Yoga guru Baba Ramdev’s Ruchi Soya Industries Ltd has found itself at loggerheads with the capital markets regulator again.
In a first, the Securities and Exchange Board of India has allowed investors to withdraw their applications to the company’s follow-on public offer after reports of unsolicited messages advertising the FPO surfaced.
The FPO closed for subscription on March 28. The total issue subscribed 3.6 times. QIB and non institutional investors subscribed 2.2 times and 11.75 times respectively. Retail investors subscribed 0.9 times.
Analysts believe that SEBI’s step is needed to hinder such unsolicited advertising and marketing ahead of a fundraising.
"A message was circulated to a large number of people where it was written that Ruchi Soya FPO is a good investment opportunity. Such kind of marketing is not allowed so SEBI telling the company to open a redemption window is most welcome. Such a step has been taken to protect the interests of shareholders who have been influenced by such messages," said Aditya Kondawar, chief operating officer, JST Investments.
Ruchi Soya on Tuesday issued a notice saying they have lodged a first information report to find out the origin and culprits of unsolicited SMSs after the regulator ordered the firm to provide options to the investors to withdraw their applications.
This is not the first time Ruchi Soya has taken heat from the watchdog. Earlier in October 2021, a clip of Ramdev urging viewers to invest in Ruchi Soya stock during a yoga session on Aastha TV channel went viral, prompting SEBI warning.
The recent meltdown following the initial public offerings (IPOs) of several startups such as Paytm has spotlighted companies and merchant bankers.
Paytm, which was the biggest IPO in India, is down nearly 70% from its issue price. Many retail investors lost huge amounts of money in the stock.
Other firms that saw a sharp correction in valuations after their listing are Zomato, CareTrade, and FSN E-Commerce Ventures.
At 11:30 am, Ruchi Soya was trading 12% higher on BSE at Rs 913 while India's benchmark Sensex gained 0.35% to 57,795 points.