Patanjali Foods said on March 16 that it will start the process of launching a Follow-On Public Offering (FPO) in April to increase the public shareholding to 25%. This is because stock exchanges have frozen the shares of its founders.
But in an interview with the news agency PTI on Thursday, Baba Ramdev reassured his investors and public shareholders that Patanjali Foods Ltd’s (PFL) operations, financial performance, and growth path would not be affected.
Ramdev was quoted by PTI as saying, “The investors have no reason to worry.”
Ramdev told us that the promoters’ shares are locked up until April 8, which is one year from the date of listing. He also said that this move by NSE and BSE doesn’t seem to hurt the way that PFL works.
Aside from this, Ramdev said that the Patanjali group is running PFL in a “ideal” way and is taking care of everything, including business growth and distribution, profit, and performance.
Ramdev said that the market was not in a good place, so he added, “We will be giving away about 6% of our shares.” There isn’t any doubt about that.”
On the question of timing, Ramdev said, “We will start the FPO process in April, right after the end of the current financial year.” He also said, “There is no question that we have to dilute our equity share.”
Earlier on Wednesday, the National Stock Exchange and the BSE froze the equity shares of Patanjali Foods Ltd, which used to be called Ruchi Soya Industries Ltd. They did this because the company did not meet the requirements for public shareholding by the deadline.
Patanjali Ayurveda Ltd, Patanjali Parivahan Private Ltd, Patanjali Renewable Energy Private Ltd, and Patanjali Agro India Private Ltd are some of the 21 companies that the exchanges put restrictions on.
Rule 19A(5) of the Securities Contracts (Regulation) Rules, 1957 says that a listed entity must have at least 25% of its shares owned by the public. But after the FPO in March 2022, MPS went up to 19.18%, which was 5.82% less than it should have been.
Patanjali Group bought PFL through an insolvency resolution process. In September 2019, the National Company Law Tribunal (NCLT) approved the resolution plan put forward by a group led by Patanjali Ayurved Ltd.
After this, the equity shares were given out as part of the resolution plan that had been approved by the NCLT. This meant that the promoter and the promoter group now owned 98.87 percent of the company’s total issued, paid-up, and subscribed equity share capital.
As stated in Rule 19A(5) of the SCR Rules, if a listed company’s public shareholding falls below 25% because of the implementation of a resolution plan approved under Section 31 of the Code, the company must bring the public shareholding back up to 25% within a maximum of three years from the date of the drop. If the public shareholding falls below 10%, it must be brought back up to at least 10% within a maximum of twelve years.
In March 2022, PFL put out an FPO and raised the MPS to 19.18% by giving out 6.61 crore equity shares worth 2 each at a premium of 648.
To meet the MPS, the company must increase the number of shares held by the public by 5.82%.
With help from PTI.
Since the public’s share of PFL fell below 25% and 10% on December 18, 2019, they were supposed to raise the MPS by 25% by December 18, 2022, but they didn’t.
Source: Team CurrencyVeda