Shares of Baba Ramdev-led Ruchi Soya Industries jumped 7% in the early trade on Monday as the edible oil maker announced its plans to rename itself as Patanjali Foods.

The stock opened at ₹999 apiece on BSE and was trading over 5% higher in the intraday trade.

The comes after the board of directors of Ruchi Soya gave its in-principle approval for "evaluating the most efficient mode of enhancing synergies with Patanjali Ayurved's food portfolio in any manner on an arm's length basis" (proposed transaction) and authorising officials of the company to negotiate, finalise, execute and deliver the terms and conditions of the proposed transaction, according to an exchange filing.

The Patanjali Ayurved-owned company raised ₹4,300 crore from its follow-on public offering (FPO) last week. A follow-on offer is when a firm issues additional shares after an initial public offering.

Acharya Balkrishna, managing director of Patanjali Ayurved, said that Ruchi Soya has become debt-free by repaying ₹2,925 crore worth of loans to banks.

The money was paid to a consortium of banks led by State Bank of India. The other banks in the consortium are Punjab National Bank, Union Bank of India, Syndicate Bank and Allahabad Bank.

Patanjali 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.

The jump in Ruchi Soya's stock price comes as the Reserve Bank of India (RBI) cautioned that edible oil price pressures are likely to remain elevated in the near-term due to export restrictions by key producers as well as loss of supply from the Black Sea region.

A spike in edible oil prices is likely in the near-term as the Russia-Ukraine war has hit shipments of sunflower oil – which comprises 15% of most edible oil brands. Ukraine and Russia together account for 90% of India's sunflower oil imports.

In an interview with Fortune India in March, Sanjeev Asthana, CEO of Ruchi Soya, warned that if the Russia-Ukraine war continues till April, the sunflower sowing season could get impacted, and that could lead to scarcity for a longer period. "So, the pressure would be on to soya oil, which has two dimensions. Both in Brazil and Argentina, from where we import soybean, the crop looks sluggish. To add to that is the mandate on biodiesel and how much of soya oil needs to be used there. There is rapid work happening in Argentina and Brazil which has led to supply shortage," Asthana said.

There is a 10-15 million tonne shortage of the soybean crop, he had said.

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