Ruchi Soya, now entirely owned by Patanjali Ayurveda Limited, has repaid ₹ 2,925 crore loans to banks and has become a debt-free company. In the last few months, the company posted huge profits given the global shortage of oil and rising oil prices and its follow on public offer was a huge hit. It raised ₹ 4,300 crores through its follow-on public offer, and part of the proceeds has been utilised to repay the debt.
In 2019, Ruchi Soya was heavily indebted and a loss-making unit when Patanjali Ayurveda acquired it for ₹ 4,350 crore rupees through IBC proceedings. Today, its shares are trading at 938 rupees from around 220 two years ago. The company has given a return of 400% to its investors in two years and has become a profitable entity.
With annual revenue of ₹ 17,000 crores (>2 billion dollars), the company is one of the largest in the FMCG space. And it is expected to become a milking cow for Patanjali Ayurveda in the coming decade. With the rising commodity prices around the globe, Ruchi Soya is expected to post double-digit growth in profits and revenues.
During the first nine months of 2021-22 (ending December 2021) Ruchi Soya reported a net profit of ₹ 572 crores on revenues of ₹17,542 crores as compared to ₹ 16,382 crores revenue and ₹ 680 crores loss in FY 21. How Patanjali turned Ruchi Soya profitable within three years of acquisition is a lesson for India’s business houses to emulate and business leaders should learn from Baba Ramdev.
Baba Ramdev is well known for taking up new challenges head-on. He said that he defeated paralysis by practising Yoga.
He also popularised the dying Vedic Indian tradition throughout the world, took on black money and looked after India’s most trusted Fast Moving Consumer Goods (FMCG) company Patanjali Ayurveda.
Baba Ramdev is an astute businessman and a master strategist when it comes to brand building. He assessed it very well that top Indian FMCG companies are foreign origin multinationals, and then used the plank of Swadeshi to build brand loyalty among customers.
The Indian FMCG sector is known to be the most competitive with multinationals like ITC, Hindustan Unilever Limited and old homegrown Dabur, Britannia, Parle etc but Patanjali Ayurveda now has a strong presence in the FMCG sector within a decade. Patanjali’s sales and profits have grown exponentially over the last few years, and now that the company is venturing into other sectors it will be interesting to see whether it could repeat a similar success story as that of FMCG.
Patanjali has also seen tough days, especially the years after demonetization and GST when rural consumption dried up and its businesses were not able to understand the complexities of the new regime.
In FY 17, when the company was growing at double-digit in terms of revenue, Baba Ramdev declared that Patanjali Ayurveda Limited would double its revenue to 20,000 crore rupees by March 2018. However, in the next two years, the fortunes of Patanjali were on a nosedive and the sales declined by more than 10 per cent to 8,100 crore rupees in March 2018. In the first 9 months of the last financial year, the total sales of the company further declined to 4,700 crore rupees.
However, Baba Ramdev learnt his lesson and went for the public offering of Ruchi Soya just a year after its acquisition even though it was a loss-making company. He raised capital and modernized his businesses, and with little luck from rising global commodity prices, the company has made a comeback. Now it is a moderately profitable entity and is expected to expand rapidly in the coming years.