We all know Ruchi Soya. How? Do you have NUTRELA in your kitchen? If yes you know it.
Let us understand the company through a series of events.👇
- In 1972-73 - Sahara family of MP started Ruchi Soya
- 1986- The company became a public limited company.
- 1997-99- It launched various new products under various brand names.
- 2005-05- various companies including its wholly-owned subsidiary amalgamated with the Ruchi Soya industries.
- Over the years the company performed fairly well and was holding a good rank in the FMCG sector.
Downfall:
- January'15- the downfall of Ruchi was majorly caused by the inclination of Mr. Sahara towards trading in castor seeds on a commodities exchange. The global price of Castor seeds fell from 5100/ quintal to 3051/ quintal. The company has been thriving since then.
- Other factors - falling revenues in the oil business, drought and excess monsoon acted as a catalyst, also the company's profit margin was as low as 2 percent.
- March'16- Debt of company stood at 4513.8 cr which was 2568.05 cr 2 years ago. This shows that the company took a lot of debt in order to expand.
- July'16- IDFC bank filed for winding up as the company could not repay it's debt and was suffering huge losses. But the Bombay High court dismissed the petition.
- July'17- The company was served insolvency and bankruptcy notice by the secured lenders. This is where the bidders came into the picture.
- In order to acquire the company, various companies like Adani Wilmar, Patanjali Ayurved, Godrej Agrivet, Emami agrotech placed their bids.
- The joint venture with Adani Wilmar was almost complete when Patanjali raised concerns over the eligibility criteria for bidders and surprisingly Adani Wilmar was not eligible.
September 2019- Ruchi was acquired by Patanjali Ayurved at 4350 cr whereas it's debt stood at 9345 cr. 4235 cr was used to pay off the debt and 115 cr was invested in the company. Patanjali took a loan of 3200 cr to execute this deal.
What made Ruchi Soya so attractive for the bidders?
- The analysts suggest that an established infrastructure of manufacturing units, various brands, and huge refining capacity makes it a readymade kit worth buying.
- The company has approximately 13-14 plants and 5 of them are port-based.
Share price:
- Delisted- 19th November 2019- at Rs 3.5
- Relisted- 26th January 2020 at Rs16.90
- Actively trading- 26th June 2020 - at Rs1519.65
The 8350 Percent rise in the share price can be explained further. Patanjali acquired 98.87 percent share which leaves the public with just 0.82 percent share. This is where there are a lot of buyers and very little suppliers leading to a surge in the stock price.
Also, investors are optimistic about the turnaround of the company.
Low liquidity has led the company to hit the Lower and upper Circuit(5 percent).
-Articulated by Divya Pansari
