Patanjali plans to sell food retail biz to Ruchi Soya for $88Mn

Indian multinational conglomerate holding company, Patanjali Ayurved has recently signed an agreement to sell its food retail unit to Ruchi Soya Industries for Rs 690 crore (USD 88 Million).

The deal, which comprises 21 major products such as honey, ghee, juices, spices, and atta, is undertaken to fasten the transition of Ruchi Soya into one of the leading FMCG (fast most consumer goods) companies.

In a regulatory update, Ruchi Soya said that after completing the deal, which is on a slump sale basis, the firm would be named Patanjali foods.

Under this deal, Patanjali Ayurved's manufacturing units in Newasa Maharashtra, and Haridwar, Uttarakhand, distribution network, transfer of employees, and customers, among others, will also be acquired by Ruchi.

Sources cite that the acquisition will help Ruchi's food portfolio, contributing about 18% of its overall revenue in FY2023, compared to the 6% revenue in FY2022. This will positively impact the margin profile and will be re-positioning Ruchi from a mostly commodity-oriented company to one of the leading food companies in India.

For those unaware, Patanjali group acquired Ruchi Soya after a Corporate Indebtedness Resolution Plan which was closed on December 18, 2019.

This came as two foreign lenders, DBS Bank, and Standard Chartered Bank, registered insolvency actions against Ruchi Soya Industries before the NCLT (National Company Law Tribunal) in 2017.

The transfer of Patanjali Ayurved food marketing business to Ruchi Soya Industries is also said to be a part of its strategy to focus on traditional medicine, non-food products, and wellness business, it added.

Earlier in April, Ruchi Soya had said that it would assess the most effective mode to combine Patanjali Ayurved's food portfolio with itself and has also decided to change the firm's name to Patanjali Foods.

Source Credit - https://www.financialexpress.com/industry/patanjali-ayurved-sells-food-retail-business-to-ruchi-soya-for-rs-690-crore/2530069/