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    Care Ratings downgrades Patanjali as acquisition raises risks

    Synopsis

    ​Care Ratings Ltd. downgraded Patanjali’s long-term bank facilities to A- from A+.

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    By Rahul Satija

    An Indian credit ratings company cut Patanjali Ayurved Ltd. by two levels, citing a likely weakening of its financial position as it partly funds a merger with a maker of soya products.

    Care Ratings Ltd. downgraded Patanjali’s long-term bank facilities to A- from A+, according to a statement on Friday. Care and Brickwork Ratings cut the company’s outlook to negative from stable.

    Patanjali Consortium Adhigrahan Pvt. -- a venture by Patanjali Ayurved and three other companies controlled by yoga guru Baba Ramdev -- is taking over Ruchi Soya Industries Ltd. for Rs 4,350 crore ($614 million).

    Care said the revision in the ratings takes into account the “expected weakening of its financial risk profile on account of large outflow of funds from Patanjali Ayurved to Patanjali Consortium Adhigrahan.”

    India’s company court approved a bid by Patanjali Consortium last month to take over Ruchi Soya. Creditors of the cooking oil producer are set to receive a maximum of 42.4 billion rupees in repayments, a 65% haircut to their verified claims of about 121 billion rupees.
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    5 Comments on this Story

    Analyst356 days ago
    Ruchi soya is a national asset. Largest edible oil producer in the country with 30,000crore rs turn over & with 5 prime refinery facilities in major ports. A fortune 500 company. At least government must take over this asset and can be run profitably. Or someother successful companies must take over.
    S BARIK356 days ago
    If Patanjali have loans from Government banks, which is likely,it is bad news for all other us because once it becomes NPA taxpayers money will be used to strengthen banks to come out of crisis of huge NPAS
    Citizen 357 days ago
    controlled by Ramdev? it is owned ad controlled by Acharya Balakrishnan who owns 90pc of the stake. Ramdev is just brand ambassador who also has minority stake of 1pc given by Acharya
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