Ruchi Soya hits upper circuit on diversification move

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Ruchi Soya Industries hit an upper circuit of 5% at Rs 1,137.50 after the company said it has forayed into the nutraceuticals and wellness products segment.

The board of the directors of Ruchi Soya Industries have approved the launch of 100% vegetarian, preservative-free nutraceutical products to be marketed under Patanjali and Nutrela branding in the medical, sports and general nutrition category.

The company is launching 10 products, viz. Vitamin B12, Iron complex, Vitamin D, Vitamin C & Zinc complex, Daily active, Daily Energy, Weight Gain and Omega and shall soon introduce additional products in the market. Ruchi Soya Industries aims to have a range of products across various product categories in the next one year.

Ruchi Soya Industries proposes to use the joint branding of Patanjali and Nutrela for packaging, promotion, advertising and marketing the range of the initial ten products. The firm has obtained a non-exclusive renewable license to use the Patanjali brand for which Ruchi shall pay Patanjali Ayurved (PAL) a royalty of 1% of the net manufactured volume. The entire range of nutraceuticals and wellness products will be manufactured by Patanjali Ayurved at the plant located at Patanjali Food & Herbal Park, Haridwar, under a contract manufacturing arrangement. PAL has signed a non-compete arrangement for all nutraceutical products under agreed arrangements.

Meanwhile, the board has approved the execution of the breakfast cereals and noodles assignment agreement between PAL and the company for a consideration of Rs 3.50 crore. This will enable the company to foray into breakfast cereals and atta (wheat) noodles category under the Patanjali brand keeping in mind the health-conscious consumer in mind. The rectangular range of six noodles variants are 100% vegetarian made from wheat flour, rice bran oil and contain high fiber and protein.

The breakfast cereal products range of seven varieties of Corn Flakes, Muesli, Instant Wheat Dhaliya, Oats etc and will also be sold under the Patanjali brand by the company. Ruchi Soya Industries has entered into a non-exclusive renewable brand license agreement with PAL to use the Patanjali brand name for noodles and breakfast cereals against payment of royalty of 0.5% of the net invoiced amount. The products will be distributed by the existing distribution network of the company and through PAL distribution network.

The board has also approved a distribution agreement between Ruchi Soya Industries and PAL for non-exclusive distribution of Ruchi Soya Industries’ products including edible oil, biscuits, breakfast cereals, noodles and nutraceutical products. This will give company access to Patanjali’s super distributors, distributors, mega stores, Chikitsalyas and Aarogya Kendras.

The foray into Nutraceuticals, breakfast cereals and noodle’s product category is not only an excellent fit with Ruchi Soya Industries’ existing brand portfolio but underscores its commitment to growing the consumer business. As a part of its product expansion strategy, Ruchi Soya Industries has forayed into the product segment of honey, high protein atta, premium edible oil and biscuits in the last 18 months (i.e. 1.5 years).

On a standalone basis, Ruchi Soya Industries’ net profit tanked 97% to Rs 227.44 crore on a 20.3% surge in net sales to Rs 4,465.32 crore in Q3 FY21 over Q3 FY20.

Ruchi Soya is one of the largest manufacturers of edible oil in India.

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