Patanjali IPO: Baba Ramdev says Patanjali’s IPO decision by year-end sets roadmap for Ruchi Soya
Ramdev, who practices and teaches yoga every morning from 5 a.m. to 10 a.m., is busy these days meeting various institutional investors before
‘s Rs 4,300 crore follow-up public offering (FPO). His âkarma yogaâ begins at 10 am and ends at 10 pm, he says.
âWe’ll be taking a call for Patanjali’s IPO soon. We have to wait a bit,â Ramdev said in an interview with ETMarkets.com.
The yoga guru said that the initial investor response to Ruchi Soya’s problem was solid and that he would ensure that the upcoming bid was priced for the benefit of all existing and potential shareholders.
Ramdev said potential investors in Ruchi Soya might be happy that the company aims to transform into a large consumer company.
âWe are in a process of transformation of the company, in which its soul – its main activity of commodities – will represent 20% of the activity and the rest will be entirely made up of consumer products. Having said that, we will ensure that the commodity business grows as well. in size, especially in the edible oil sector. We would like to be on a palm oil plantation, âRamdev said in his entrepreneurial avatar.
Last month Ruchi Soya bought the unit of cookies and noodles from Patanjali for Rs 60 crore. Ramdev said he will ensure that Patanjali and Ruchi Soya offer differentiated products and that there is no overlap.
Ramdev’s Patanjali recorded sales of over Rs 30,000 crore in fiscal year 21. From this, Ruchi Soya contributed Rs 16,318 crore to sales. Sales in FY20 amounted to Rs 25,000 crore in FY20 of which Rs 13,117 crore was contributed by Ruchi Soya.
Patanjali, run by the yoga guru, acquired the bankrupt company known for Nutrela soy chunks in July 2019 as part of an insolvency proceeds for 4,350 crore rupees. The acquisition was finalized in December 2019.
Later on January 27, 2020, Ruchi Soya shares went public at around Rs 17 each on the stock exchange and since then they have been on a dream run. Today, even as the script failed to hit its 52-week high of Rs 1,377, it is up 6,476% from its relist price.
Due to the promoter’s high 98.9% stake in Ruchi Soya, the company is required to reduce its stake to reach the minimum public ownership standards of 75% by December 2022, i.e. within three years of acquisition. In the next FPO, it may need to reduce its stake by at least 9 percent. A stake sale of Rs 4,300 crore at current levels is equivalent to a 13% stake.
Ramdev said his goal was to free Ruchi Soya from debt within two years.
The company plans to use Rs 2,663 crore of the FPO proceeds for the repayment of the company’s loans and Rs 593.4 crore for working capital. The remainder of the product will be used by the company for general business purposes.
During the Covid period, Ramdev said, the fastest growth for Ruchi Soya has been achieved by Nutrela while for Patanjali it is honey, Chayanprash and mustard oil. For Patanjali, the food segment accounts for 60 percent of its income. The rest is provided by the non-food segments.
Ramdev said he rarely saw disruption because of Covid. During the period, Patanjali experienced 10-100% growth in sales of some products, thanks to a strong supply chain.
Ramdev said his businesses would focus more on online distribution, exports and markets where it has weaker reach. In addition, he will target certain age groups where he sees opportunities, he said.