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The Patanjali Plan

The Patanjali Plan

How will the markets react to Ruchi Soya when the floating stock increases after more shares are offered to the public as is mandatorily required? Will the listed Ruchi Soya eventually be able to power Patanjali’s ambition?

Sourav Majumdar, Editor, Business Today Sourav Majumdar, Editor, Business Today

One of the most important elements of corporate strategy is managing integration following a takeover. Whenever a company acquires another corporate entity, the things to keep in mind are how the overall vision of the acquirer will be dovetailed with the target company, how the portfolio of products can add muscle to the combine and, equally important, how the culture of the two entities can be integrated for best results.

When Baba Ramdev’s unlisted fast-moving consumer goods company Patanjali Ayurved acquired the ailing Ruchi Soya as part of the National Company Law Tribunal process in 2019, there was enough curiosity around how Patanjali would eventually make Ruchi Soya work for it, and what the combine’s vision would be going forward. The curiosity was justified. Here was the almost-mysterious Patanjali, led by Ramdev and his close associate Acharya Balkrishna, acquiring a bankrupt listed company and seeking to turn it around. How would the two monks make it happen, given that the foods business is highly competitive and that Ruchi Soya was overwhelmingly focussed on the commodities business? Two years after the acquisition, Baba Ramdev and Acharya Balkrishna seem to be riding the Ruchi Soya elephant with some ease. The company has turned profitable, the stock price has soared (though floating stock is minimal), Ruchi’s plants are being juiced and made more efficient, and the product portfolio is being recast to ensure high-margin products are placed under the Ruchi Soya brand. The Ramdev-Balkrishna duo’s plan is to make Ruchi Soya a Rs 23,000-crore company by FY23, from about Rs 16,300 crore now, and have as much as 80 per cent of its revenue coming from branded products. And true to the maverick Ramdev’s character, he intends to overtake giants like Hindustan Unilever and ITC in the near future. “We only know how to run, we don’t know how to walk,” declares Ramdev, speaking to us for our cover story.

The grand plans aside, there are questions. How will the markets react to Ruchi Soya when the floating stock increases after more shares are offered to the public as is mandatorily required? Will the listed Ruchi Soya eventually be able to power Patanjali’s ambition? Public markets are notorious for being ruthless, and the questions around Patanjali’s governance — which Balkrishna seeks to counter strongly in his interview to us — continue to haunt the company. That said, this is a fascinating story, one which promises to keep everyone interested as it unfolds over the next several months.

Our cover story apart, I would urge you to read Global Business Editor Udayan Mukherjee’s fascinating interview with Byju Raveendran, the poster boy of India’s start-up ecosystem, whose company is now the toast of the ed-tech world and is valued at a staggering $16.5 billion. Raveendran talks about the ed-tech sector, the road ahead, and his plan of making Byju’s a $5-billion company by 2023/24.