Our Vision Is To Cut Edible Oil Imports Totally, Says Ruchi Soya

Edible oil and food products major Ruchi Soya Industries, which will launch its Rs 4,300-crore follow-on public offer (FPO) in the next few days, intends to reduce its edible oil imports in five to seven years. The company plans to start its own plantations, mainly in the North-East.

This move by Ruchi Soya will eventually increase India’s area under cultivation for oilseeds, said Baba Ramdev, non-executive director of Ruchi Soya, on Monday.

India currently imports 65 per cent of its edible oil requirements worth Rs 1.5 trillion from overseas and Ruchi Soya wants to replace this with its own production in India, said Baba Ramdev.

“We have a vision to reduce edible oil imports completely and the Indian government is already taking steps in this regard,” Baba Ramdev told this paper.

In its red herring prospectus, Ruchi Soya said that, going forward, palm plantation is expected to gain scale in India.

It added, “India has a large potential of 1.93 million hectares of identified land for oil palm cultivation. It is expected that there will be expansion of palm plantation through existing players and new entrants.”

The company also said, “The sector is expected to get further support from the government in terms of steps regarding zone allocation and financial support for farmers, among others.”

Baba Ramdev said that the company has 23 edible oil plants that are running at full capacity.

Ruchi Soya’s FPO price band is set to be between Rs 615 and Rs 650. This is at a discount to its current price. The FPO will open on March 24 and close on March 28.

The stock price of the company closed 9.4 per cent lower at Rs 910 a piece, but fell 17 per cent during Monday’s trading session. Post the FPO, promoter shareholding in the company will reduce to 81 per cent from 98.9 per cent currently.

Ruchi Soya has time till December to reduce promoter shareholding to 75 per cent to comply with the Securities and Exchange Board of India (Sebi’s) norms to have 25 per cent public shareholding.

Post the FPO, the company will come up with a plan to reduce promoter shareholding to 75 per cent.

However, bringing in a strategic investor on board by offloading the remaining shares is not an option, Sanjeev Kumar Asthana, chief executive officer (CEO), Ruchi Soya, told Business Standard.

A bulk of the FPO proceeds will be used to repay debt worth Rs 3,300 crore and the rest will be used to fund incremental working capital requirements of the company, the company said today.

Baba Ramdev also said that the company is in the process of integrating Patanjali’s food and nutraceutical business — which includes biscuits and noodles — with Ruchi Soya.

However, he did not give any indication if the rest of Patanjali’s portfolio will be brought into the Ruchi Soya fold.

Ramdev said the company will address both the masses and classes.

Ruchi Soya has a reach of 4,763 distributors with 100 sales depots and its products are available through 4,57,788 retail outlets.

It also has access to Patanjali Ayurveda’s network, which includes 3,409 distributors, 126 super distributors and 5,45,849 customer touch points.

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