Ruchi Soya up on Patanjali tie-up

Ruchi Soya has been in the limelight since yesterday when it breached the UC at Rs.24.05 and today, it opened higher, going up almost 17% to Rs.28.10. Its 52-week high stands at Rs.33.20.

There is unconfirmed news report stating that the company has entered into a marketing tie-up with Baba Ramdev’s Patanjali. The deal is that Patanjali will start branding and marketing Ruchi’s edible oil. This is expected to be a win-win deal for Ruchi as it would mean ready access to Patanjali’s wide spread distribution network and will also help bring down its marketing costs.

This is a much needed deal for Ruchi which is facing an uphill task of survival. Ruchi is sitting on debt of over Rs.1000 crore and IDFC Bank has initiated a winding up proceeding against the company. Even its JV with Adani Wilmar is pending approval from its 22 lenders. With all this going on, naturally, its performance has also taken a hit when it ended Q2FY17 78 (YoY) drop in net profit on a declining topline. And to think that Ruchi Soya is the India’s largest edible oil maker with successful brands like Mahakosh and Ruchi Gold.

The stock exchanges have sought a clarification from Ruchi regarding this tie-up with Patanjali; the company is yet to reply.