Why are Ruchi Soya FPO investors being allowed to withdraw their bids?

We are likely to be up against a piquant situation in the case of Ruchi Soya. SEBI has instructed Ruchi Soya to give an option to retail investors to withdraw their bids if they chose to. The retail investors can withdraw their bids between 28th March and 30th March. This instruction was given after it was found that unsolicited messages had been sent to investors inducing them to invest in the Ruchi Soya FPO, contrary to SEBI rules.

SEBI was of the view that the circulation of these messages appeared to be misleading and fraudulent and not in consonance with SEBI regulations. The investment bankers have been asked to intimate all the bidders by message about the facility withdrawal. In addition, the investment bankers have also been asked to issue an advertisement in newspapers on 29th March and 30th March. This could result in the issue being undersubscribed.

Interestingly, the retail portion of the FPO saw tepid demand getting just 90% of its intended issue. The overall FPO of Ruchi Soya got subscribed 3.6 times but the retail portion lagged with just 90% subscription received. However, Baba Ramdev is not new to making such lofty promises. It may be recollected that even in 2021, SEBI had warned Baba Ramdev not to urge his followers to buy Ruchi Soya stock to become Crorepati.