Ruchi Soya Industries (Ruchi Soya) is acquiring the food retail business of parent Patanjali Ayurved Ltd (PAL) for Rs 690 crore as it looks to accelerate transition to a leading FMCG company.

Ruchi Soya is also changing its name to Patanjali Foods.

In 2019, yoga guru Baba Ramdev-led Patanjali had acquired Ruchi Soya through an insolvency process for Rs 4,350 crore.

The company said in a regulatory filing to stock exchanges that it has entered into a business transfer agreement with PAL to acquire its entire food retail business, which consists of manufacturing, packaging, labelling and retail trading of certain food products along with manufacturing plants located at Padartha, Haridwar, and Newasa, Maharashtra as a going concern on a slump sale basis.

It added that the transaction would also consist of transfer of employees, assets (excluding Patanjali’s brand, trademarks, designs and copyrights), current assets (excluding debtors, vehicles, cash and bank balance) contracts, licences and permits and distribution network.

According to the company, this strategic initiative for acquisition of the food business will strengthen its food products portfolio with an array of brands and also contribute to the growth in terms of revenue.

The food business that it will acquire includes 21 major products such as ghee, honey, spices, juices and flour. Ruchi Soya said that the acquisition is valued at a fair market value (net) of Rs 690 crore.

The company pointed out that after the acquisition by the Patanjali group in 2019, it has been showing sustained and robust financial performance in terms of revenue, EBIDTA and net profits on a quarterly basis. The company reported revenues of Rs 16,382.97 crore in 2020-21 as against Rs 1,3175.36 crore in the preceding year.

Ruchi Soya also disclosed that of the total acquisition, Rs 103.50 crore would be paid with the execution of the BTA or within three days of the BTA, while Rs 293.25 crore will be paid on the closing date as defined in the BTA. Similarly, Rs 293.25 crore will be paid within 90 days from the closing date.

The stock markets reacted positively to the announcement with shares of Ruchi Soya surging by almost 10 per cent.

In the BSE, the script ended 9.59 per cent higher at Rs 1,176.85. It currently has a market capitalisation of almost Rs 43,000 crore.