FMCG major Ruchi Soya Industries, which was acquired by Baba Ramdev’s Patanjali Ayurved through an insolvency resolution process, has witnessed one of the biggest rallies in the share market since its relisting in January 2020. The Indore-based edible oil maker registered a 55x growth in around two years to ₹945 per share in intraday on March 22, 2022, after getting relisted at ₹17 apiece on January 27, 2020.
Since its resolution and relisting, investors turned bullish on the stock after the company’s management was taken over by Patanjali group. Shares of the company surged a whopping 5,500% over 26 months following capital infusion and turnaround in business performance under the new management.
However, there is a twist in the story. Despite a stellar run at domestic bourses, the retail investors have hardly made money out of it, thanks to shareholding pattern and capital reduction as part of the approved resolution plan of Patanjali. Under the resolution plan, the Patanjali group reduced the equity share capital of the existing shareholders by 99%, which means those who were holding 100 shares of the company now have 1 share. In a filing to the exchange in December 2019, the company had notified that the shares got consolidated at a 100-to-1 ratio.
Besides, 98.90% (about 29.25 crore shares) of Ruchi Soya are held by five Patanjali group entities, as per the latest shareholding pattern available on the BSE. The remaining 1.1% (about 32.64 lakh shares) equity stake is owned by 85,041 public shareholders.
Ruchi Soya is back in the news after the company’s board, in which Baba Ramdev is one of the directors, announced a follow-on public offer (FPO) worth ₹4,300 crore to meet Securities and Exchanges Board of India (SEBI)'s norm of minimum public shareholding of 25% in a listed entity. A follow-on offering is when a firm issues additional shares after an initial public offering.
As per the SEBI rule, the company has to increase the public shareholding to 10% in 18 months of its relisting and further to a minimum of 25% in three years.
According to the draft red herring prospectus (DRHP) filed with SEBI, the FPO will open for subscription between March 24 and March 28, while shares will be credited on April 5 and their trading will start a day. The company has set a price band of ₹615-650 per share for its FPO program.
The Ruchi Soya FPO comprises equity shares of the face value of ₹2 each aggregating to ₹4,300 crore. The issue also includes a reservation of up to 10,000 equity shares for subscription by eligible employees.
Patanjali Ayurved plans to make its companies debt-free in the coming three-four years, with a substantial portion (62%) of Ruchi Soya’s proceeds from the ₹4,300 crore follow-on public offer to be used to partly retire the company’s debt of ₹3,330 crore. Patanjali had completed the acquisition of Ruchi Soya in a ₹4,350-crore deal in December 2019. Since then, it has managed to grow the business to ₹16,318 crore in FY21.
On Tuesday, Ruchi Soya opened higher after three sessions of consecutive falls and gained as much as 3.83% to hit an intraday high of ₹945 on the BSE. The stock has fallen nearly 19% in a week, while it gained 13% over a month. It has given a return of 35% over one year period and 7% since the beginning of the calendar year 2022.