Patanjali Backed Ruchi Soya To Open Rs. 4300 Cr FPO on March 24

Diversified FMCG and FMHG focused company, Ruchi Soya will launch its follow-on public offer (FPO) on March 24, the company said in its filing on the exchanges on March 11, 2022.

The FPO comprises equity shares of the face value of Rs 2 each aggregating to Rs 4300 crore. The issue also includes a reservation of up to 10,000 equity shares for subscription by eligible employees. If such placement is completed, the follow-on size will be reduced. The issue will open on March 24 and close on March 28. 

After filing a draft red herring prospectus (DRHP) in June 2021, the Securities and Exchange Board of India (SEBI) approved the public issue of the Ruchi Soya FPO in August 2021. To comply with Sebi's requirement of a minimum public shareholding of 25% in a listed business, the company is issuing a further public offering. It will take about three years to reduce promoters' stake to 75%. This FPO dilution will aid Baba Ramdev's Patanjali Ayurveda, which owns Ruchi Soya, in adhering to the minimum shareholding rules. 

Currently, Patanjali Group owns about 98.9 percent stake in Ruchi Soya. Public shareholders own about 1.1 percent stake. Post the FPO, Patanjali Group’s holding in Ruchi Soya will come down to about 81 percent and the public would hold about 19 percent. 

As per the DRHP, Ruchi Soya mentions it will utilize the entire issue proceeds for furthering the company's business by repayment of certain outstanding loans, meeting its incremental working capital requirements, and other general corporate purposes.  

Ruchi Soya: The Key Player in Branded Palm Oil 

Ruchi Soya is the largest player in branded palm oil with a share of 12% of the branded palm oil market in terms of value followed by Adani Wilmar with a share of 11%. Ruchi Soya’s ‘Ruchi Gold’ brand is the market leader in branded palm oil and also the pioneer of soya foods in India under the brand name of “Nutrela’, which Ruchi Soya launched in the 1980s.  Its brands are well recognized in the Indian market and include Ruchi Gold, Mahakosh, Sunrich, Nutrela, Ruchi Star, and Ruchi Sunlight.  

Other Commodities 

The company has Patanjali Biscuits, Noodles, and Breakfast Cereals business – which makes it the only Patanjali group entity which will sell the entire range of Patanjali biscuits, Noodles and Breakfast Cereals under the brand of Patanjali itself. On the back of Patanjali group’s more than 14 years of experience in the nutraceutical and wellness space, Ruchi Soya has launched ‘Patanjali and Nutrela’ branded nutraceuticals. 

Patanjali groups acquisition has enabled Ruchi Soya to benefit from Patanjali’s pan-India distribution network, significant technical know-how in the FMCG and FMHG sectors in India, and group synergies amongst the wider Patanjali Group.  

The Competitors in Edible Oil Industry

The edible oil firm competitors include Kuok, Bunge, Cargill, Adani Wilmar, Conagra, National Dairy Development Board of India, Kaleeshwari Oil Mills Limited, Gokul, Emami, Liberty Oils Mills Vippy Industries Limited, Prestige Feed Mills, and ADM Agro Industries Limited. 

Ruchi Soya with a crushing capacity of approximately 11,000 MT per day and Adani Wilmar with a crushing capacity of approximately 8,800 MT per day are the key players. The 2 players contribute almost 17-18% of the total capacity of 40 Mn MT in India. 

The company’s downstream business of oleochemicals utilizes by-products from the edible oil refineries to manufacture products like soap noodles, glycerine, distilled fatty acids as well as value-based products like castor oil, soya, and palm-based derivatives which have a wide usage across paints, personal care, pharmaceuticals, lubricants, and cosmetics. Its client includes tyre and paint manufacturing companies like Asian paints and Berger paints and exports oleochemical products to China. 

As of December 31, 2020, Ruchi Soya generated wind power at a total aggregate amount of 85.2 MW across eleven locations and six states.  

Recently Ruchi Soya showcased strong Q3FY22 results, its total income grew by 40.79% on a YoY basis. EBITDA stood at Rs 440.89 cr with a margin of 7% despite the unprecedented commodity inflation. It has expressed plans to expand its existing product portfolio of nutraceutical products. It also received the Great Place to Work Certification by Great Place of Work Institute 

Book Running Lead Managers to the issue are SBI Capital Markets Ltd, Axis Capital Ltd, ICICI Securities Ltd.