Patanjali Foods in a soup

Patanjali Foods is in a bit of a soup currently; both the stock exchanges, NSE and BSE have frozen the stake held by the promoter groups of Patanjali Foods (formerly known as Ruchi Soya Industries) for not meeting the public shareholding requirements within the stipulated deadline.

The freezing will be applicable till compliance with minimum public shareholding requirements as per SEBI regulation.

The company said that in order to meet with this provision, in March’22, it came out with a Further Public Offering (FPO), issuing over 6.5 crore shares with FV of Rs.2, issued at a premium of Rs.648/share. This helped shore up the stake to 19.18%. As per SEBI rules, this public holding has to be at a minimum of 25% and that has not happened yet, almost a year after the FPO.

The company said that promoters' equity shares are already under lock-in as per SEBI regulation till April 2023 (one year from date of listing i.e. April 08, 2023) and therefore, the company does not perceive any impact of this action by the Stock Exchanges. The company said that promoters' equity shares are not pledged.

To bring up the stake to 25%, there are only two options – either promoters sell their stake and bring it down from current 80.82% to 75% or raise further funds.

The stock is in the red, opening 4% lower at Rs.922 and went down further to Rs.912.90, briefly hitting the 5% LC of the day.