Shares of Patanjali Foods Ltd (erstwhile Ruchi Soya Industries Ltd) hit a lower circuit during morning trading after BSE and National Stock Exchange (NSE) decided to freeze the promoter and promoter group's shareholding for not complying with the norms for keeping public shareholding at 25%. Later, the scrip recovered. Patanjali Foods ended Thursday 2.38% down at Rs938.05 on BSE, while the 30-share Sensex closed flat at 57,634.84 points.
In a regulatory filing, the company says, "We have received a communication from our promoters that they are fully committed to the mandatory compliance of achieving minimum public shareholding (MPS) and they have been discussing various modes best suited for increasing the public shareholding. They are confident of achieving mandatory MPS within the next few months."
"Our promoters' equity shares are already under lock-in as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 till April 2023 (one year from date of listing i.e. 8 April 2023) and therefore, we do not perceive any impact of this action by the stock exchanges. Further, it should be noted that our promoters' equity shares are not pledged," it added.
According to Patanjali Foods, the action by BSE and NSE will not have any impact on its financial position as it continues to register robust business and financial performance.
The 21 promoter and promoter group entities whose shares are frozen include: Patanjali Ayurved Ltd, Patanjali Parivahan Private Ltd, Patanjalu Gramudhyog Nayas, Yogakshem Sansthan, Ruchi Soya Industries Limited Beneficiary Trust, Vedic Broadcasting Ltd, Sanskar Info TV Private Ltd, Patanjali Agro India Private Ltd, SS Vitran Healthcare Pvt Ltd, Divya Packmaf Pvt Ltd, Patanjali Peya Pvt Ltd, Patanjali Paridhan Pvt Ltd, Patanjali Natural Biscuits Pvt Ltd, Gangotri Ayurveda Pvt Ltd, Swasth Aahar Pvt Ltd, Patanjali Renewable Energy Pvt Ltd, Vedic Ayurmed Pvt Ltd, Divya Yog Mandir Trust, Ram Bharat, Acharya Balkrishna and Snehlata Bharat.
On 15 December 2017, the Mumbai bench of national company law tribunal (NCLT) had initiated the corporate insolvency resolution process (CIRP) against Ruchi Soya Industries. A resolution plan submitted by Patanjali Ayurved Ltd was approved by NCLT on 24 July 2019 and was implemented from 18 December 2019. Following the implementation of the resolution plan, public shareholding in Patanjali Foods came down to just 1.10%. Later, Ruchi Soya Industries changed its name to Patanjali Foods.
To comply with Rule 19A(5) of the Securities Contracts (Regulation) Rules, in March last year, the company launched its follow-on public offering (FPO) and issued 66.15mn (million) shares of Rs2 each at a premium of Rs648 per share aggregating Rs4,300 crore. Due to this, it says, public shareholding in Patanjali Foods increased to 19.18%.
As per SEBI rules, Patanjali Foods needs to increase MPS to 25% from 19.18% without which promoter and promoter group stake would remain frozen.
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