Ruchi Soya board approves RHP for Rs 4,300 cr follow-on public offer

Edible oil major Ruchi Soya’s board has approved the red-herring prospectus (RHP) for its follow-on public offer (FPO) of around Rs 4,300 crore, the company said in a regulatory filing. 

The company also informed that it filed the RHP with the Registrar of Companies, Maharashtra on Saturday. 

“Pursuant to the approval accorded by the Board of Directors of the Company (“Board”) at its meeting held on March 10, 2022, read along with the approval accorded by the Issue Committee, a committee of the Board, has passed resolution by circulation on March 11, 2022,” Ruchi Soya said in its filing on Saturday. 

The issue will open on March 24 and close on March 28 (2022), the company informed. This dilution through the FPO would help Baba Ramdev-led Patanjali Ayurveda, which owns Ruchi Soya, to adhere to the minimum shareholding norms. 

In August last year, the company had received capital markets regulator Sebi’s go-ahead to launch the FPO. It had filed the draft red herring prospectus (DRHP) in June 2021. 

As per the DRHP, Ruchi Soya will utilise the entire issue proceeds for furthering the company’s business by repayment of certain outstanding loans, meeting its incremental working capital requirements and other general corporate purposes. 

In 2019, Patanjali acquired Ruchi Soya, which is listed on the stock exchanges, through an insolvency process for Rs 4,350 crore. 

The promoters currently have a nearly 99 per cent stake in the edible oil major. The company needs to dilute a minimum 9 per cent stake in this round of the FPO. 

As per the Securities and Exchange Board of India (SEBI) rules, the company needs to bring down promoters’ stake to achieve the minimum public shareholding of 25 per cent. It has around 3 years to pare promoters’ stake to 75 per cent. 

Ruchi Soya primarily operates in the business of processing oilseeds, refining crude edible oil for use as cooking oil, manufacturing soya products, and value-added products. 

The company has an integrated value chain in palm and soya segments having a farm to fork business model. It has brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela.