Patanjali confident of achieving minimum public shareholding in few months as exchanges freeze promoter shares

Patanjali Foods Ltd, erstwhile Ruchi Soya Industries, issued a response late last night to the exchanges saying that the exchanges orders to freeze promoter entity shares will not have any impact on its overall financial performance.

The statement further said that promoters are fully committed to achieving the mandated minimum public shareholding and are discussing various methods to do so. "They are confident of achieving mandatory MPS within a few months," the statement said.

Patanjali Foods also spoke about promoter shares being under a lock-in for a period of one year. That ends on April 8, 2023, which will be one-year of listing for the company. "Further, it should be noted that our promoter equity shares are not pledged," the statement said.

The company on Wednesday said stock exchanges have frozen 292.58 million shares of promoter group entities of the company for not meeting the minimum public shareholding norms within the stipulated deadline.

A total of 21 promoter entities' shares have been frozen by BSE Ltd and the National Stock Exchange of India Ltd, the company said. The exchanges have acted as per regulator Sebi’s master regulation, and as such the Sebi would not act on such individual cases.

On December 15, 2017, the corporate insolvency resolution process was initiated against Patanjali Foods by National Company Law Tribunal, Mumbai Bench.

Further, the resolution plan submitted by a consortium led by Patanjali Ayurved was approved by NCLT. Upon implementation of the resolution plan, the public shareholding in the company was reduced to 1.10 percent.

According to Sebi, if public shareholding in a listed company falls below 25 percent, the company must bring the public shareholding to 25 percent within a maximum period of three years from the date of such fall.

Also, if the public shareholding falls below 10 percent, the same shall be increased to at least 10 percent, within a maximum period of 18 months from the date of such fall.

To comply with this requirement, Patanjali Foods floated a follow-on public offer in March 2022 and issued 66.2 million equity shares by which the public shareholding was increased to 19.18 percent.

Accordingly, Patanjali Foods had to increase its public shareholding from 19.18 percent to 25 percent. However, Patanjali Foods didn't comply with Sebi's minimum public shareholding requirements.