‘Mantra to become crorepati’: Baba Ramdev lands in trouble after exhorting followers to buy his firm’s shares
SEBI has issued a warning to Ruchi Soya, a firm famed for its Nutela brand of products, acquired by Patanjali Ayurved in 2019, and the bankers involved with its follow-on public offer (FPO)
Yoga guru and founder of FMCG company Patanjali Ayurved Baba Ramdev has landed in trouble with the market regulator Securities and Exchange Board of India (SEBI) for exhorting his followers to invest in Ruchi Soya, a bankrupt firm known for its Nutrela brand of products, which was acquired by Patanjali Ayurved under the Insolvency and Bankruptcy Code in 2019.
Ramdev is a non-executive director of Ruchi Soya, which soon plans to raise Rs 4,300 crore through an FPO after receiving regulatory approval from SEBI in August.
SEBI has written to Ruchi Soya and the bankers involved with its follow-on public offer (FPO), asking for an explanation. The development was confirmed by a close aide of Ramdev, as per a report carried by news website Moneycontrol.com.
According to sources, the website said, SEBI has sought an explanation from Ruchi Soya and merchant bankers for flouting investment adviser regulations and norms on insider trading and unfair trade practices.
“I will give you a mantra to become a ‘crorepati’. Today itself, you should open a demat account, which is mandatory to trade in stock markets. I have also learned this recently,” Ramdev can be heard saying in a video in Hindi while performing yoga, as per the website’s report.
“I give you guarantee that nobody can stop a person from turning ‘crorepati’ if he invests in Ruchi Soya or Patanjali,” he says addressing his followers during the session.
“Do not buy and sell the stock but let it sit for a while. Buy the share and take a ‘samadhi’,” he adds.
The yoga guru also says during the address that Patanjali’s market cap will be in crores if it is analysed by any agency in the world, the website said.
SEBI shot off a letter to Ruchi Soya Board over the issue, as per a report carried by Business Standard.
“In the video, Shri Ramdev, one of the directors of the issuer is observed to be addressing a gathering at one of his Yoga Shivirs or Yoga Meets. In his address, he is observed to be marketing the FPO of Ruchi Soya Industries and in his own words terming the investment as ‘Mantra for becoming a Crorepati’. 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,” SEBI said in the letter to Ruchi Soya’s Board, where Ramdev is a non-executive director, Business Standard reported.
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. It also says, “No public information with respect to the issue shall contain any offer of incentives, to the investors whether direct or indirect, in any manner, whether in cash or kind or services or otherwise.”
“In view of the above, you are hereby warned to ensure compliance with SEBI (ICDR) Regulations, 2018. The warning is being issued without prejudice to any future action,” the SEBI letter states, Business Standard added.
“As per SEBI norms, only certified investment advisors can give investment advice related to markets about which stocks to buy and sell and the guru can be seen advising his followers against the regulation,” moneycontrol.com quoted Sonam Chandwani, Managing Partner at KS Legal & Associates, as saying.
It also quoted R.S. Loona, Managing Partner, Alliance Law, as saying that Ramdev’s promise of returns in crores if they invest in Ruchi Soya stock is not in the spirit of the market. “Any advisor has to put a true picture about an investment in front of his or her client and also make them aware of the risks involved. Hence, his statement is misleading,” he said.
National Herald reached out to SK Tijarawala, spokesman for Baba Ramdev, for comments on the issue. This copy will be updated as and when a response is received.
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Published: 02 Oct 2021, 7:43 PM