Ruchi Soya acquires Patanjali Ayurved’s food business for Rs 690

Cooking oil giant Ruchi Soya has announced that it will acquire Patanjali Ayurved’s food business for around Rs 69 billion. This is expected to accelerate the transition of Ruchi Soya to the Fast-moving Consumer Goods (FMCG) category.

The name of Ruchi Soya Industries Ltd will be changed to Patanjali Foods Ltd with regulatory approval.

The acquired food business consists of 21 products including ghee, honey, spices, juices and flour.

Ruchi Soya pays Patanjali Ayurved annual royalties. This is estimated to be 1% of total sales of products under the transfer agreement, according to company sources.

This is a debt-free transfer, and RuchiSoya will fund the acquisition through an internal accrual, he said.

“The acquisition is valued at a fair market value of 690 chlores based on all fixed assets in the food sector and their respective current assets on a slump sale basis,” the company said in a filing with the stock exchange. ..

The Board of Directors of Patanjali Ayurved has approved the transfer of this food business to RuchiSoya Industries from May 9th.

In the deal on Wednesday, Ruchi Soya’s share price rose 10% to Rs 1,192.15.

As part of the deal, Luci Soya will acquire manufacturing plants in Padalsa (Haridwar, Uttarakhand) and New Asa (Maharashtra). This includes the transfer of employees, assets, contracts, licenses and permits, distribution networks, and related customers. Patanjali Ayurved’s food retail business. However, Patanjali’s brands, trademarks, designs and copyrights are excluded. The transaction includes current assets but excludes debtor, vehicle, cash and bank balances. ..

Payments are made in three tranches.

For the first tranche, 15% of the total purchase consideration (Rs 103.5 Chlore) shall be paid at the same time as the conclusion of the business transfer agreement or within 3 days of the conclusion of the business transfer agreement.

In the second phase, 42.5% of the total purchase consideration (Rs 293.25 Chlore) shall be paid on the end date defined under the business transfer agreement. In the third tranche, the remaining 42.5% of the total (Rs 293.25 chlore) will be paid. The purchase price will be paid. The transaction is expected to close by July 15.

Patanjali’s food retail business had sales of Rs 417.4 billion, an increase of 28% from the previous fiscal year. Patanjali Jurved sales in the previous fiscal year were approximately Rs. 1060.5 billion, Ruchi Soya said in an exchange declaration.

Patanjali Ayurved maintains businesses in hair care, dental care, skin care, pharmaceuticals and herbal formulations.

“This strategic initiative to acquire the food business will strengthen our food portfolio with a range of brands and contribute to growth in terms of revenue and EBIDTA,” the company said. A powerful FMCG company that is committed to shareholders at the time of subsequent public offerings (FPOs).

In a memo to investors, Luci Soya said: This has a positive impact on the margin profile and relocates Ruchi from a predominantly product-oriented company to a major Indian food company. “

It also states that the Patanjali food business is growing at 2-2.5 times the industry’s growth, which is fixed at 11%.

The combined food portfolio of the Luci and Patanjali food business is estimated to exceed Rs 6,600-6,800 in 2011. 22,000 chlores at a fixed price (excluding oil) over the next five years. “


About the author


Leave a Comment