Ahead of Ruchi Soya FPO, Sebi warns Baba Ramdev for making claims to woo investors

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Baba Ramdev has been given a warning by the Securities and Exchange Board of India (Sebi) for making questionable investment claims, according to a report in the Business Standard. Ramdev is shown in a viral video urging his followers to invest in Ruchi Soya Industries if they want to become crorepatis. The remarks came before the company’s planned Rs 4,500-crore follow-on public offer (FPO).

“Ruchi Soya’s FPO is getting a lot of attention. I will teach you how to become a crorepati by giving you the mantra. Open a demat account right now. When I advise you to buy Ruchi Soya, do so. After that, every global agency will tell you about Patanjali shares, which have a market capitalisation of lakhs of crores,” he is seen stating in Hindi.

Ruchi Soya is promoted by Patanjali Ayurved Group, which is presently unlisted.

Sebi has sent a letter to Ruchi Soya’s board of directors, requesting that they moderate the remarks.

According to the rule, a corporation aiming to reach public markets should only communicate the information contained in the draft offer document. “No public material relating to the issuance shall contain any offer of incentives, whether direct or indirect, to the investors in any fashion, whether in cash, kind, services, or otherwise,” it adds.

According to the Sebi letter, “the warning is being issued without prejudice to any subsequent action.”

Ruchi Soya received approval from the Sebi in August to begin its Rs 4,300-crore FPO. The new round of funding will help the company lower its debt and promoter shareholding. The promoters currently own 98.9% of the stock in the company.

Ruchi Soya’s stock had risen more than 200 times by 2020. This year, the stock has increased by another 56%.