New Delhi: Baba Ramdev and his associates run a tax-exempt charitable organisation to park money and investments, including in bankrupt consumer goods company Ruchi Soya that Patanjali acquired, an investigation by The Reporters’ Collective has found.

In 2016, people linked to the Patanjali Group set up a non-profit charity company called Yogakshem Sansthan for establishing and promoting yoga and ayurveda centres, earning it a tax-free status. While the non-profit didn’t do a rupee worth of charity for six years, it was solely used to park investments worth tens of crores of rupees, including what Ramdev’s close associates made in Ruchi Soya, reveal company records accessed during the investigation.

Tax laws have restrictions on non-profits earning income through business investments and commercial activities to prevent such charitable organisations being used as vehicles to make profits without paying taxes. In the past, many non-profits have been investigated and prosecuted by tax authorities for minor transgressions. Ramdev’s charitable company stayed off scrutiny despite it not doing any of its stated charitable work and instead moving investments.

Our earlier investigation had found that the Patanjali group had spawned several dubious and zero-revenue companies that discreetly traded in ecologically sensitive Aravalli forestland to earn unprecedented superprofits. This land, they had wrongly disclosed, was for setting up factories to manufacture ayurvedic medicines and products.

While the motive for setting up such entities is complex, the obvious reasons are these hollow entities - that don’t do their stated work - limit the visibility of ownership, add layers of obfuscation as money moves from one entity to another and potentially provide opportunity to minimise taxes. Accountants call it ‘tax planning’. 

While Yogakshem Sansthan did end up paying taxes on the massive income from investments it held in Ruchi Soya, now Patanjali Foods, the company did not lose its tax-free status despite not fulfilling the terms on which it was granted tax exemption.

We sent questions to Acharya Balkrishna and Yogakshem Sansthan seeking reasons behind the non-profit company’s failure to do any charity and why it only held investments, but didn’t receive any response.

Ramdev built proximity to power by pointing fingers at corruption in the previous government led by the Indian National Congress, siding with the current ruling dispensation of Bharatiya Janata Party and on occasions peddling hate against the minority Muslim community. He branded himself as a messenger of virtuous consumerism, portraying his business empire as a patriotic bastion dedicated to serving the nation and fighting international companies. But documents seen by The Collective show Ramdev and his associates frequently employed tactics typical of businessmen using teams of accountants and lawyers to maximise their profits while staying out of trouble. 

[dropcap]O[/dropcap]ne of the key persons who pumped investments into Yogakshem Sansthan is Acharya Balkrishna, Ramdev’s right-hand man who holds the keys to the Patanjali Business group.

“We need the wealth to serve the people," said Balkrishna in an interview to a journalist in 2016. The same year, four people linked to the Patanjali group -- Acharya Pradyumna, Phool Chandra, Suman Devi and Savita Arya -- set up Yogakshem Sansthan. The non-profit had an initial capital of Rs 4 lakh.

Phool Chandra is now known as Swami Parmarthdev. And even as he has turned into another spiritual leader on the face of it, over years he has been a director in more than a dozen for-profit companies, including construction company Pleasant Vihar Private Limited and Patanjali Natural Biscuits Private Limited. 

Phool Chandra is now known as Parmarthdev.

Suman Devi is now Sadhvi Devpriya. Under the latter name, she is a director at Vedic Broadcasting Limited, another Ramdev empire firm.

Unlike most other companies run by Ramdev and his associates to earn profit, this one was formally set up as a non-profit company.

Its incorporation records say the company’s primary purpose is to establish and promote yoga centres, educational institutes for skill development, and healthcare centres for underprivileged sections of society. 

They said the company would nurture “giftedness amongst children and youths thereby creating in them quality of good citizenship and enabling leadership”. Its objectives also include granting aid and donations to other organisations with similar objectives.

So, did the nonprofit do enough charity works in society to justify the tax exemptions provided to it?

A review of the financial records of the company since it was formed show that the company never set up any yoga or health centres for underprivileged people or educational institutions on its own.

From the second year of its existence Yogakshem became part of a dubious investment parking game of Ramdev’s associates.

Yogakshem’s records submitted to the government say that on January 5, 2018 it received a corpus donation from Balkrishna, late Swami Muktanand (the other close lieutenant of Ramdev) and six other companies affiliated to the Patanjali group.

The corpus donation was in the form of 2.065 crore shares of Patanjali Ayurved Limited (PAL), worth Rs 79.8 crore. Of these, two crore shares were gifted by Balkrishna alone who owned 98.54% of Patanjali Ayurved, which in a decade of its operation became an economic powerhouse with Rs 8,136 crore sales in the same fiscal.

In January 2018, Yogakshem received over 2 crore shares of PAL (Patanjali Ayurved Limited) as corpus donation. [Source: Yogakshem Sansthan’s financial records]

After Patanjali Ayurved shares were donated, Yogakshem’s 100% shares were given to Patanjali Sewa Trust, another entity set up by Ramdev and his associates according to media reports. Ramdev became a nominee shareholder of Yogakshem Sansthan with one share in his name.

After the donation of shares in PAL (Patanjali Ayurved Limited), Ramdev and his associates took control of Yogakshem Sansthan. [Source: Yogakshem Sansthan’s financial records]

So, within 24 hours of gifting Patanjali Ayurved shares, Balkrishna along with Ramdev and Muktanand took over control of Yogakshem.

The original owners of the non-profit company were divested of their shares though they continued to be directors on papers for the next few months.

In public, Ramdev sold this strategic investment as an endeavour to serve the people and the nation.

A media report from the same fortnight as the transaction notes, “Yoga guru-turned-businessman Baba Ramdev said Patanjali Ayurved Ltd will be turned into a “non-profit" entity as it seeks to plough back earnings from its businesses into charity.”

The report cites Ramdev saying, “We’ll not list Patanjali on the stock exchanges. We will list Patanjali in people’s hearts. We are transforming Patanjali into a non-profit organization."

The report also said that Patanjali Sewa Trust will be the holding entity for all Patanjali Group companies.

Ramdev’s bombastic claims could have been true if Yogakshem Sansthan would go on to do any charitable work on its own. It did not. Rather Balkrishna and other associates of Ramdev used the nonprofit company to park their shares in Patanjali Ayurved while remaining the effective dominant owners of the cash cow Patanjali Ayurved Ltd, puncturing Ramdev’s claim of turning business into charity.

Yogakshem Sansthan spent a year without moving a muscle to promote yoga, sitting comfortably on the two crore shares gifted to it by Patanjali Ayurved Ltd.

What is interesting is that for two fiscal years, 2017-18 and 2018-19, Yogakshem reflected the corpus donation of Patanjali Ayurved Ltd’s shares in its account books. But Patanjali Ayurved’s financial records continued to show Balakrishna as owner of 98.54% of its shares.

Technically, it is irreconcilable that the same shares are in possession of two entities. And they had to eventually answer the incongruity that remained unexplained for two financial years.  

The answer was tucked away in small print in the balance sheets, most of which are eye-glazing technicalities. In plain English, the crux of what it said was that these shares, which were donated to Yogakshem, had also been pledged by Balkrishna to banks to take loans. Now the banks were not too happy with their collateral being handed over to Yogakshem Sansthan, an entity they had no truck with. So the share transfer had to be reversed in FY 2020-21, ending an attempt to weave their way through the gaps in rules to park an investment.

Lender banks did not agree to the corpus donation of Patanjali Ayurved Ltd’s shares. It was reversed in the 2020-21 fiscal year. [Source: Yogakshem Sansthan’s financial records]

By the time Yogakshem finished this convoluted investment parking attempt, Ramdev’s Patanjali-led consortium in December 2019 controversially acquired Ruchi Soya, famous for its Nutrela brand of soya chunks.

Ruchi Soya had gone broke, owing lenders over Rs 12,000 crore. Bankers had two options under the insolvency law -- find a buyer to claw back some of the debt or sell off the company piece by piece. Ramdev grabbed the chance, outbidding Adani Group (who withdrew from auction at the last minute), and got Ruchi Soya for a steal. Banks like SBI and Union Bank loaned Patanjali consortium the money to buy it. Patanjali's bid of Rs 4350 crore was approved in December 2019, and in June 2022, Ruchi Soya became Patanjali Foods.

Yogakshem would now get pulled in to play a critical role in parking investments of Ramdev and his associates in Ruchi Soya.

In the 2020-21 fiscal, Yogakshem was light by Rs 79 crore after reversing the Patanjali Ayurveda shares parked with it. The same year, Divya Yog Mandir Trust, yet another non-profit of Ramdev that was part of the Patanjali consortium that acquired Ruchi Soya, gifted Yogakshem 6 crore shares of Ruchi Soya worth Rs 42 crore. With this Yogakshem was now 20.28% owner of Ruchi.

While the investment was parked in Yogakshem, the Divya Yog Mandir Trust became majority owner of the non-profit by taking over 60% of the shares from Patanjali Sewa Trust.

After donating Ruchi Soya shares to Yogakshem Sansthan, Divya Yog Mandir became a 60% owner in the charitable company. [Source: Yogakshem Sansthan’s financial records]

This kind of circuitous holding of shares in a profit-making firm often helps obfuscate who holds the real control of a company and who is really gaining from the profits made. 

Yogakshem Sansthan’s ownership changed hands almost every year. A year after Divya Yog Mandir got 60% stake in the company in FY 2020-21, it transferred it to another Patanjali trust, Patanjali Research Foundation Trust. This trust, in turn, gave away its stake to Patanjali Food and Herbal Parks Private Limited, another non-profit company,  the next fiscal year.

We sent a detailed questionnaire to Acharya Balkrishna and Yogakshem Sansthan seeking reasons behind the non-profit company’s failure to do charity, why it only held investments, and frequent change in ownership as it received donations from other entities. We also asked Patanjali Ayurved, Patanjali Foods and Divya Yog Mandir Trust questions about donation of shares to Yogakshem Sansthan and corresponding change in the nonprofit’s ownership. S K Tijarawala, who acts as Baba Ramdev’s spokesperson and National Head of Aastha TV, was also copied on all the mails. We spoke to Tijarawala on the phone and also sent him queries on WhatsApp as he had asked. We have not received any responses yet. 

As a charitable entity, Yogakshem Sansthan enjoys tax exemptions under Income Tax Act, 1961. The company is not required to pay any tax on its income if it utilises at least 85% of it on its charitable work. In case such tax-exempt nonprofits get some shares in a company, the nonprofit is required to liquidate these before the end of the next financial year and the money is to be deposited in instruments specified by the tax law.

Yogakshem, which had done nothing to promote yoga, in FY2022-23 earned a dividend of Rs 30 crore on the Ruchi Soya shares it was holding.

In this financial year, it spent Rs 19.43 crore, little over 60% of its income through Ruchi Soya’s shares, on donations to undisclosed entities.

Consequently, it ended up paying an income-tax of Rs 10.48 crore on this dividend income.

But, that did not change what Yogakshem Sansthan was being used for. The company continues to claim it is a charitable organisation. The government continues to offer it a tax-free status.

It continued to hold a 16.52% stake in Ruchi Soya (now Patanjali Foods), as per the latest financial records of the company. 

Ramdev’s business empire continues to flourish. His less-known and dubious companies such as Yogakshem  Sansthan continue to be the secret sauce.