Patanjali food retail business is to be taken over by Ruchi group Industries for Rs 690 crore through an insolvency process. It is to speed up its transition to a leading FMCG company. The change in the name is based on the approval of all members and authorities.
Ruchi Soya Foods have taken over the retail food business of Patanjali Ayurved. After completing formalities, they have paid Rs 690 crore, and it will work with a new name – Patanjali Food. The newly taken-over business has a collection of over 21 products, right from honey, ghee, juices, spices, and atta.
Ruchi Soya will control the production, packaging, and labeling units within the factories located at Padartha, Haridwar, and Newasa, Maharashtra. The business transfer includes the transfer of employees and all resources, excluding Patanjali’s prior designs, trademark, and existing properties, including vehicles, debtors, bank balance, and cash. Business Standard has published the report.
Payment system made for Patanjali Foods
The company has declared that the payment will be made in three parts. The initial transfer will see an amount of Rs 103.5 crore, which is 15% of the purchase value, to be paid together with the business transfer agreement. It can also be paid within three days from the onset of the business transfer agreement.
In the next phase, funds of Rs 293.25 crore, which is again 42.5% of the total purchase value, will be paid on the closing date mentioned in the business transfer agreement.
The last and final payment phase will have Rs 293.25 crore as the final share of 42.5% purchase value, which will be settled 90 days from the closing date. The whole payment transaction is to be completed by 15 July 2022. The data has been given to Business Standard.
Details of the merger
Last month Ruchi Soya Industries had announced a possible merger with Patanjali Ayurved food company and had recently obtained Rs 4,300 crore through the follow-on-public offer.
Patanjali Ayurved business was transferred to Ruchi Soya as it would concentrate only on non-food items and natural medicines. The entity also declared that Ruchi Soya would have four main edible oil, food, FMCG, and oil palm plantation businesses.
The biscuit business was also transferred to Ruchi Soya for Rs 60 crore. The annual revenue of the combined business of Patanjali Ayurved and Ruchi Soya is around Rs 35,000 crore.
Patanjali Ayurved will be held from businesses related to haircare, dental care, skin care, skincare, and herbal medicines. This takeover will enable it to maintain the position of Patanjali Food as a strong FMCG company with a list of brands. According to the data given in Business Standard, the growth of the Patanjali food business is estimated to be approximately 11% of the total industry growth.
The total revenue from the mergers is expected to cross Rs 6,600 to Rs 6,800 crore in FY23. With a 25% CAGR growth rate, Ruchi’s food revenue is estimated to cross Rs 22,000 crore in the next five years.