Ruchi Soya’s follow-up public offering faces further delays

The company will have to increase its public stake to more than 10% from the current 1.1% to meet the Securities and Exchange Board of India (SEBI) norms. The promoters of the company were planning to use the proceeds from the FPO to repay the lenders.

“There is not enough demand for this issue. If the issue is not resolved, the company may withdraw the papers filed with SEBI,” said one of the above persons, requesting anonymity. Had to modify. January but has not done so, this person added.

Questions from Ruchi Soya’s spokesperson and subsequent reminders did not go unanswered.

The company filed draft documents with SEBI in June and subsequently obtained approval from the regulator to go ahead with the public offering. As per Sebi norms, Ruchi Soya needs to increase its public stake to 10 per cent within 18 months of its relisting. The 18-month period ended in July last year.

Patanjali acquires Ruchi Soya 4,350 crore through insolvency process. Interestingly, the banks that had given loans to Patanjali for the acquisition were about to bankrupt Ruchi Soya. Almost the entire 99% stake of the new promoters is pledged with the banks.

Experts said Ruchi Soya’s low public inflows contributed to its high valuation, making it difficult to find buyers for the share sale.

Ruchi Soya’s present value is 24,114 crore, less than 33,255 crore market valuation when it first proposed the FPO.

“The delay is probably linked to the market value of the shares. In this regard, it is worthwhile to mention the reprimand given by SEBI to Baba Ramdev on his public statements promoting FPOs a few months back,” said Srinivas Kotni, Managing Partner, Lexport, a law firm.

In September, Baba Ramdev was seen in a viral video encouraging his followers to invest in Ruchi Soya shares during a yoga session, plunging him into the regulatory soup.

In the video, Ramdev said that anyone investing in the shares of Ruchi Soya will become a millionaire, which is in violation of regulatory norms. Following this, the market regulator warned the company and sought clarification.

SEBI may take punitive action for violation of regulatory requirement of raising public shareholding by Ruchi Soya.

“It is mandatory to adhere to the statutory timelines for the sale of shares to the public. If the delay can be linked to any fraudulent or unfair trade practices under section 15HA of the SEBI Act, 1992, the maximum fine 25 crore can be applied after proper decision. Otherwise, after due process, SEBI may penalize the company under section 15HB up to a maximum of 1 crore,” Kotni said.

Moin Ladha, partner at law firm Khaitan & Co, said Sebi will consider the justification for delay in such cases. “While there is a stipulated time-frame for compliance with the minimum public shareholding, one needs to understand that market conditions influence such transactions. Therefore, before invoking the provisions of non-compliance, SEBI will certainly consider the justification for the delay,” Ladha said.