Patanjali acquires bankrupt Ruchi Soya for Rs 4,350 crore

The acquisition will help Patanjali acquire edible oil plants as also soyabean oil brands such as Mahakosh and Ruchi Gold.

Yoga guru Baba Ramdev's Patanjali Ayurved on Wednesday made its first big acquisition when it paid Rs 4,350 crore to take over soya food brand Nutrela-maker Ruchi Soya through an insolvency process.

The acquisition will help Patanjali acquire edible oil plants as also soyabean oil brands such as Mahakosh and Ruchi Gold.

Sources said Patanjali settled Rs 4,350 crore of dues Ruchi Soya had towards financial creditors by infusing Rs 1,100 crore equity and arranging another Rs 3,250 crore via debt.

The acquisition of Ruchi Soya by Patanjali Ayurveda has been completed, sources said, adding that the amount has been transferred to an escrow account and disbursals to financial creditors are in process.

When contacted, Patanjali Ayurveda spokesperson S K Tijarewala said: "We have completed all the formalities and the entire amount of debt and equity has been deposited.

“Now, officially Ruchi Soya has become Patanjali group firm."

In December 2017, the National Company Law Tribunal (NCLT) ordered start of insolvency proceedings against Ruchi Soya on application of Standard Chartered Bank and DBS Bank.

Shailendra Ajmera, part of consultancy firm EY, was appointed as resolution professional (RP).

Ruchi Soya is the second big insolvency case to be completed this week.

World's largest steel maker ArcelorMittal together with Japan's Nippon Steel on Monday completed the acquisition of Essar Steel for Rs 42,000 crore.

Both the companies were taken to insolvency court over unpaid dues of lenders.

Their bankruptcy proceedings had been pending for two years.

Their resolution will help lenders such as State Bank of India clear a good part of bad loans, sources said.

Japyee Infratech, which built the country's first road expressway that is wide enough to land fighter jets during emergency, is also headed towards resolution with lenders on Tuesday accepting the offer of state-owned NBCC Ltd.

The deal is slated to close in coming months.

In April 2019, Patanjali Ayurved had received approval of financial creditors to acquire Ruchi Soya.

The NCLT gave its nod to the resolution plan in early September.

But later, the Singapore-based DBS Bank became a dissenting creditor and approached the NCLAT challenging the distribution of proceeds from the bid submitted by Patanjali Ayurveda.

Earlier, Ruchi Soya had informed in a regulatory filing that resolution applicant Patanjali group will infuse Rs 204.75 crore as equity and Rs 3,233.36 crore as debt.

The amount will be infused in a special purpose vehicle 'Patanjali Consortium Adhigrahan Pvt Ltd', which will be later amalgamated with Ruchi Soya.

Another Rs 900 crore would be infused by the Patanjali group through subscription of non-convertible debentures and preference shares in the SPV.

It will also provide credit guarantee of nearly Rs 12 crore.

Out of the Rs 4,350 crore offered by Patanjali group, Rs 4,235 crore would be utilised to pay creditors while Rs 115 crore would be used for capital expenditure and working capital requirements of Ruchi Soya.

As per the filing, Rs 4,053.19 crore would be paid to secured financial creditors, Rs 40 crore to unsecured financial creditors, Rs 90 crore to operational creditors, Rs 25 crore to clear statutory dues, Rs 14.92 crore to workmen/employees and Rs 11.89 crore to provide counter bank guarantee.

Patanjali won the bid to acquire Ruchi Soya after Adani Wilmar, which sells edible oil under the Fortune brand, withdrew from the race citing significant delays in resolution process that led to deterioration of assets.

Patanjali Ayurved had approached NCLT challenging the decision of Ruchi Soya's lenders to approve Adani Wilmar's takeover bid. Patanjali group had come second in the bidding process.

Photograph: PTI Photo