Baba Ramdev's Patanjali Ayurved is looking to tap public sector banks to bankroll its first major acquisition, edible oil firm Ruchi Soya. The homegrown FMCG major was the sole contender for the beleaguered firm, which owes over Rs 9,300 crore to its lenders, after its highest bidder Adani Wilmar backed out last year. In April, Ruchi Soya's lenders approved Patanjali's revised bid of Rs 4,325 crore, up around Rs 140 crore from its initial offer. This excludes capital infusion of Rs 1,700 crore.
People in the know told The Economic Times that Patanjali is looking to raise debt with a maturity of five years and above from State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank and Jammu & Kashmir Bank. While Rs 600 crore will be generated through internal accruals, the Haridwar-headquartered company is tying up with the banks to raise the balance of over Rs 3,700 crore.
"The funding is in the final stages of negotiation and the interest rates will be finalised soon," said a source, adding, "Patanjali had earlier approached several non-banking channels but it backtracked after these investors sought high level of disclosures."
Meanwhile, on May 10, the National Company Law Tribunal (NCLT) Friday reserved its order on Patanjali's takeover bid for Ruchi Soya and again sought clarity on the part funding to be met through internal accruals. This is the second time that the tribunal has sought details on the committed Rs 600 crore figure, and asked them to file written submission on the same.
With the acquisition of Ruchi Soya, Patanjali will become a key producer of soyabean oils and other products. The beleaguered firm also boasts several manufacturing plants and its leading brands include Nutrela, Mahakosh, Sunrich, Ruchi Star and Ruchi Gold. Moreover, Ruchi Soya has improved its financial figures. On Wednesday, it reported a consolidated net loss of Rs 88.04 crore for FY19, down from a massive Rs 5,754.6 crore loss in the previous year.
The deal is also expected to help Patanjali maintain its earlier growth momentum. After starting out as a small pharmacy in 1997, Patanjali slowly picked up steam on the back of factors like value pricing and differentiated positioning. The company reached Rs 10,000 crore in revenues in FY16 from less than Rs 500 crore in FY12. But its growth trajectory took a big hit after the central government rolled out the GST in July 2017. While arch rivals like HUL Ltd and ITC Ltd managed to use cutting-edge technology to quickly overcome the GST shock, Patanjali lagged behind. The company's weak distribution network and poor store filling frequency also caused demand for its products to dip.
Down but not out, Patanjali aims to achieve Rs 20,000 crore in annual revenues in three to five years. In December, Ramdev had announced at an event that the Patanjali group hopes to become the world's largest FMCG company by 2025.
With PTI inputs