Ruchi Soya To Acquire Food Business Of Patanjali Ayurved Limited, Change Name

Ruchi Soya—a part of yoga guru Baba Ramdev-led Patanjali Group, has entered an agreement to acquire food retail business of its parent company Patanjali Ayurved Limited for INR 690 crore, the company said in a regulatory filing to the stock exchanges.

Patanjali acquired Ruchi Soya Industries Limited through an insolvency process in year 2019.

The company said that its Board of Directors has approved the change in the name of the company from Ruchi Soya Industries Limited to Patanjali Foods Limited subject to, among other things, securing approval of members, Ministry of Corporate Affairs and such other applicable statutory and regulatory authorities.

On acquisition of the food retail business of Patanjali Ayurved Limited, Ruchi Soya Industries said the board has approved the Business Transfer Agreement (BTA) with Patanjali Ayurved Limited (PAL) to acquire the food retail business undertaking of PAL, which consists of manufacturing, packaging, labelling and retail trading of certain food products along with manufacturing plants located at Padartha, Haridwar, and Newasa, Maharashtra ("Food Retail Business Undertaking"), as a going concern on a slump sale basis subject to the approval of shareholders and other authorities as may be required.

The acquired food business comprises 21 major products: ghee, honey, spices, juices, and atta.

The acquisition is valued at a fair market value (net) of INR 690 crore based on all the fixed assets of the food division and respective current assets on a slump sale basis, Ruchi Soya said in a statement.

Fast Moving Consumer Goods (FMCG) -- country’s fourth largest sector with household and personal care accounting to 50 per cent of FMCG sales in India - has grown rapidly in the last few years. Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector. The urban segment is the largest contributor to the overall revenue generated by the FMCG sector in India.

Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50 per cent of the total rural spending.

According to India Brand Equity Foundation (IBEF), the FMCG market in India is expected to increase at a Compound Annual Growth Rate (CAGR) of 14.9 per cent to reach USD 220 billion (around INR 170 lakh crore) by 2025 as compared to 2020. 

According to Fitch Solutions- market expert, real household spending is projected to increase 9.1 per cent year on year in 2021, after contracting 9.3 per cent in 2020 due to economic impact of the pandemic. The FMCG sector's revenue growth will double from 5-6 per cent in FY21 to 10-12 per cent in FY22, according to CRISIL Ratings.

Investments

The Government has allowed 100 per cent Foreign Direct Investment (FDI) in food processing and single-brand retail and 51 per cent in multi-brand retail. This would bolster employment, supply chain and high visibility for FMCG brands across organised retail markets thereby bolstering consumer spending and encouraging more product launches.

Some of the recent developments in the FMCG sector are as follows:

In February 2022, Dabur India, formed an exclusive partnership with energy provider Indian Oil, which will give Dabur's products direct access to around 140 million Indane LPG consumer households across India.

Beco, a start-up in India, is revolutionising the FMCG market with low-cost, environmentally-friendly consumer goods.

In February 2022, Dabur India achieved its goal to collect, process, and recycle approximately 22,000MT of post-consumer plastic three months early.

In February 2022, Marico Ltd announced its aims to achieve net-zero emissions by 2040 in its global operations.