Ruchi Soya on Wednesday said that the company has entered into an agreement with Patanjali Ayurved Limited (PAL) to acquire its food retail business for Rs 690 crore on a slump sale basis.
With this acquisition, Ruchi Soya would change its name from “Ruchi Soya Industries Limited" to “Patanjali Foods Limited" subject to statutory and regulatory approvals.
Patanjali's food retail business consists of manufacturing, packaging, labelling and retail trading of certain food products. As part of the deal, Ruchi Soya will also acquire its manufacturing plants located at Padartha, Haridwar, and Newasa, Maharashtra.
The acquisition is likely to be completed by July 15, 2022.
"The transaction shall consist of transfer of employees, assets (excluding Patanjali’s brand, trademarks, designs and copyrights), current assets (excluding debtors, vehicles, cash and bank balance) contracts, licenses and permits, distribution network, customers related to the Food Retail Business Undertaking of Patanjali Ayurved," the company said in an exchange filing.
Patanjali also has an extensive range of non-food FMCG business which it will retain.
According to Ruchi Soya CEO Sanjeev Asthana, the food business of Patanjali reported a revenue of Rs 4,100 crore last year and is expected to grow by 20-25 percent in the current financial year. The earnings before interest, taxes, depreciation, and amortization (EBITDA) of Patanjali's food business is Rs 650 crore while the margin hovers between 15 and 20 percent.
Asthana in an interview with CNBC-TV18 said that the deal is likely to double the food business revenue to up to Rs 7,000 crore and make Ruchi Soya's balance sheet stronger as the company is debt free now. The company will continue to hire more people for foods business.
Asthana had last month said that the company's board of directors had approved
"enhancing synergies with Patanjali Foods". “All the decisions have been made with twin purposes. One, rationalize the product portfolio between effective companies for better clarity for all stakeholders, which means that entire foods’ portfolio will be with Ruchi Soya and non-foods part of the business shall remain with Patanjali," he had said.
Ruchi Soya was acquired by yoga guru Baba Ramdev's Patanjali in 2019 as part of an insolvency process.
Shares of Ruchi Soya were trading 6.79 percent higher at Rs 1,156.50 around 2:20 PM on the BSE.
First Published: May 18, 2022 3:35 PM IST
