Baba Ramdev-led Patanjali Ayurved Ltd will sell its food retail business to group firm Ruchi Soya Industries Ltd for Rs 690 crore as part of its strategy to focus on non-food, traditional medicine and wellness business.
Patanjali Ayurved Ltd had acquired Ruchi Soya through an insolvency process.
In a regulatory filing, Ruchi Soya informed that it has entered into a "business transfer agreement" with Patanjali Ayurved Ltd to acquire the food retail business of the latter as a going concern on a slump sale basis.
The food retail business consists of manufacturing, packaging labelling and retail trading of certain food products along with manufacturing plants located at Padartha, Haridwar, and Newasa, Maharashtra.
The transaction shall consist of the transfer of employees, assets (excluding Patanjali's brand, trademarks, designs and copyrights), current assets (excluding debtors, vehicles, cash and bank balance), contracts, licences and permits, distribution network, customers related to the food retail business of Patanjali Ayurved.
The proposed acquisition falls under the related-party transaction.
The amount of consideration for the acquisition agreed upon under the agreement is Rs 690 crore, subject to certain adjustments.
The board also approved the change in the company's name from 'Ruchi Soya Industries Limited' to 'Patanjali Foods Limited’.
Last month, Ruchi Soya Industries said it would evaluate the most efficient mode to merge Patanjali Ayurved Ltd's food portfolio with itself and has also decided to change the name of the company to Patanjali Foods Ltd.
Ruchi Soya recently raised Rs 4,300 crore through its follow-on public offer (FPO).
A few months back, Baba Ramdev had announced that: "In the next few months, Patanjali Ayurved will transfer all food business to Ruchi Soya. Patanjali Ayurved would operate in non-food, traditional medicine and wellness space."
Ramdev had said Ruchi Soya would focus on four business verticals -- edible oil, food and FMCG, nutraceuticals and oil palm plantation.
Last year, Patanjali transferred its biscuits business to Ruchi Soya for a nominal consideration of Rs 60 crore.
"We have set a target to make Patanjali Ayurved and Ruchi Soya, India's largest food and FMCG company in the next five years," Ramdev had said.
He claimed that Patanjali Ayurved is the country's second-largest food and FMCG firm, with Hindustan Unilever Ltd (HUL) being the first.
The combined annual turnover of Patanjali Ayurved group and its subsidiary Ruchi Soya is around Rs 35,000 crore.
Ruchi Soya, which was acquired by the Patanjali group in 2019 for Rs 4,350 crore through an insolvency process, had a revenue of nearly Rs 16,400 crore in FY21.