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Patanjali gets NCLT nod to acquire Ruchi Soya, with conditions
Photo Credit: Reuters

The insolvency tribunal has okayed Baba Ramdev-led Patanjali Ayurved's bankruptcy resolution plan worth Rs 4,350 crore for edible oil firm Ruchi Soya.

The approval is subject to certain conditions and modifications including filing of affidavits showing the source of funds and details of the resolution process cost. These have to be submitted before the next hearing on August 1.

Out of the aggregate amount of Rs 4,350 crore, a sum of Rs 4,235 crore shall go towards each class of creditors and stakeholders and the rest Rs 115 crore towards equity infusion for improving operations of Ruchi Soya.

Operational creditors will get Rs 90 crore of their claims worth Rs 2,716.6 crore.

The tribunal is also seeking clarity on the source of funds of about Rs 600 crore, which is part of the bid amount.

Moreover, the Rs 4,350 crore plan does not include the cost of the resolution plan, which the bankruptcy resolution professional is yet to submit.

The average liquidation value submitted by registered valuers is Rs 2,391 crore, and the fair value submitted by registered valuers is Rs 4,162 crore. Fair value is the estimated realisable value of the assets between a willing buyer and seller.

Liquidation value is the estimated realisable value of the assets when they are liquidated.

In March this year, consumer goods company Patanjali had improved its offer by Rs 200 crore, pipping Adani Wilmar Ltd’s bid of Rs 4,100 crore.

Adani Wilmar was the highest bidder in August last year after a long-drawn battle with Patanjali. Adani Wilmar later opted out, blaming the delay in the process after Patanjali moved the bankruptcy tribunal against the bid.

In May, the revised bid by Patanjali was approved. The haircut on this transaction stands at around 53% for the lenders.

However, a few days later, Singaporean lender DBS Bank contested the revised plan offered by Patanjali, citing unfair treatment in terms of claims despite it having the status of a first charge holder as a secured financial creditor.

In December 2017, Ruchi Soya was referred to the National Company Law Tribunal following petitions from creditors Standard Chartered Bank and DBS Bank for resolution under the Insolvency and Bankruptcy Code.

Ruchi Soya, which has a total debt of about Rs 12,000 crore, of which around Rs 9,400 crore is owed to financial creditors, has several manufacturing plants and it sells food products and edible oils under brands including Nutrela, Mahakosh, Sunrich, Ruchi Star and Ruchi Gold.

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