The take-over of Ruchi Soya, a listed company that went into insolvency by Baba Ramdev and now he became owner of as many as 80 percent of its shares, without spending a single rupee, has once again leading to question the functioning of Indian Public Sector Banks and revealing how they are assisting massive `corporate frauds’.
Ruchi Soya originally owed Rs. 12,146 crores to PSU banks. SBI writes off Rs 933 crores and settles its dues of Rs. 1,816 crore to Rs 883 crores. Other banks – PNB, CBI etc write off more than half their loans. Having reduced the liabilities to less than half, NCLT puts it up for sale. Only two bidders remained – Patanjali and Adani Wilmar.
Adanis having bid initially, but after his conspicuous withdraw, only Patanjali was left in the race. The bid of Patanjali was Rs. 4,350 crores of which Rs3,250 crores would be funded by banks led by SBI, surprising a bank that wrote off Rs 933 crores.
The security for the loans was the same Ruchi Soya stock, which was written down to Zero in the Debt restructuring plan agreed by the banks. Now we have a situation where the banks that wrote off massive amounts are now funding another loan to Patanjali to acquire the same company where they wrote off debts.
It doesn’t stop here. SEBI mandates a 25% public shareholding to be listed on the stock exchanges to ensure liquidity and avoid price manipulation. NCLT played along and ordered listing even though public shareholding was just 1%. SEBI played dead and did not challenge order.
Price manipulation begins. There were no sellers in the market. Even the 1% was closely held. The stock zoomed from Rs.3.50 to Rs. 1053 in two years. Now, Ruchi Soya, a company that Patanjali acquired in Dec 2019 with just Rs 1,000 crore of own money is valued at Rs.31,190 Crores.
Ruchi Soya, now owned 99.5% by Patanjali, is now coming with a public issue diluting just 20% and raising Roo 4300 crores. Remember, they bought 100% of the company at Rs 4,350 crores. They will also repay all the debt with investor money.
The bankers wrote off a few thousand crores. The initial shareholders were written off to zero. The bankers again funded the acquisition of the same company with securities of the same shares by Baba Ramdev. The small investors will again buy equity worth Rs 4,300 crores. Finally, now Baba Ramdev will own 80% of a Rs 31,000-crore company with no. investment.
