patanjali: Ruchi Soya CEO on turning zero-debt co and rebranding as Patanjali Foods

Ruchi Soya has announced that you have prepaid all the debt. That is something you have talked about in the runup to the FPO as well. What does it mean for your balance sheet?
The balance sheet is absolutely cleaned up. As a zero debt company, our ability to invest in businesses, to expand the portfolio of the products that we have, becomes way better. We are a much more robust company and a stronger company financially and business wise.

Nearly Rs 3,000 crore of debt that has been paid and the biggest lender was SBI. You mopped up Rs 4,300 crore via the FPO and nearly Rs 3,000 crore is going in for debt. What do you use the balance proceeds for?
We have used most of the proceeds for retiring our debt and other obligations. The balance will be used as working capital and some of it will go to other general corporate purposes. The company is in a very strong position because our cash flows are throwing up more funds for operations and expanding working capital. Right now, we are pretty happy with the way things have gone and as we continue to invest in the businesses but this is something which we will continue and you will hear more from us in the coming months.

What kind of revenue potential do you now see for the combined entity?
I would not speculate on the exact size and the revenues of Patanjali right now. It would be very improper till we get the full details and both the committees have worked through that. But suffice to say, the scale is large. This is a pure play food FMCG business that Patanjali runs which has got some of the illustrated list I can share. These are household names and all of us at some point of time or the other have it at our homes. For example, Patanjali has been a pioneer in building cow ghee category, Patanjali Chyawanprash, aloe vera juice, refined oils. The list is very long.

As we start working through the numbers, through the product lines and seek the necessary approvals from respective shareholders, we also work through the regulators. It will become clearer but the whole intent now is that we want to expeditiously move in the direction of integrating that business with Ruchi Soya and we have also made an application subject to the necessary approvals to convert the name of Ruchi Soya to Patanjali Foods Ltd.

This is an intent and not a sudden move. Ramdevji had declared this intent long back in multiple calls with all the stakeholders including the investors that these are the plans. We declared everything in our regulatory documents as well that it would be the intent, but that being behind us, now is the time for action.

The first action that we did was on the day of listing, we paid off the entire debt; next, within four days, we are moving ahead with the change of the name as well as moving ahead with the integration of the food businesses app.

What is the future plan? What is Baba Ramdev’s grand vision for the next five to 10 years? Would there be further additions from the Patanjali portfolio into this entity?
At this stage, we have completely cleared up the structure. There was a confusion in the marketplace on some duplication of products. There was confusion and constant questions that we used to get from stakeholders. That’s how the businesses will be split between the two entities. Our structure will get entirely cleaned up. All the non-food FMCG businesses like personal care, home care, ayurvedic medicines will remain with Patanjali Ayurved Ltd. The entire food portfolio will move to the new entity. But to answer your question specifically, there is no intent at this point of time or even a discussion to move anything else from Patanjali other than the food portfolio.

There is a lot to digest and do because there is a lot of action going on at Ruchi Soya and hopefully we will digest it. We want to come good to the market in terms of the commitments that have been made and basically get down to the basics of doing good hard work, execute it well and demonstrate a good performance to ourselves and the marketplace and all the stakeholders.

Can you give us ballpark numbers on what we can expect in terms of potential revenue growth from the food portfolio?
The food portfolio is growing between 10% and 15% year-on-year. There are two steps to the strategy; one is that we have very strong brands in Nutrela and that we are converting to an umbrella brand and adding a whole lot of more products under Nutrela brand.

The second part is our very extensive portfolio of the edible oil brands like Mahakosh and Ruchi Gold and Sunrich. We are focussing on a lot more to build up greater traction with the customer.

The third piece of course is going to be the Patanjali Foods new business. We will go through a lot of rationalisation in terms of a) expanding the existing portfolio because the industry is in a growth mode; and secondly to build up the FMCG foods business into a substantially large business.

Unfortunately that number I am not at liberty to disclose right now but suffice to say, it is going to be in a large scale and that is what we are aspirationally getting ready for. You will hear from us within one or two months in terms of scope, scale and the size of what we are going to acquire and how it is going to impact the fortunes of Ruchi Soya or the renamed entity, subject to approvals.