Yoga guru Baba Ramdev found himself at Sebi’s receiving end for making dubious investment promises about Ruchi Soya Industries. In a video, Ramdev tells his followers that Ruchi Soya’s FPO is being talked about and urges them to buy shares.
“I give you the mantra to become a crorepati. Open a demat account today itself. Buy shares of Ruchi Soya when I tell you. After that shares of Patanjali, which market cap is lakhs of crores any global agency will tell you,” he says in Hindi.
Ramdev’s video and comments come ahead of Ruchi Soya’s Rs 4,500 crore fundraise by way of a follow-on offering (FPO). As such, the Securities and Exchange Board of India (Sebi) shot a letter to the company’s board censoring them over the comments.
Baba Ramdev is one of the directors of the issuer. In the video, which is now viral, he can be seen addressing a gathering at one of his Yoga Shivirs (Yoga Meets). Ramdev doesn’t leave the opportunity to market the FPO of Ruchi Soya Industries and alluring his followers by saying that it is the “mantra for becoming a crorepati”.
Mohit Saraf, Founder and Managing Partner, Saraf & Partners, says once a company starts the IPO/FPO process, it needs to follow very strict public communication guidelines so as to maintain the sanctity of dissemination of marketing information to the public. “Pursuant to the ICDR regulations, Sebi has issued warning to Ruchi Soya so that the company officials do not make improper communication to the markets like “mantra for becoming crorepati” etc,” he told Business Standard. “This is particularly important as there is lots of frenzy in the market particularly relating to new issuance of equity.”
Sebi in its letter to Ruch Soya said it is noted that the referred address falls under “Public Communication” as explained under Schedule IX of Sebi (ICDR) Regulations, 2018. Prima-Facie, the attached address by one of the directors of the issuer company appears to be non-compliant with the following clauses of Schedule IX.
The said clause says that a communication by a company planning to tap public markets should contain only such information as contained in the draft offer document. Moreover, no public information with respect to the issue shall contain any offer or incentives, to the investors whether direct or indirect, in any manner, whether in cash or kind or services or otherwise.