Ruchi Soya Turned Jackpot for an Investor, Banks Still Waiting for Loan Recovery
While public sector banks (PSBs) are still waiting to recover the money lent to Ruchi Soya Industries Ltd, one investor appears to have got a inside track to hit a jackpot in the re-listed company after it was acquired by Patanjali Ayurveda, says an expose by Business Standard
, this mystery investor who hit the jackpot is Delhi-based Ashav Advisory LLP, related with Minda Corporation, a leading manufacturer of auto components. This group’s investment of Rs13 crore in a preferential offer of Ruchi Soya in February, at Rs 7 is now worth Rs1,500 crore.
Meanwhile, Indian banks who financed the previous management and wrote off large sums and also funded the new acquisition appear flat footed!
Quoting regulatory filing by the company on 9th April, the report says, the (Ruchi Soya) board had agreed to issue 18.67 million shares to Ashav Advisory LLP on a preferential basis at mere Rs7 per share — a massive discount to the market price of Rs48.7 on that day. “Ashav Advisory bought the stake at Rs13 crore, which is now valued at about Rs1,500 crore.”
"On 27 January 2020, the shares were listed at Rs17 apiece. The stock price rallied to a 90x growth in just five months to Rs1,535 per share on 29th June 29. For a company that had been acquired in a bankruptcy sale just months ago, this was an incredible feat," the report says.
More interestingly, after reaching a high of Rs1,535 per share, Ruchi Soya is hovering at around Rs740 on the BSE. This also raises question on possible stock manipulation in Ruchi Soya shares. Many investors are raising this question on social media, including Twitter.
Below is the price movement in Ruchi Soya shares…
As per the resolution plan approved by National Company Law Tribunal (NCLT), Mumbai Bench vide its Orders dated 24 July 2019 and 4 September, 2019 under section 31 of the Insolvency and Bankruptcy Code, 2016, Yoga guru Ramdev Baba led Patanjali Ayurveda Ltd took over debt-ridden Ruchi Soya from the Dinesh Shahra family.
A regulatory filing by Ruchi Soya shows as on end-June 2020, new promoter group holds 98.97% stake in the company. Patanjali Ayurveda owns majority 48.17% stake, followed by Divya Yog Mandir Trust at 20.28%, Patanjali Parivahan Pvt Ltd at 16.90%, and Patanjali Gramundhyog Ltd at 13.52% in Ruchi Soya.
However, as per regulatory requirement, and as part of the bankruptcy resolution, Patanjali Ayurved, the new promoter is allowed to increase free float in Ruchi Soya to at least 10% within 18 months of takeover. As per the SEBI norms, such companies need to increase public shareholding to prescribed limit of 25% within three years of re-listing.
At present, there are 91,528 public shareholders who own 1.03% stake in Ruchi Soya. This stake is the free float that may have given rise to the company's stock price. Quoting Abneesh Roy, executive vice-president (research), Edelweiss Securities, the BS report says, "The lower the number of shares held by members of the public, the higher the volatility in share price movements due to lack of liquidity.”
As Moneylife reported, and documents shared by SBI to its shareholder shows in FY2019-20, the bank wrote off Rs746 crore of non-performing assets (NPA) of Ruchi Soya and has not recovered a single rupee from the company. The plan approved under the Insolvency & Bankruptcy Code (IBC) had indicated that SBI would recover Rs883 crore against its admitted claim of Rs1,816 crore.
While SBI had told its shareholder that it did not recover a single penny from Ruchi Soya, during the same FY, it gave a fresh loan of Rs1,200 crore to Baba Ramdev-led Patanjali Ayurveda to help it acquire the same company as per the NCLT order.
Last week, we sent an email to SBI officials seeking response on the Ruchi Soya case. We had asked...
1. What attempts SBI made to recover its written off loan of Rs700 crore from Ruchi Soya?
2. What efforts SBI had taken to recover the loan amount from Ruchi Soya through the NCLT proceedings?
3. Since Patanjali Ayurveda took over Ruchi Soya, who owns the responsibility of the Rs700 crore debt given by SBI to Ruchi Soya?
4. How SBI plans to recover its written off debt of Rs700 crore and from whom the amount would be recovered?
However, SBI declined to comment on any of these questions. In an email, a spokesperson from SBI says, "It is the policy of the bank not to comment upon individual account and its treatment".