Monday, March 28, 2022

Ruchi Soya Industries Ltd FPO - A New and Diversified Company in FMCG and FMHG Horizon.

Before Patanjali had acquired the once beleaguered Ruchi Soya Industries Limited or RSIL, because Swamiji wanted to save an established, homegrown Indian brand from extinction, it was one of the leading edible oil companies in the nation. However, after the acquisition under the Insolvency & Bankruptcy Code (IBC), December 2019 with new management that brings corporate governance, best in class professional management, and transparency, including robust systems, processes & risk management practices, it has now turned into a diversified Fast Moving Consumer Goods or FMCG and Fast Moving Healthcare Goods or FMHG entity that has a pan India presence.
Ruchi Soya
It is noteworthy that before this, RSIL was recognised as the pioneer as well as the largest manufacturer of soya foods, their brand Nutrela a nationally recognised household and generic name, along with their other renowned brands such as Mahakosh, Ruchi Gold and Ruchi Star. Since Patanjali has transferred its healthy biscuits, breakfast cereals and noodles line to RSIL, the company's FMCG portfolio has reached new heights, through the high experience, reach, and strength of the former, making it one of the biggest FMCG companies in the national edible oil sector, that possesses 23 strategically located plants as well as one of the largest fully integrated Indian edible refining operations. 

RSIL has received access to Patanjali's huge distribution network which is roughly estimated as below:
  • 3,409 distributors
  • 3,326 Arogya kendras
  • 1,301 Chikitsalayas
  • 273 mega stores
  • 126 Patanjali super distributors

The distributors offer access to more than 5,45,849 customer touchpoints, inclusive of 47,316 pharmacies, medical stores & chemists as of March 31, 2021, along with the Patanjali Order Me app.

This makes Patanjali Nutrela Nutraceuticals the only brand that has products across the spectrum in sports nutrition & medical nutrition for men, women and kids, and general nutrition. 

Currently, RSIL has the intention of raising Rs. 4,300 crore through their Follow-on Public Offer or FPO that includes fresh issue of shares i.e. the proceeds from the FPO of the company, which will be utilised to further the company's business. This proposed FPO would also help the company in meeting statutory Minimum Public Shareholding or MPS, norms as prescribed by SEBI. 

Ruchi Soya would also in the future integrate its operations to focus on other FMCG as well as FMHG products with all the money that would be raised through FPO. The ultimate aim remains to make Ruchi Soya a globally recognised name and that is the reason the company is on an expansion mode, with the Rs. 4300 crore from the acquisition, focusing on other products of the same sphere. 

What the investors should keep in mind most is that Ruchi Soya is at the moment offering a massive 40% discount at the current share price of the company which is Rs 913, which makes the upper end of the price to be only Rs. 650 per share. 
 
Due to this significant discounting, many leading trade analysts are tracking Ruchi Soya Industries, pointing out that investors can now apply for shares with a long-term view