Ruchi Soya to Patanjali Foods: Behind Baba Ramdev's decision to alter brand name

After successfully flouting its follow-on public offer (FPO), Ruchi Soya board has decided to effect a major change in the firm’s operations. While its board of directors has given in-principal approval for renaming the company, at the group level the move bears larger significance.

In a regulatory filing Ruchi Soya management today informed the BSE that it is considering the terms and conditions of renaming Ruchi Soya Industries. As per the group management, the renamed entity would be known as Patanjali Foods Ltd.

Once effected, the move would mean that the nearly four decades old brand, which continues to be one of the leading edible oil makers in the country, would cease to exist. This comes after the Haridwar-based Patanjali Group acquired the then-beleaguered company under insolvency in late-2019.

But apart from incorporating the Patanjali brand, the latest move is aimed at improving operational efficiencies, removing internal competition among group companies and reorganising its portfolio, which would finally boost the Patanjali Group’s business.

According to the Patanjali Group, the group’s 17 key portfolio would be placed under the renamed entity. Apart from the edible oil portfolio, branded commodities like wheat flour and pulses, fruit juices & beverages, spices, jams & ketchup, cow ghee, honey, chawanprash, dry fruits and herbal-medicinal juices & extracts, would be placed under Patanjali Foods.

Baba Ramdev, co-founder and the de-facto brand ambassador of the Haridwar-based consumer goods major is of the opinion that the plan is to improve operational efficiencies and remove any internal competition by placing the group’s packaged foods and other consumable businesses under the renamed entity. Along with this, the non-foods portfolio, ayurvedic medicines and healthcare business will be under the group’s original entities like Patanjali Ayurveda and Divya Pharmacy, among others.

“We are making sure there is no overlap in the different businesses of the group. This is a marriage between Patanjali and Ruchi Soya. There is now a non-compete agreement between the group firms," Ramdev said recently. This will further boost its business and help it become the largest consumer goods company in next few years, he added.

The plan was in effect for some time. Last year, Patanjali had transferred its biscuits business to Ruchi Soya for Rs 60 crore. With its flagship brand Nutrela at the forefront, Patanjali management now aims to leverage the brand’s trust and recall among consumers in the foods segment. While, the group’s traditional businesses -- like herbal-natural medicines and personal and home care segments that it ventured into in recent years -- would continue to be under Patanjali Ayurved and Divya Pharmacy.

In FY21, after adding Ruchi Soya in 2020, Patanjali Group managed to cross the Rs 30,000-crore revenue mark for the first time. Of the multiple group firms, Ruchi Soya’s Rs 16,318 crore sales contributed 54 per cent towards Patanjali’s total revenue.

The firm had posted Rs 13,118 crore revenue in FY20. Patanjali Ayurved, the group’s flagship entity till recently, grew its business by 8 per cent and posted Rs 9,784 crore revenue in FY21, said Ramdev. Patanjali Agro emerged as the third largest entity in the group with Rs 1,600 crore revenue, followed by Divya Pharmacy, the group’s medicine making arm.

According to Patanjali’s management, the group extended its distribution network significantly in the recent past. From less than 10,000 distribution points in 2018, its current reach stands at 55,751, including 100 sales depots and over 6,000 distributors. And its total retail reach has crossed 450,000 outlets.

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Also read: Ruchi Soya renamed Patanjali Foods Ltd