Patanjali Targets Adani In Bidding War For Cooking Oil Major Facing Insolvency

It took a heated bidding war to acquire the country’s largest, and now insolvent, manufacturer of edible oil for one bidding company — as much a beneficiary of the corrupt crony capitalist closet — to officially point fingers at the shenanigans of a bigger corporate.

Yoga guru Ramdev’s Patanjali Ayurved has cited a rule under the bankruptcy law to claim that Adani Wilmar, part of the Gautam Adani-led multinational conglomerate Adani Group, is not eligible to bid for Ruchi Soya, which is undergoing insolvency and bankruptcy proceedings.

This is because Pranav Adani, nephew of Gautam Adani and the Managing Director of Adani Wilmar — a 50:50 joint venture between Adani Group and Singapore’s Wilmar International — is married to Namrata, daughter of Vikram Kothari, the erstwhile promoter of Rotomac group who was arrested by the CBI in February on charges of loan fraud.

According to Section 29A of the Insolvency and Bankruptcy Code (IBC), a bidder for an insolvent company cannot be allowed to offer an insolvency resolution plan under the Corporate Insolvency Resolution Process (CIRP) if the bidding company is ‘connected’ to another stressed-loan corporate.

Now, the IBC was amended recently to expand the definition of a ‘connected’ persons to include relatives. An ordinance approved by the President on 6 June broadened the “connected person” to include “related party” and “relatives” such as husband, wife, father, mother and in-laws, among other familial relations.

However, because the amendment was made after both Patanjali and Adani had submitted their bids and resolution plans for Ruchi Soya, it is not clear yet whether the eligibility criteria will apply retrospectively in this case, it is reported.

The resolution professional (RP) for this case has reportedly sought at 8 to 10 days at the minimum for responding to the clarifications Patanjali has asked for. 

Ruchi Soya — India’s largest edible oil seed extraction and refining company — was admitted to the CIRP in December 2017. The debt-ridden company has claims of around Rs 104 billion by financial creditors and Rs 360 million by operational creditors. But the company is still a prized asset with 3.72 million tonnes of oil seed extraction capacity across 10 locations and 3.30 million tonnes of refining capacity across 13 locations.

According to the Business Standard, the Committee of Creditors (CoC) consisting of the lenders met on 20 June to discuss the bids as well as the resolution plans by both companies. 

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Adani Wilmar was declared the preferred (H1) bidder on 12 June, while Patanjali was declared the second preferred (H2) bidder. Adani Wilmar made a bid offer of Rs 54.74 billion, of which Rs 43 billion would go to the lenders. The company would also make an equity infusion of Rs 17 billion. Patanjali made a bid offer of Rs 57.65 billion, but only Rs 40.65 billion would go to the lenders. Before the battle was narrowed down to these two companies, Godrej Agrovet and Emami Agrotech were also in the running.

After Adani was declared the preferred bidder, Patanjali had been given a chance under the so-called Swiss Challenge system to make a revised bid that would match or better Adani’s offer. But Patanjali raised this question regarding Adani’s eligibility citing Section 29A of the IBC and sought clarifications in a letter sent to the Committee of Creditors.

Earlier, Patanjali had also raised an objection regarding a conflict of interest arising out of the fact that law firm Cyril Amarchand Mangaldas (CAM) had been appointed as the RP’s legal advisor while the firm was already representing Adani Wilmar. Consequently, it is reported, that CAM has stepped down from advising Adani Wilmar in order to continue advising the RP in the Ruchi Soya case.

In fact, Patanjali has an existing marketing tie-up with Ruchi Soya and is eager to enlarge its cooking oil business. Ruchi Soya’s brands include popular and iconic names like Nutrela, Mahakosh, Sunrich, Ruchi Star and Ruchi Gold. Adani Wilmar currently markets cooking oil under the Fortune brand.

The connection that Patanjali has pointed out in this case is only a tiny peephole in to the tentacles of the country’s corporate elite that are spread far and wide — covering  the bases of the media and political parties. Within the corporate circles, marriage is the old and trusted way for these tentacles to branch out and strengthen.

In February, the Central Bureau of Investigations (CBI) had arrested Vikram Kothari, promoter-director of Rotomac Global Private Limited and his son Rahul Kothari, acting on a complaint by the Bank of Baroda, in the alleged ₹3,695-crore “wilful” loan default case. Kothari is accused of cheating a consortium of seven public-sector banks.

Not that Patanjali’s own slate is clean. Ramdev and his Haridwar-based FMCG (fast-moving consumer goods) company, which had a turnover of Rs 10,561 crore in the financial year ending 2017, have their own mire of allegations of corruption and cronyism. It has been reported that Ramdev received 46 million dollars in land allocations and discounts from BJP-led state governments. In fact, Acharya Balkrishna, who is a close aide of Ramdev and ownder of 94% of Patanjali’s shares, was declared in September 2017 by the Hurun India Rich List as the 8th richest Indian with a personal wealth of Rs 70,000 crore. 
As for Adani, the expanse of their misdeeds and empire are widely known and so vast that they can still hardly be estimated.