Process For Second Patanjali Foods FPO To Begin From April, Says Baba Ramdev
"We will start the process for FPO in April, immediately after finishing the current financial year," Ramdev said.
With stock exchanges freezing shares of its promoters, Patanjali Foods on Thursday said the move will not impact the company's operation and it will start the process of launching a follow-on public offering in April to increase the public shareholding to 25%.
Stock exchanges NSE and BSE have frozen the shares of promoters of Baba Ramdev-led Patanjali Group firm Patanjali Foods, which is a major edible oil player.
In an interview with PTI, Ramdev assured his investors and public shareholders that there would be no impact on Patanjali Foods Ltd.'s operations or financial performance and that its growth trajectory would remain intact.
"There is no reason for the investors to worry," he said.
According to Ramdev, promoters' shares are already under lock-in as per Sebi guidelines till April 8, 2023, which is one year from the date of listing, and the latest move by stock exchanges does not appear to have a negative impact on the functioning of PFL.
He further said that PFL is being operated by Patanjali Group in an "ideal way" and is taking care of all factors such as expansion of business and distribution, profitability, and performance.
"We will be diluting around 6% stake. There are no questions about that," he said, adding the delay was because the market conditions were not favourable.
When asked about the time frame, he said: "We will start the process for the FPO in April, immediately after finishing the current financial year."
The Haridwar-based group has already "lined up" offshore and domestic investors who are ready to invest in the PFL.
"We have to dilute our equity share, and there is no question about that," he added.
On Wednesday, Patanjali Foods Ltd. informed that leading bourses BSE and NSE had frozen shares of its 21 promoter entities, including Patanjali Ayurved and Acharya Balkrishna, who is the managing director of Patanjali Ayurved and co-founder of Patanjali Yogpeeth Haridwar, for failing to meet minimum public shareholding norms.
Rule 19A(5) of the Securities Contracts (Regulation) Rules, 1957 mandates a listed entity to have a minimum public shareholding (MPS) of 25%.
However, after the FPO in March 2022, MPS increased to 19.18%, with a shortfall of 5.82%.
PFL was acquired by Patanjali Group under an insolvency resolution process pursuant to the NCLT's approval of the resolution plan submitted by a consortium led by Patanjali Ayurved Ltd. in September 2019.
After these equity shares were allotted pursuant to the implementation of the resolution plan as approved by NCLT, the aggregate shareholding of the promoter and promoter group in PFL increased to 98.87% of the total issued, paid up, and subscribed equity share capital of the company.
As per 19A(5) of the SCR Rules, where, as a result of the implementation of the resolution plan approved under Section 31 of the Code, public shareholding in a listed company falls below 25%, such company shall bring the public shareholding to 25% within a maximum period of three years from the date of such fall, and if the public shareholding falls below 10%, the same shall be increased to at least 10% within a maximum period of 12 months.
As PFL's public shareholding fell below 25% and 10% on December 18, 2019, it was required to increase the MPS by 25% before Dec. 18, 2022, which was not done.
PFL came out with an FPO in March 2022 and increased MPS to 19.18% by allotting 6.61 crore equity shares of Rs 2 each at a premium of Rs 648.
The company is required to further increase its public shareholding by 5.82% to achieve the MPS.