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Adani Wilmar to use Rs 450 cr from IPO proceeds to tap inorganic growth

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FMCG major Adani Wilmar, which has grown to become the largest category leader through acquisitions, has set aside Rs 450 crore from the share sale that opens later this week, to tap more acquisition-led growth opportunities primarily in its non-edible oils business.

The company, which is an equal joint venture between the Adani Group and Singapore’s Wilmar Group, is launching a Rs 3,600-crore IPO on January 27.

Its flagship Fortune brand of edible oils is the largest selling brand in the category controlling nearly a fifth of the organised market, and is among the top five fastest growing packaged food companies in the country in terms of revenue, according to a report by the industry tracker Technopak.

Angshu Mallick , Chief Executive , Adani Wilmar told PTI without offering a timeline for the same ”We are looking at more inorganic growth opportunities to grow our non-oil/FMCG business. Accordingly we’ve earmarked Rs 450 crore from the IPO proceeds to acquire manufacturing units or brands in the food staples business such as wheat flour, rice and besan, ready-to-cook and ready-to-eat segments”.

In the case of Adani Wilmar, acquisitions will be from the broader packaged food industry which may include edible oils, foods & staples, FMCG products, spices & condiments both in the domestic market as well as outside, he said.

Going forward, the company will focus on increasing the market share in the edible oils segment on one hand and grow the food business on the other and an acquisition should speed up the growth process, he added.

”We believe we have the building blocks in place to continue to deliver market leading growth. We will continue to leverage the strengths of our promoters, our strong brand ‘Fortune’ and our integrated business model to increase our profitability and competitiveness,” he said.

”When we succeed in becoming the biggest manufacturer of essential food products, we will have the biggest brands and distribution network which can be used to launch smaller volume but higher margin products like noodles, pasta, ready-to-eat, ready-to-cook products,” he explained.

They are looking to expand the FMCG portfolio to capitalise on growing demand for branded kitchen essentials. Of late, it has been increasing focus on value-added products, to diversify revenue streams and generate higher margins.

The value-added products launched since 2013 include functional edible oil products such as rice bran oil, fortified food, ready-to-cook soya chunks, packaged wheat flour, rice, pulses, besan, sugar, and ready-to-cook ‘khichdi’.

In April-September 2021-22, its sales stood at Rs 24,957.3 crore as against Rs 16,273.73 crore a year ago and net income at Rs 357 crore, up from Rs 288.78 crore. FY21 revenue was Rs 37,090 crore and net profit was Rs 727.6 crore, according to its RHP filing.

 

Its product portfolio spans across three categories–edible oils, packaged food & FMCG, and industry essentials. As much as 73 per cent of its revenue have come from edible oils and packaged food and FMCG sales in FY21 and the rest from industry essentials which are as non-branded.

The company has 22 plants across 10 states, comprising 10 crushing units and 19 refineries.

After the IPO, which will be a fully primary offer with no offer-for-sale, public shareholding will be 12 per cent and the remaining 88 per cent will be equally held by the two promoters.

 

(PTI)