Another Patanjali Foods FPO To Come Up In April, Says Ramdev

Ramdev said that the promoters' share freeze by the stock exchanges will not impact Patanjali Foods' operation and the company

Baba Ramdev on Thursday said that promoters' share freeze by the stock exchanges will not impact Patanjali Foods' operation and the company has started the process of launching a follow-on public offering (FPO) in April to increase the public shareholding to 25 per cent.

In an interview with the PTI, Ramdev said there would be no impact on Patanjali Foods Ltd's (PFL) operation and financial performance and its growth trajectory will remain intact. "There is no reason for the investors to worry," he said.

The stock exchanges, NSE and BSE, on Wednesday froze the shares of promoters of Baba Ramdev-led Patanjali Group firm in Patanjali Foods. However, Ramdev said that promoters' shares are already under lock-in till April 8, 2023, as per SEBI guidelines. He said that the latest move by stock exchanges does not appear to have a negative impact on the functioning of the company. Further, he added that PFL is being operated by the Patanjali group. 

"We will be diluting around 6 per cent stake. There are no questions about that," the yoga guru added. Baba Ramdev also told the news agency, “We will start the process for FPO in April, immediately after finishing the current financial year."

On Wednesday, Patanjali Foods Ltd (PFL) informed that leading bourses BSE and NSE had frozen shares of its 21 promoter entities, including Patanjali Ayurved and Acharya Balkrishna for failing to meet minimum public shareholding norms.

After the NCLT's acceptance of the resolution plan submitted by a group led by Patanjali Ayurved Ltd in September 2019, Patanjali Foods was bought by Patanjali Group through an insolvency resolution process. However, when shares were allotted, the aggregate shareholding of the promoter and promoter group in Patanjali Foods increased to 98.87 per cent of the total issued, paid up, and subscribed equity share capital of the company.

Rule 19A(5) of the Securities Contracts (Regulation) Rules, 1957 mandates a listed entity to have a minimum public shareholding (MPS) of 25 per cent. According to the rules, if public shareholding in a listed company falls below 25 per cent then the company shall bring the public shareholding to 25 per cent within a maximum period of three years from the date of such fall and if the public shareholding falls below 10 per cent then the same shall be increased to at least 10 per cent, within a maximum period of twelve months.

As Patanjali Foods Ltd's public shareholding fell below 25 per cent and 10 per cent on December 18, 2019, it was required to increase the minimum public shares by 25 per cent before December 18, 2022. The promoter failed to meet the target in time. 

In March 2022, Patanjali Foods released an FPO, increasing minimum public shares to 19.18 per cent by allocating 6.61 crore equity shares. To meet the regulatory requirement, the firm will have to further raise its public shareholding by 5.82 per cent.