Ruchi Soya shares were locked at the 20% upper circuit after the company anounced that it will launch its follow-on public offer on March 24. A follow-on offering is the issuance of additional shares made by a company after an initial public offering. The issue will close on March 28. 

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“The FPO comprises equity shares of the face value of Rs 2 each aggregating to Rs 4,300 crore. The issue also includes a reservation of up to 10,000 equity shares for subscription by eligible employees. If such placement is completed, the follow-on size will be reduced,” it said in a statement.

The company is issuing the additional public offering to meet market regulator SEBI’s requirement of a minimum public shareholding of 25% in a listed company.

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“It will take about three years to reduce the promoters’ stake to 75%. This FPO dilution will aid Swami Ramdev’s Patanjali Ayurveda, which owns Ruchi Soya, in adhering to the minimum shareholding rules.”

The Patanjali group presently holds around 98.9% of Ruchi Soya. Around 1.1% is owned by public shareholders. Following the FPO, the Patanjali group’s stake in Ruchi Soya will be around 81%, with the public holding approximately 19%.

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According to the statement, the proceeds of the offering will be utilized to enhance the company’s business by repaying outstanding loans, fulfilling additional working capital requirements, and other general corporate objectives.

  Ruchi Soya’s Ruchi Gold brand is the industry leader in branded palm oil. It is also a pioneer of soya meals in India under the Nutrela brand. 

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For the quarter ending December 2021, the company recorded a 3% rise in net profit to Rs 234.07 crore. In the previous fiscal year, its net profit was Rs 227.44 crore. According to a regulatory filing, total income increased by 41% to Rs 6,301.19 crore in the third quarter of the current fiscal year from Rs 4,475.59 crore in the same time last year.

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Ruchi Soya has about 56,000 hectares of oil palm under cultivation and works with over 39,000 farmers in nine Indian states. The corporation is also in the wind power production industry, with 19% of its output used for captive consumption.