Ruchi Soya: A TURNAROUND, rags to riches story – Special ZEE BUSINESS report
Edible oil manufacturer Ruchi Soya Industries Limited is one of the largest companies in this segment and is the textbook story of survival, from the time it was sent for resolution under the IBC, to now. Zee Business brings this special story on this company and its revival
Edible oil manufacturer Ruchi Soya Industries Limited is one of the largest companies in this segment and is the textbook story of survival, from the time it was sent for resolution under the IBC, to now. Zee Business brings this special story on this company and its revival.
The company began its operations is 1986 and the operations were going smoothly until 2010. The company started facing problems after 2011 with issues like import duty structure and bad monsoon. The debts mounted and by 2017, the overall debts with the banks stood at Rs 9,325 cr.
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After the company failed to repay its debts, a case under the Insolvency and Bankruptcy Code (IBC) was filed against it on the directions of the Reserve Bank of India (RBI) in 2017.
It was only in 2019, that Ruchi Soya managed to get a buyer. A resolution plan worth Rs 4,350 cr was given by Patanjali Ayurved. Out of this Rs 4235 cr was to be used to repay its debts while the remaining Rs 115 cr for the operations of the company.
The company management was taken over by Patanjali in December 2020. The company is now focusing on other food products as well.
The share markets were first to react. The share price of this stock was Rs 16.90, when Ruchi Soya was relisted on 27 January 2020. The share prices reached to levels at Rs 1519 by 26 June 2020.
Ruchi Soya’s quarter-on-quarter earnings results show a marked improvement. The company's revenues in Q4FY20 were at Rs 3191 cr which was a loss of Rs 41 cr. In Q1FY21, the revenues posted by Ruchi Soya stood at Rs 3043 cr with the profit of Rs 12 cr.
A look at the performance of Ruch Soya over the last 4 quarters shows an improvement.
Ruchi Soya has also given an application to the market regulator SEBI for bringing a Follow-on Public Offer (FPO) worth Rs 4,300 cr. Around 99 per cent shares are held by Patanjali. This will increase a free float.
The money raised through the FPO will be utilised to pare its debts and also on expansion activities. The company recently announced its entry into nutraceuticals segment.
Market Expert Sandeep Jain said that the overall system of Ruchi Soya has been comprehensively improved by all regulators. Jain called it a “landmark” achievement.
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