Did you know Patanjali acquired Ruchi Soya in December 2019 after which the latter’s stock went berserk? After some time, Ruchi Soya sold some of its subsidiaries to a Lucknow based firm called Sanatan Pvt Ltd. And that deal involved selling off 62,000 hectares of land. But did Sanatan pay the fair price to buy it? Or will someone else pay for it? Or did Patanjali gain from this deal?
Crux of the Matter
Acquisition Through Bankruptcy
In December 2019, Patanjali took over the Soya food brand and one of India’s largest edible oil manufacturers, Ruchi Soya through an insolvency process. The deal worth ₹4,350 crores was considered to be one of the most successful insolvency resolutions in India.
Ruchi Soya’s Share Price
The Controversy Over Land Dealings
In November 2020 filing, Ruchi Soya had announced selling off its 5 subsidiaries to one Single entity – Sanatan Multi Skill Development and Education. Following were the sale considerations of the 5 subsidiaries:
1. RSIL Holdings – ₹ 3.55 Crore
2. Mrig Trading – ₹ 100
3. Ruchi Worldwide – ₹ 100
4. Ruchi Ethiopia Holdings – ₹ 75
5. Ruchi Industries – ₹ 75.4
Only the RSIL Holding figure is in crores, rest are denominations as mentioned.
The Land That Sanatan Got From Ruchi Soya
Collectively, Sanatan got 62,000 hectares of land for ₹150!
Ruchi Ethiopia Holdings:
1. Ruchi Agri Plc. , Ethiopia: Leaseholder of 25,000 hectares.
2. Ruchi Agri Sarlu, Madagascar: Leaseholder of 17,000 hectares.
1. Ruchi Agri Plantation, Cambodia: Leaseholding of 20,000 hectares.
The Sanatan ‘Shady’?
The Lucknow based company was incorporated by Chandra and Indira Thapa in 2017. They resigned in 2020 in March 2020 and transferred their shareholding to Prakash Pal (40%), Sanjay Singh (30%) and Ved Prakash (30%). Prakash Pal and Yogesh Kumar are the appointed directors of the firm. Sanatan had no business operations and recorded zero revenues until 2018 – 19.
Ruchi Soya’s Filing To NSE
Ruchi Soya, in their filing with NSE disclosed that Sanatan does not belong to the promoter, promoter group or group companies, thus sale of Ruchi Worldwide does not fall under Related Party Transaction (RPT). Technically, it is correct. But although indirectly, the promoters of Ruchi Soya and Sanatan are very closely related. Lets see how!
A Ruchi Soya spokesperson said to Economic Times that Sanatan is not a related party to Ruchi Soya and thus the acquisitions made by the former are in complete compliance of the standards. However, the promoters of Ruchi Soya were required to dispose the assets at a ‘fair market value’, which does not seem to be the case.
What do you think? Is it a legit transaction or did Patanjali somehow managed to take control of land worth ₹100 crores at just ₹150? Let us know in the comments below.
- Soybeans were a crucial crop in East Asia long before written records began. There is evidence for soybean domestication between 7000 and 6600 BC in China, between 5000 and 3000 BC in Japan and 1000 BC in Korea.
- By the 1600s, soy sauce spread from southern Japan across the Indian subcontinent region through the Dutch East India Company.
- Chinese records dating prior to 2000 BCE mention use of cultivated soybeans to produce edible soy oil. It is one of the most widely consumed cooking oils and the second most consumed vegetable oil.