NEW DELHI: Unfazed by the controversies surrounding its takeover of Ruchi Soya and tax exemptions given to its research foundation, Baba Ramdev-led Patanjali Ayurved has mapped out aggressive plans for the newly acquired company through the bankruptcy process in a bid to unlock its next phase of growth.
The plan includes hiring celebrities to endorse the brand, doubling exports, and transforming the commodity business into a fast-moving consumer goods company.
“We have big plans for Ruchi Soya for the coming days and have taken it as a challenge to turn around the company and run a listed corporate entity despite all the criticisms. We are already exporting to over 36 countries and we now see an export revenue of Rs.1,000 crore achievable in three years,” Baba Ramdev, non-executive director, Ruchi Soya told The New Indian Express in an exclusive interaction on Friday. As of March 31, 2021, the company’s revenue from the exports basket stood at Rs. 404.98 crore.
For the first time, the company will also rope in celebrities for Ruchi Soya and later for Patanjali.
“We are in the last leg of signing contracts with one sports person and another Bollywood celebrity, with a huge fan following, to promote our brands. It should be finalised in the next week,” he added. Ramdev, however, did not reveal the names.
Patanjali Ayurved Ltd, which owns 98.9% of Ruchi Soya, is in the process of selling Rs 4,300 crore worth of stake in the edible oil manufacturer through follow-on public offering (FPO) to meet the minimum shareholding norms and pare its debt.
Currently, the company needs to raise public shareholding by 9%, but the Securities and Exchange Board of India (Sebi) mandates firms coming out of insolvency to achieve 25 per cent public shareholding within 3 years.
“We have time till December 2022 so we may liquidate Ruchi Soya shares in two phases and we will provide good return to all existing and new shareholders. Currently, Ruchi Soya has a debt of Rs. 3,300 crore and more than 60% of the proceeds from this FPO has been earmarked for its debt reduction,” Ramdev said, adding Ruchi Soya aims to be a debt-free company "in not more than two years".
For the equity dilution, Patanjali has already filed a draft red herring prospectus with markets regulator Sebi and is awaiting its approval, which is expected to come in the next 15 days, he added.
The maker of Dant Kanti toothpaste was able to resuscitate Ruchi Soya as the restructuring post acquisition helped the company shed over Rs. 9,300 crore of debt as well as turn profitable.
The company's stock was relisted on January 27, 2020 after which it surged from Rs.16.9 to Rs.1,500 in five months. On Friday, its shares closed at Rs. 1,126, up 1.26%, on BSE and the market capitalisation of the lesser known firm stood at Rs. 33,239 crore.
The possible reason for the dramatic surge is that very few people own these shares. Currently, Ruchi Soya stocks that are trading on the open market are less than 1% and investors are buying whatever shares they can get their hands on.
On transformation, the founder of Patanjali said Ruchi Soya will become pure-play FMCG company. “Going ahead, only 20% of the company’s revenues will come from its old commodity business (edible oil) and 80% will be from food, FMCG, health and wellness. But there won’t be a clash in the product line of Patanjali and Ruchi Soya. For instance, since desi cow ghee is one of the top grossers for Patanjali, we may introduce buffalo ghee under Ruchi Soya. Rhyming with Patanjali’s Chyawanprash, Ruchi Soya will launch Collagen Prash, which is a high-value protein supplement, particularly to tap the premium customers,” the Yoga guru added.
Also, nutraceuticals will be a big focus area for the maker of soya food brand Nutrela. “We plan to launch 25 nutraceutical products this year and 25 more next year,” Ramdev said. Besides, Patanjali plans to take a major step towards large-scale palm oil plantation and maximise production of refined edible oil in India, which will help save foreign currency worth Rs 2.5 lakh crore.
Tax exemption dilemma
The Income Tax department has recently categorised Patanjali Research Foundation Trust as a Research Association for scientific research, which necessarily means that a business entity that pays any amount to the foundation for scientific research will be eligible to claim the said expense as deduction from business income.
However, the Haridwar-based group made headlines after it was granted a five-year tax exemption for its donations to which Ramdev said: “We have spent crores for scientific research and we are happy that the government has recognised our efforts which will be beneficial not just for Patanjali but for the entire nation. The tax exemption will give a boost to our future spending.” Patanjali Ayurved intends to invest another Rs. 1,000 crore to the trust, which houses 300 scientists and has published thousands of research works, over the next few years.
In FY21, the Patanjali Group achieved a combined turnover of around Rs 30,000 crore, aided by a revenue boost of Rs 16,318 crore from Ruchi Soya.