Ruchi Soya sells 51% stake for ₹4,000 cr
MUMBAI: Edible oil maker Ruchi Soy a Industries Ltd has agreed to sell a 51% stake in the company along with its entire branded oil distribution business for ₹4,000 crore to private equity firm Devonshire Capital.
The company will use the funds to part repay its over ₹12,000 crore debt as of June 30, Ruchi Soya said in stock exchange filings. Thecompany’s board approved the decision in a meeting held on Thursday.
Approvals from Ruchi Soya’s creditors, the Securities and Exchange Board of India (Sebi), and the National Company Law Tribunal (NCLT) are pending.
As part of the deal, Ruchi Soya is selling its entire stake in wholly-owned subsidiary Mrig Trading Pvt Ltd into which the company will spin off its branded oil distribution business, it said in a press statement.
“This strategic investment by Devonshire will enhance the value of our business and provide an effective solution to resolve our outstanding issues with the banks, financial institutions and operational creditors,” Dinesh Shahra, managing director and CEO of Ruchi Soya, said in the statement .“We are optimistic on an early completion of this restructuring exercise after all necessary approvals of the lenders and legal formalities.”
A Ruchi Soya spokesperson declined to comment on the specific sand timeline of the deal.
Ruchi Soya’s board set up a committee to look into restructuring options for its business, which included spinning off individual businesses earlier this year, Mint reported on September 6. Its primary business is edible oils refining, which made up 74% of its revenue in FY16-17, according to the company’s annual report.
“The deal is subject to approvals, and so it’s not done yet ,” Amarjeet Singh, country head, India, at Devon shire Capital said. “We don’t comment on ongoing investment processes. We are looking at it, it’s an interesting company, there’s a long-term strategic value in it,” he said.
Thailand-based Devonshire Capital focuses on stressed assets in Asia, Singh said. “We were set up to look at stressed assets in South-east Asia, Greater Asia. This is going to be our first investment in India if it happens .”
Ruchi Soya is negotiating terms for debt resolution with its creditors even as it is battles insolvency proceedings in the NCLT with DBS Bank and Standard Chartered Bank for pending re payments worth ₹184.38 cr ore, Mint reported on 15 September. Ruchi Soya is part of the list of 26 companies that the RBI sent to banks asking them to conclude a debt resolution process by December 13.