We Aim To Be A Large FMCG + FMHG Player: Sanjeev Kumar Asthana, CEO, Ruchi Soya Industries
Patanjali Ayurved, which owns 98.9 per cent of Ruchi Soya Industries, is gearing up for a follow-on public offering (FPO). Patanjali had acquired the erstwhile bankrupt Ruchi Soya, best known for its Nutrela brand of soya-based products, in 2019 for around Rs 4,350 crore through an Insolvency and Bankruptcy Code (IBC) process. Sanjeev Kumar Asthana, CEO, Ruchi Soya Industries talks to Ashish Sinha about the company’s expansion plans and what it will do with the FPO proceeds. Excerpts:
What are the plans for Ruchi Soya after the FPO? In addition to the existing businesses, Ruchi Soya Industries (RSIL) sees itself evolve into a significant player in the FMCG and the FMHG (fast moving health goods) categories in the country. We have a well laid out growth plan. Our new products, including honey, atta and premium blended oil, are already added under the Nutrela brand umbrella.
Also, our company recently acquired Patanjali’s product portfolio of biscuits, cookies, rusks, noodles and breakfast cereals, becoming the only company in India to market biscuits, noodles, breakfast cereals and other allied confectionery products under the Patanjali brand. Also, we have for ayed into high growth nutraceuticals plus wellness product categories. We intend to continue leveraging the consumer brand equity of being a premium and health-friendly brand, deepening our FMCG and FMHG presence.
Will you consider an acquisition?
We may also consider inorganic growth depending on group synergy, experience, strength and reach of promoters in a particular domain. All in all, after the FPO, our company will focus primarily on growth, and furthering its presence in the FMCG and FMHG space, either organically or inorganically.
How is Ruchi Soya trying to become a debt-free company and by when? Please do explain the proposed FPO in detail.
The proposed FPO is the first step in the direction of the company meeting statutory public shareholding requirements. The company intends to utilise 62 per cent of gross proceeds of the issue (FPO) for repayment and/or prepayment, in full or part, of certain borrowings availed by the company.
This will aid in the retirement of around 79-94 per cent ‘Long Term Debt’ availed by the company. The company is also confident of retiring residual long term debt by the end of Fiscal 2023. We will continue to avail short-term working capital only for operational and optimisation efficiency.
What are the timelines related to the proposed FPO?
In the context to the Ruchi Soya FPO, a DRHP (draft red herring prospectus) has already been filed with the market regulator on 13 June, 2021, and the company has completed all formalities related to stock exchanges’ in-principle approval and responded to all queries raised by the regulator thus far. Post receipt of approval from the Securities and Exchange Board of India, we intend to launch and complete the FPO process before the end of the current financial quarter. Patanjali Ayurved also intends to chart out its IPO plan and fixate indicative timelines during the ongoing fiscal.
What are the new business strategies that Ruchi Soya will be adapting to in line with the changing markets?
Business strategies envisaged to be adopted by Ruchi Soya includes the continuous leveraging of the Patanjali brand. It also includes enhancing the synergies with Patanjali.
We will also enhance the high margin premium food portfolio through the Nutrela brand and help increase its brand awareness. We will go all out to increase the market share of our established product portfolio by deeper penetration and also via expanding the footprint in newer markets, especially for nutraceuticals and other products. We will also increase the overall palm plantation and will focus on ‘backward integration’. Diversification of the supply chain, and improving operational efficiency by adopting newer technologies, goeswithout saying.
How is the company planning to diversify its business?
RSIL, which was traditionally an edible oil and commodity company, has transformed into a well-diversified FMCG and FMHG focused company with a reputable brand, present across India. We are already one of the largest FMCG companies in the Indian edible oil sector and intend to become one of the largest FMCG and FMHG companies in India.
Further, diversification of our business will be on a need basis after our company has fully optimised its presence in all current businesses of our company, including edible oils, its byproducts and derivatives, oleochemicals, edible soya flour and textured soya protein, honey and atta, oil palm plantation, nutraceuticals and wellness products among others.
How is the demand for Ruchi Soya’s products globally? What are your plans for exports?
We are exporting products to more than 36 countries across the world including – but not limited to – Nepal, Sri Lanka, Kuwait, the UAE, Indonesia, Thailand, Japan, South Korea, Oman, Bangladesh, Singapore and Vietnam. The company has achieved an export turnover of Rs 404.98 crore in Fiscal 2021 and we plan to achieve an export turnover of Rs 1,000 crore in the next two to three years. Going ahead, we intend to focus on exports to African counties and also to enhance our presence in the Middle East, which has a significant presence of the Indian diaspora that is familiar with our brands and the product portfolio. The Indian diaspora continues to drive demand for Made in India products.
