Yoga teacher Ramdev-led Patanjali Ayurved-owned Ruchi Soya hit the capital market on Thursday to raise Rs 4,300 crore through his follow-up public offering (FPO) as it aims to become a debt-free company.
The issue closes on March 28. The price band is set at Rs 615 to Rs 650 per share.
Ramdev said during a press conference here that the company launched its FPO despite volatility in the stock market due to the war between Russia and Ukraine.
He said the company had already raised Rs 1,290 crore from anchor investors on Wednesday and expressed confidence that its FPO would be a huge success as people have confidence in its products and brand.
Ramdev said the proceeds of the FPO will be used to retire the term loan of Rs 3 300 crore.
“Ruchi Soya will be debt free,” he claimed.
Asked why the price band was kept lower than current market prices, Ramdev said it was done to give a good return to investors.
Ruchi Soya shares closed at Rs 897.45 on the BSE on Wednesday.
“We overturned the Ruchi Soya after obtaining it through insolvency proceedings,” Ramdev said.
He said the company went bankrupt due to mistakes made by the previous management.
“We run the company with transparency, accountability and corporate governance,” he said.
Patanjali Group currently owns about 98.9 percent of Ruchi Soya.
Public shareholders own about 1.1 percent of the stake.
After the FPO, Patanjali Group’s stake in Ruchi Soya will come down to about 81 percent, and the public will hold about 19 percent.
The Securities and Exchange Board of India (SEBI) has given the nod to the launch of the Ruchi Soya FPO in August 2021, after the company submitted the draft Red Hair Prospectus (DRHP) in June 2021.
The firm comes out with the public issue to comply with SEBI’s standard of 25 percent minimum public shareholding in a listed entity. It takes about three years to reduce promoters’ interest to 75 percent.
Ruchi Soya will use the proceeds of the issue to promote the company’s business by repaying certain outstanding loans, to meet its incremental working capital requirements and other general corporate purposes.
In 2019, Patanjali Ruchi Soya, which is listed on the stock exchanges, went through an insolvency process for Rs 4 350 crore.
Ruchi Soya is mainly engaged in the processing of oilseeds, the refining of crude edible oil for use as cooking oil, the manufacture of soy products and value-added products. The company has an integrated value chain in palm and soybean segments, with a farm-to-fork business model.
It has brands like Mahakosh, Sunrich, Ruchi Gold and Nutrela.