Ruchi Soya FPO opens for subscription on 24th March

The dates for the follow-on public offer (FPO) of Ruchi Soya have finally been announced. It had been in the works for a long time but had to be repeatedly put off due to unfavourable market conditions. Now, the company has announced that the Rs.4,300 crore FPO of Ruchi Soya will open on 24th March and close for subscription on 28th March. That will ensure that the company gets the funds in the current fiscal year itself.

The company, Ruchi Soya, had been purchased by Patanjali Ayurveda from the NCLT as part of the bankruptcy resolution process after Ruchi Soya had reached the point of default with an overdose of debt.

Patanjali Ayurveda is headed by Baba Ramdev and Acharya Balkrishna with the latter managing the day to day operations of the company. Ruchi Soya is a key player in India in the food products business with marquee brands in its stable.

One of the key purposes of the FPO by Ruchi Soya is to progressively reduce the stake of Patanjali Ayurveda in Ruchi Soya to 75% since 25% public holding is the norm for listed companies as per extant SEBI regulations.

As a result of this FPO, the holding of Patanjali in Ruchi Soya will fall from 98.9% to 81% with 19% held by public. Reducing the stake of Patanjali to 75% will still require another 2 years, but the process has surely started.

How does Ruchi Soya plan to use the fund infusion, net of issue costs. The largest chunk will be used to repay and also to prepay the company borrowings either in part or in full. Being a working capital intensive business, Ruchi Soya will also use part of these funds to bankroll its working capital needs.

Any surplus left after that would be used for general corporate purposes by the company. There is not major capex planned immediately.

Ruchi Soya was incorporated in the year 1986 and it is one of the leading FMCG brands in the Indian edible oils sector. It is also the largest manufacture of soya foods and caters to retail and institutional clients.

Its key products include edible oil, oleochemicals, textured soya proteins (TSP), honey, atta, oil palm, biscuits, cookies, rusks, noodles and breakfast cereals. Ruchi Soya has 22 refining facilities with total refining capacity of 11,000 TPD.

After making losses in 2018, the consistent has turned out to profitability since 2019 onwards. Ruchi Soya has over 100 sales depots, 4,763 distributors and 457,788 retail outlets.