Patanjali Ayurveda’s edible oil maker venture Ruchi Soya is facing financial distress following a downgrade given by the rating agency CARE. Under the Insolvency and Bankruptcy Code, Ruchi Soya has come to the point of bankruptcy which has a debt of close to Rs. 12000 crores.
The major lender bank of India, State Bank of India (SBI) and other public sector banks of India has agreed to pay the loan of Rs. 4000 crores to Patanjali Ayurveda for the acquisition of Ruchi Soya.
Ruchi Soya had failed to repay the loan of Rs 12,146 crore as claimed by the group of banks led by State Bank of India.
In the first week of October this year, the credit rating agency CARE had downgraded ratings on Ruchi Soya’s long-term bank facilities by two notches to A-. Few days letter, the agency placed the rating on “credit watch with developing implications” on account of the sizable Ruchi Soya acquisition of Rs 4,350 crores.
However, the rating agency removed the outstanding ratings of ‘CARE A- (Single A Minus) – credit watch with developing implications – assigned to the bank facilities of Patanjali Ayurveda with immediate effect following the consumer company’s request and ‘no objection email’ received from the banks on October 24.
Patanjali group had rejected the report of finding it tough to raise fresh loans of Rs 4,000 crore following a downgrade by a rating agency and said the downgrade by CARE was based on factors which had no relation to corporate guarantee not being offered by Patanjali.
As now the public sector banks have decided to lend money, the government-owned banks could settle their exposure to Ruchi Soya with a haircut of 65 per cent. The group of banks led by SBI includes Union Bank of India also which have agreed to lend Patanjali Ayurveda.