Ruchi Soya: from bankruptcy to buoyancy

Learning outcomes The learning outcomes are as follows: examining the restructuring process of companies under the framework of IBC, 2016; analysing the business environment following the incorporation of IBC, 2016; analysing Ruchi Soya Industries Limited’s (RSIL) competitive position by evaluating competitors’ financials; assessing the explicit and implicit costs associated with financial distress; and identifying financial factors that contribute to distress and lead to bankruptcy. Case overview/synopsis Pirushi, an equity analyst at Equentis, received a sudden text message on March 25, 2022, from the Patanjali group: “New FPO issue by Ruchi Soya available in the price band of Rs. 615–650 @ 30% discount to the market price—invest now!” Her eyes widened as she read the unexpected message. She stared intently at the financials of Ruchi Soya, her mind buzzing with questions. The company’s history was a tumultuous one – its downfall was hastened by an import duty hike in 2011, followed by unfavourable weather conditions, ill-timed bets on commodities and a series of unsuccessful internal restructuring attempts. But how did a company that once thrived in the FMCG sector find itself on the brink of insolvency by 2017? Pirushi discussed with the Portfolio Manager of Equentis, Ritesh, what had gone wrong and how Ruchi Soya ended up in such dire straits. Complexity academic level Post graduation and management training programmes on insolvency and bankruptcy. Supplementary material Teaching notes are available for educators only. Subject code CSS 1: Accounting and Finance.