Ruchi Soya to use FPO to retire 85% debt: CEO

“Twice we have gone to the marketplace and reduced the MRPs on our edible oil product portfolio and we will continue to work on making sure that the consumers do not get impacted especially in oils like palm oil which is a mass market consumer products or even soya oil where we want to keep it reasonable,” says Sanjeev Kumar Asthana, CEO, Ruchi Soya Industries.





One of the purposes of Ruchi Soya FPO is to repay the borrowings. Out of this Rs 4,300 crore, how much are you going to use for repayment borrowings and what is going to be the overall debt situation post this repayment?

Our plan is to retire almost Rs 3,300 crore of debt which is 80-85% of the company’s debt. We will be left with very minimal debt, partially towards working capital and others. The debt component of the company’s balance sheet will be negligible and the plan is to retire that also in a few month’s time. The company has to be debt free as early as possible other than the working capital requirements. Second part is that part of the proceeds are going to use towards working capital as well.

You have now forayed into the business of fast moving health goods as well with the launch of this nutraceutical business. What is the growth expected here and what is the revenue that can be expected to be generated from this particular segment going forward?

Right now, in terms of the specific numbers, I will avoid that because we are in the midst of FPO and giving any directional statement etc. will not be appropriate. But the vision is very large and the market is expanding almost 20% year on year in terms of the opportunity for us to capture substantial market share is right there. I can anticipate that in the years to come, we will not only grow our nutraceutical very substantially, but for the unique positioning that we have of this being a 100% vegetarian product, we are offering to the marketplace and I am anticipating a very significant growth in our nutraceutical business and very substantial market share compared to our competition.

How do you plan on increasing your distribution via the Patanjali Stores?

There are two legs to the strategy. Patanjali has a massive distribution network, not only through more than 5,000 dedicated stores that they have but also through mega stores, Arogya kendras and Chikitsa kendras. Patanjali has a large expansion plan of creating further dedicated stores across the country.

Ruchi Soya has the plan to reach every single town with 20,000 population and above. On top of that, we are building up a very extensive rural distribution network now where the whole idea is that we will not only push closer and closer to the rural areas because most of the products that we have barring very few are big mass consumption products in the rural areas. So there is a big plan and we have already touched nearly half a million touch points or direct retail outlets. We also have more than million to million and a half indirect reach points in the country.

We will continue to expand that. For example, in nutraceuticals, we are adding almost 20,000 retail outlets every month, the idea being that we consistently reach the consumers in the most effective way and we will leverage Patanjali’s distribution network besides growing ROE.

The company primarily imports crude palm oil which has seen a sharp price fluctuation in recent times. How have the supply constraints affected your business and how is the situation looking like now?

The food inflation which is naturally going into the production does have an impact and we are also facing the same thing, especially in biscuits where a large part of the raw material in terms of the oil, wheal four etc has gone through the roof. So clearly that is some challenge. But our portfolio is very minimal in the overall scheme of things of the company.

The second part is on the edible oil side. It has not been very positive from the inflation perspective because of the one-way spike in prices that we have seen over the last 24 months. Part of that has got exacerbated because of the current conflict in Russia Ukraine, but from the company’s bottom line perspective, the impact is less, but from a consumer standpoint, the impact is certainly more.

I want to assure that we have worked very closely at different levels to make sure that the impact of price increase for the consumers is kept to the minimum and that is why, in terms of the passing on the full price change to the consumers, we have kept it to a minimum. Twice we have gone to the marketplace and reduced the MRPs on our edible oil product portfolio and we will continue to work on making sure that the consumers do not get impacted especially in oils like palm oil which is a mass market consumer products or even soya oil where we want to keep it reasonable, we want to keep it as something which the consumers can afford. That is the whole objective of the company, minimum impact on the consumers to the extent possible.

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