Patanjali Ayurved, the consumer products company headed by yoga exponent Baba Ramdev, has scaled up its agreement with Ruchi Soya, which has been facing financial stress due to high debt levels.
Ruchi Soya said the two companies have agreed to expand their initial agreement — signed last month — to two Madhya Pradesh and Gujarat to help meet the sales ambitions of Patanjali — one of India’s fastest growing food and fast-moving consumer goods brands.
“The initial agreement had been signed for Rajasthan, however, looking at the strong demand for the 3 major varieties of edible oils – soybean, sunflower, mustard oil, both the organisations have inked further agreements for processing and packaging,” Ruchi Soya said.
Like February’s agreement, the new agreement is also for a period of three years, the company said.
“Patanjali is eyeing sales of Rs 20,000 crore in 3 to 4 years time from the cooking oils business,” said Satendra Aggarwal, Chief Operating officer, Ruchi Soya. “These agreements will have positive benefits for Ruchi Soya Industries as it will allow the company to lease out spare capacities as well as bring down the overall cost of processing for the respective units and improve profitability.”
The company pegged the overall size of the edible oils market in India at Rs 1.25 lakh cr.
Ruchi Soya has 19 edible oil manufacturing plants, and has been keen to keep them operational.
Managing Director Dinesh Shahra said the agreement proved the company’s reliability as a partner to Patanjali Ayurved. At the same time, he said, “we have been cognisant of the need to utilize the idle capacity and our efforts to explore opportunities in this direction shall continue.”