Ramdev effect: Ruchi Soya Industries shares surged by more than 4.4% intra-day on reports that Baba Ramdev-led Patanjali Ayurved has increased its bid on the edible oil manufacturer, in the slugfest which involves 25 other suitors. Ruchi Soya shares surged to an intra-day high of Rs 16.35, up by more than 4.4% since opening today. The race for Ruchi Soya has prominent contenders including Godrej Agrovet and Emami.
Interestingly, both domestic and international have expressed interest to acquire the debt laden company with more than 25 companies said to be in the battle. Patanjali Ayurved is keenly looking to pick up all of Ruchi Soya assets, ET Now reported citing sources. According to the channel, Patanjali is eyeing the distribution chain of Ruchi Soya, as the latter is India’s largest edible oil extraction company.
Further, the deal is both margin as well as EPS accretive for Patanjali as capacity utilization for Ruchi Soya is not very high, and Patanjali Ayurved will be able to ramp this up. In September-17, the yoga-guru led company had entered into a distribution arrangement with Baba Ramdev’s Patanjali Ayurved.for an exclusive sales and distribution arrangement for the entire range of Patanjali edible oil in large packs.
Ruchi Soya is undergoing insolvency resolution process under NCLT since December-17. The company has a total capacity of 3.72 million tonnes per annum of which around 0.9 Million metric tonne accounts for palm oil extraction. Notably, it has more than 2 lac hectares of oil palm land under cultivation across India. This was the main attraction for Godrej Agrovet, as the palm oil segment forms around 13 per cent of Agrovet’s topline and was in fact the major revenue and profit driver in the previous quarter.
Baba Ramdev’s Patanjali Ayurved looks to take on HUL, and is keen to surpass the FMCG major’s turnover in 3-4 years. “Patanjali will grow at a faster pace this year as compared to last year. Hopeful that Patanjali will beat HUL’s turnover in next 3-4 years,” Acharya Balkrishna, CEO, Patanjali Ayurved told ET Now recenlty. While HUL’s turnover is around Rs 30,000 crore, Patanjali’s figure for FY17 is estimated at Rs 10,560 crore, or nearly a third of HUL’s revenue. In the current year, Patanjali is looking to up the ante, and has also made a foray into the online space.