Ruchi Soya acquires Patanjali’s food biz for ₹690 cr; to change its name

Ramdev-led Ruchi Soya Industries Ltd has acquired the entire food retail business of Patanjali Ayurved Ltd (PAL) as a going concern on a slump sale basis for ₹690 crore. The move is aimed at strengthening Ruchi Soya’s food product portfolio and contributing to the growth in terms of revenue and EBIDTA. The Patanjali board approved the transfer of its food business to Ruchi Soya with an effective date of May 09, 2022, Ruchi Soya has informed the stock exchanges.

After the takeover, the name of Ruchi Soya will be changed to Patanjali Foods Ltd, the company informed. And, the indicative time period for completion of the acquisition is July 15, 2022.

Ruchi Soya had announced its plans to rename itself Patanjali Foods in April 2022 and its board decided to enhance synergies between the two companies.

The food business acquired by Ruchi Soya includes manufacturing, packaging, labelling and retail trading of certain food products, along with manufacturing plants located at Padartha, Haridwar, and Newasa, Maharashtra.

Patanjali's food business comprises 21 major products, including ghee, honey, spices, juices and atta. The acquisition at a fair market value is worth ₹690 crore, based on all the fixed assets of the food division and respective current assets on a slump sale basis, says the company in an exchange filing.

The acquisition of Patanjali food business by Ruchi Soya is aimed at reaffirming its position as a strong FMCG company, it adds.

As per the deal, the transaction will consist of the transfer of employees, assets (excluding Patanjali’s brand, trademarks, designs and copyrights), and current assets (excluding debtors, vehicles, cash and bank balance), contracts, licenses and permits, distribution network, and customers.

Ruchi Soya MD Ram Bharat is also a director of Patanjali, while Balkrishna, one of its promoters and chairman, holds 98.5 % of the paid-up equity share capital of Patanjali.

The Patanjali Ayurved-owned company had raised ₹4,300 crore from its follow-on public offering (FPO) in April. A follow-on offering is when a firm issues additional shares after an initial public offering (IPO). Patanjali’s plan to raise money via FPO was aimed at making its companies debt-free in the coming three-four years, with a substantial portion (62%) of Ruchi Soya's proceeds from the ₹4,300 crore follow-on public offer to be used to partly retire the company's debt of ₹3,330 crore.

The Patanjali Group acquired Ruchi Soya in December 2019. Its revenue for FY21 stood at ₹16,382.97 against ₹13,175.36 crore in the previous year, with EBIDTA at 3.48% in FY 2020 and 6.22% in 2020-21. Patanjali Ayurveda Ltd's turnover stood at ₹10,605 crore for the financial year ending March 31, 2022.

The Ruchi Soya stock has risen 61.05 points or 5.63% to ₹1,144.80 on the National Stock Exchange today. The stock has risen 24.24% in the past five days and 21.61% in the past month. In the past six-month and year-to-date period, the stock rose 16.09% and 33.41%, respectively.