Patanjali moves ahead with Ruchi Soya acquisition

By

Isabelle Crossley

Published
Sep 9, 2019

Ayurvedic fast-moving consumer goods brand Patanjali will invest Rs 3,438 crore ($516.8 million) into Ruchi Soya, as the business goes ahead with its takeover following National Company Law Tribunal approval.

Patanjali will pay Rs 3,438 through a mixture of equity and debt to acquire the business Ruchi Soya in an insolvency process, the Press Trust of India reported. Ram Dev’s Patanjali was given NCLT approval for the funds injection last week and the funds will be used to settle dues of creditors owed by Ruchi Soya.

The funds will first be infused into Patanjali Consortium Adhigrahan Pvt Ltd, which will later be amalgamated with Ruchi Soya. Of the initial funds injection, Rs 204.75 crore will be infused as equity and Rs 3,322.36 crore will be infused as debt. 

Patanjali has offered to pay a total of Rs 4,350 crore to acquire Ruchi Soya. Of the total, Rs 4,235 will go towards paying the business’ debts and Rs 115 crore will go towards Ruchi Soya’s capital expenditure and working capital requirements. The acquisition bid is lower than Ruchi Soya’s debts as the business owes Rs 9,345 crore to various creditors. 

The NCLT referred Ruchi Soya for insolvency proceedings back in December 2017 following requests from its creditors DBS Bank and Standard Chartered Bank. After a bidding war, Patanjali won the right to acquire the business. The acquisition will allow it to greatly scale up its India production capacity.