After allowing Patanjali to manufacture edible oils in its closed plants, Ruchi Soya Industries, an agri and food FMCG company, will now manufacture and sell large packs of cooking oils under Patanjali brand through its own (Ruchi’s) distribution network.

Ruchi Soya has signed an MoU with Baba Ramdev-promoted Patanjali Ayurved for an exclusive sales and distribution arrangement for the entire range of Patanjali edible oils in large packs, a company statement said. Under the MoU, Ruchi Soya would use its own distribution network to sell the complete range of Patanjali edible oils in large packs across the country.

There is a demand for Patanjali products and the Baba Ramdev-promoted group does not have network to sell cooking oils in large packs of 5 kg and more, which are mainly consumed by hotels, restaurants and food processing industries, an industry executive said.

The significance of this agreement can be ascertained from the fact that Patanjali is eyeing sales of Rs 20,000 crore by 2020 from its edible oils range of which large packs will constitute a substantial portion, said Satendra Aggarwal, chief operating officer of Ruchi Soya.

He said: “For Ruchi Soya, this exclusive agreement will not only help manage optimum plant capacities but will also enhance profitability; boost productivity and efficiencies of our sales and distribution system across the country due to enhanced volume throughput.”

According to Aggarwal, cooking oil brands of Patanjali and Ruchi operate in premium and popular segments, respectively and they do not compete with one another.

Under the current agreement, Ruchi has exclusive distribution rights for the existing as well as future range of Patanjali edible oils in large packs. A detailed service agreement for a period of three years will be signed later. Both Ruchi and Patanjali had earlier this year signed similar agreements on processing and packaging.

Ruchi Soya’s brands are available in more than 10 lakh outlets across 4,000 towns in India, a company statement said.

Early this month, Ruchi had announced that it would appoint a consultant which would suggest options to restructure its business including creating subsidiaries and separate entities. As part of an overall corporate strategy, the company will consider various options such as subsidiarisation and de-merger of its business units into separate entities.

Ruchi in February had announced its tie-up with Patanjali Ayurved but denied any plan to sell its units.