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Patanjali Ayurved's Rs 4,350-crore bid for Ruchi Soya gets lenders nod

Patanjali's success comes after a failed attempt to acquire Ruchi Soya last year and fierce competition from one of the country's leading edible oil players - Adani Wilmar

Arnab Dutta  |  New Delhi 


The country's leading packaged consumer goods major, Ayurved, won the approval to take over edible oil firm Ruchi Soya on Tuesday. The committee of creditors (CoC) of the debt-laden firm voted in favour of Ayurved’s Rs 4,350-crore bid.

Ayurved spokesperson S K Tijarawala said the Haridwar-based firm was now free to move forward to take over Ruchi Soya. "On Tuesday, the CoC voted in favour of us. A formal intimation is expected tomorrow (Wednesday)," he said. According to sources, around 96 per cent of the voters were in favour of Patanjali.

Ruchi Soya's leading brands include Nutrela, Mahakosh, Sunrich, Ruchi Star and Ruchi Gold.

Patanjali's success comes after a failed attempt to acquire Ruchi Soya last year and fierce competition from one of the country's leading edible oil players — Adani Wilmar.

Last year, the edible oil market in India stood at Rs 1.64 trillion — ahead of the second-largest category: Dairy (Rs 1.39 trillion). It is also the fastest-growing category among large packaged food categories. According to Euromonitor International, the edible oil market grew by 21.8 per cent in 2018 and by 25.6 per cent in 2017.

The deal, which is the first major acquisition for Patanjali, is expected to boost the firm's fortunes and place it among the top of the pecking order of branded edible oil players in the country.

This comes at a time when Patanjali is struggling to grow its business at a rapid pace. It grew substantially between 2010 and 2016. Demonetisation of high-value currency notes in late 2016 and advent of the goods and services tax (GST) structure in mid-2017 hampered the firm's operations in large parts of the country. In 2017-18, Patanjali's revenue growth rate, which ranged from 44 per cent to 110 per cent between 2011 and 2016, dropped to less than 14 per cent.

At present, Patanjali is bringing its on-field operations on track by strengthening its presence in general trade by hiring sales personnel in thousands and adding distributors.

Despite the blow suffered during its first attempt to acquire Ruchi Soya last year, reiterated its intent to buy out the beleaguered edible oil player and brought the CoC back to the drawing board in December 2018.

A top executive from a bank that has lent to Ruchi Soya, said at the time: "If we get a good deal, we will take Patanjali's offer. Adani Wilmar is also willing to let Patanjali buy Ruchi Soya if the latter can match the offer. Prima facie, if the bid is lucrative for bankers, it shouldn't be a problem."

Ruchi Soya came under the hammer when its lenders began an insolvency auction to recover over Rs 9,345 crore worth of loans. In December 2017, the National Company Law Tribunal (NCLT) had referred Ruchi Soya for insolvency proceedings on the application of Standard Chartered Bank and DBS Bank. Shailendra Ajmera was appointed resolution professional (RP) to manage the company's affairs and conduct insolvency proceedings.

Patanjali, the lone player left in the contention after the exit of Adani Wilmar, had last month increased its bid value by around Rs 200 crore to Rs 4,350 crore for Ruchi Soya. This excluded capital infusion of Rs 1,700 crore into the company.

Among the financial creditors, State Bank of India has the maximum exposure of around Rs 1,800 crore, followed by Central Bank of India at Rs 816 crore, Punjab National Bank at Rs 743 crore and Standard Chartered Bank at Rs 608 crore.

First Published: Wed, May 01 2019. 01:59 IST