Stock exchanges NSE and BSE have freezed shares of promoters of Baba Ramdev-led Patanjali group firm Patanjali Foods, but the company said the decision will not have any impact on its functioning.
Patanjali Foods Ltd, erstwhile Ruchi Soya Industries, on Thursday said the freezing of its promoters' shareholding in the company "will not have any impact" on its financial position and functioning of the company.
On Thursday, Patanjali Foods Ltd (PFL) informed that leading bourses BSE and NSE had frozen shares of its 21 promoter entities, including Patanjali Ayurved for failing to meet minimum public shareholding norms.
Rule 19A(5) of the Securities Contracts (Regulation) Rules, 1957 mandates a listed entity to have a minimum public shareholding (MPS) of 25 per cent.
In a filing, PFL said its promoters are "fully committed" to achieving the minimum public shareholding and discussions are going on for this.
"We have received a communication from our promoters that they are fully committed to the mandatory compliance of achieving minimum public shareholding. They have been discussing various modes best suited for increasing public shareholding. They are confident of achieving mandatory MPS within the next few months," it said.
The promoters were trying to take suitable steps to achieve the MPS in a timely manner and owing to the Covid outbreak and market conditions prevailing at that point of time, the public shareholding could not be brought up to 10 per cent by June 18, 2021.
However, PFL came out with a Follow-n Public Offering (FPO) in March, 2022, and increased MPS to 19.18 per cent by allotting 6.61 crore equity shares of Rs 2 each at a premium of Rs 648.
At present 19.18 per cent of shares in the company are held by public shareholders, therefore, the company is required to further increase its public shareholding by 5.82 per cent to achieve the MPS.
It further said its promoters' equity shares are already under lock in as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 till April 2023 (one year from date of listing i.E. April 8, 2023).
"... Therefore, we do not perceive any impact of this action by the stock Eechanges," it said.
PFL was acquired by Patanjali Group under an insolvency resolution process pursuant to the NCLT approval of the resolution plan submitted by a consortium led by Patanjali Ayurved Ltd in September 2019.
After this equity shares were allotted pursuant to the implementation of resolution plan as approved by NCLT, the aggregate shareholding of the promoter and promoter group in PFL increased to 98.87 per cent of the total issued, paid up and subscribed equity share capital of the company.
As per rule 19A(5) of SCR Rules where as a result of implementation of the resolution plan approved under section 31 of Code, public shareholding in a listed company falls below twenty-five per cent then such company shall bring the public shareholding to 25 per cent within a maximum period of three years from the date of such fall and if the public shareholding falls below ten per cent then the same shall be increased to at least ten per cent, within a maximum period of twelve months.
As PFL's public shareholding fell below 25 per cent and 10 per cent on December 18, 2019, it was required to increase the MPS by 25 per cent before December 18, 2022, which was not done.
Following this bourses took action and froze the shares of 21 Patanjali group entities, which includes Acharya Balkrishna, Patanjali Ayurved Ltd, Patanjali Parivahan , Patanjalu Gramudhyog Nayas.
A total of 29,25,76,299 equity shares have been impacted by this freeze order.
