Patanjali Ayurved Ltd. is set to become one of India’s largest edible oil makers as its bid was approved by lenders to insolvent Ruchi Soya Ltd.
The Yoga guru Baba Ramdev-backed company will pay Rs 4,325 crore to the lenders after Adani Wilmar Ltd., the maker of Fortune cooking oil, withdrewfrom the resolution process citing deterioration of Ruchi Soya’s assets due to “significant delays”.
The Funding Plan
Patanjali has created a special purpose vehicle that will receive a Rs 800-crore loan from the State Bank of India, Bank of Baroda and Union Bank of India, said a person aware of the transaction on the condition of anonymity as details are not public. The remaining amount will be financed as working capital debt, he said.
The unit, backed by Patanjali’s corporate guarantees, will be merged with Ruchi Soya, he said. Patanjali will also infuse Rs 235 crore into the packaged foods maker, giving it a shareholding of 95 percent, the person said, adding that existing investors of Ruchi Soya will own 5 percent.
Patanjali’s acquisition comes at a time when its revenue is expected to fall for the second straight year, according to the March 30 report of Brickworks Ratings.
The maker of Dant Kanti toothpaste and Kesh Kanti shampoo reported revenue of Rs 4,701 crore (provisional) for the nine months ended December 2018 and a profit of Rs 557 crore before interest, insurance cost, depreciation and taxes, according to a CARE Ratings report. The company’s turnover had declined about 10 percent year-on-year to Rs 8,136 crore in FY18, while profit fell by nearly three-quarters to Rs 343 crore.