Reasons why Patanjali Foods shares plunged 4% today

Shares of Patanjali Foods Ltd were trading 4 per cent lower in Tuesday's trade, as the Supreme Court (SC) was hearing the contempt case against Patanjali Ayurved, its Managing Director Acharya Balkrishna and promoter Baba Ramdev for misleading medical advertisements of the company’s products.

Patanjali Ayurved owned 32.37 per cent stake in Patanjali Foods at the end of March quarter. Acharya Balkrishna is also a promoter in Patanjali Foods. The stock declined 4.05 per cent to hit a low of Rs 1,500.05 on BSE.

Pulling up the company for producing an e-copy of the advertisement when the court asked for original records, the SC bench said, "This is not compliance", India Today reported today.

Patanjali Foods offers edible oil and FMCG products. It is also engaged into oil palm plantation and wind mill. It recently insisted that SC directions on misleading ads do not have any bearing on Patanjali Foods' regular business operations.

Patanjali Foods recently received a show cause notice from GST intelligence department.  The notice was regarding input tax credit worth Rs 27.46 crore. The GST department has asked the company why the credit should not be recovered from it.

Besides Patanjali Foods has recently received an initial proposal from Patanjali Ayurved for a sale of the latter's non-food business undertaking to the listed company.

"The board accorded its in-principle approval for evaluating the most efficient mode of enhancing synergies with PAL’s non-food portfolio in any manner on an arm's length basis. It also authorised officials of the Company to carry-out due diligence, appoint professionals, negotiate the terms and conditions of the proposal, and report the findings to the Audit Committee and the Board for further consideration," the company said on April 26.

There were reports that the Uttarakhand government has suspended manufacturing licences for 14 of products made by Patanjali Ayurved and Divya Pharmacy with immediate effect.