoga guru Baba Ramdev, to explain some transactions deemed suspicious, according to people familiar with the matter.

The Corporate Affairs Ministry sent a notice to the company after the federal economic intelligence wing found transactions it labeled as abnormal and dubious, the people said, asking not to be identified citing rules.

They didn’t, however, disclose the amounts involved in the transactions, citing the early stage of the probe. The company will have about two months to respond to the notice, the people said.

The ministry will also look into any corporate governance breaches and fund diversion, they said.

The ministry didn’t immediately respond to a request for further information. A spokesperson for Patanjali Ayurved also didn’t reply to a request for comment.

This isn’t the first time Patanjali Ayurved or its affiliates have invited scrutiny. Last year, the company’s unit faced show-cause notices from the government for alleged non-payment of taxes and wrongfully claiming refunds, while India’s top court separately restrained the company from marketing its products as a cure for certain ailments.

While Patanjali Ayurved is a closely held company, its unit Patanjali Foods Ltd. is publicly traded. Its shares extended an earlier decline to 6.1 per cent as of 3 p.m. in Mumbai, heading for its lowest close since October.