Ruchi Soya forms team to explore business restructuring options
Mumbai: The board of edible oil maker Ruchi Soya Industries Ltd has set up a committee to explore business restructuring options, the company said in a statement.
Ruchi Soya is considering internal restructuring options including creating subsidiaries for individual businesses within the company, and separating businesses into individual entities, the company said in the statement.
Ruchi Soya’s primary lines of business include selling packaged edible oils and soyabean chunks, oilseed extraction, edible oil refining, and wind power generation. During FY16-17, 74% of the company’s revenue came from its edible oils business, according to its latest annual report.
“The primary aim of undertaking this exercise is to unlock the value of our diverse businesses,” managing director Dinesh Shahra said in the press statement. “This process would allow the management to focus on the respective businesses with flexibility in fund raising for future growth and expansion.”
Ruchi Soya expects its individual business verticals will look for investors and business partnerships, the company said in the statement.
The move comes at a time when Ruchi Soya’s bankers are struggling to recover their money from the debt laden firm. In February, an unsecured lender had served an insolvency and bankruptcy notice to the company for loans worth Rs6.93 crore. This came even as Ruchi Soya successfully fought off a winding up petition filed by IDBI Bank against the company to recover loans worth Rs200 crore. IDBI is the leader of a consortium of banks who have lent funds to Ruchi Soya.
“This exercise will help Ruchi Soya to successfully overcome the issues that have developed over a period of time largely due to macro-economic conditions much beyond the control of the company,” Shahra said in the statement “The unlocking of value through this restructuring will help come up with a timely and effective solution to resolve our outstanding issues benefiting all our stakeholders including banks and financial institutions.”
Ruchi Soya’s total borrowings stood at Rs12,232.22 crore for FY16-17, almost 12 times the company’s equity, as per the latest annual report.
Ruchi Soya is part of a list of 28 defaulters that the RBI sent to banks, asking them to conclude a debt resolution process by 13 December this year, Mint reported on Tuesday. RBI has asked banks to finish proceedings by the end of year deadline, failing which these accounts will be referred to the National Companies Law Tribnual for proceedings under the Insolvency and Bankruptcy Code.
Shares of Ruchi Soya were trading at Rs22 at 2:57pm on BSE, up 5.26% while the benchmark BSE Sensex was at 31,686.90 points, down 0.39%.