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Fortune Oil Maker ‘Adani Wilmar’ Plans to Acquire Southern Players in Edible Oil & FMCG Industry

Fast moving consumer goods (FMCG) company Adani Wilmar, known for edible oil 'Fortune', is looking to acquire small regional companies with a corpus of ₹450 crore.

Ayushi Raina
FMCG player Adani Wilmar is all set to open its ₹3,600 crore IPO on January 27
FMCG player Adani Wilmar is all set to open its ₹3,600 crore IPO on January 27

Adani Wilmar, known for its edible oil 'Fortune,' is aiming to acquire small regional enterprises with a capital of Rs.450 crore. The company is one of the global leaders in the edible oil area and is trying to expand its market share further. 

"We intend to expand our geographical presence." For example, we may explore acquisitions in the edible oil and food industries to strengthen our position in southern regions where regional enterprises are strong. We want to consolidate market share through acquisitions of regional businesses," the firm stated in the red herring prospectus. 

Not only is the company looking to acquire strong edible oil brands, but also companies involved in the ready-to-cook, ready-to-eat, or organic food segments, which are gaining popularity, according to chief executive officer Angshu Mallick. 

"We are seeking for local and regional brands that we can push to a national level with our infrastructure and distribution depth," Mallick stated. 

The company has set aside ₹450 crore for any future acquisitions from the ₹3,600 crore IPO proceeds. 

Usage Of IPO Proceeds 

From Rs.3600 Crore 

Capital Expenditure 

Rs.1900 crore 

Debt Repayment 

Rs.1058.9 crore 

Funding strategic acquisitions and investments 

Rs.450crore 

Performance of popular edible oil maker Fortune 

Adani Wilmar has a market share of 18.3 percent in the edible oil sector, while 60 percent of the market is still "fragmented," according to Mallick. According to him, the market may turn around. 

"It [60% market share] is with small players, local players and regional oil players. Slowly, we notice that it is more difficult for such small players to compete with major players due to the nature of business, risk management policies, price hikes, and so on," Mallick explained. 

The edible oil industry's triggers 

Mallick said that the edible oil industry is under inflationary pressures, stating that "never witnessed such higher prices of edible oil in the last five years." 

"It was only last year when the agriculture production throughout the world was disrupted [as a result of which] supply chains were interrupted, causing sugar prices to rise," he said. 

Sunflower edible oil has recently dropped from its peak of 180 to 140 per kg. Inflationary pressures will ease during the next six months. 

"In the next months, the Indian mustard seed harvest is expected to be bountiful, which will undoubtedly provide a lot of comfort to domestic oil mills and crushers since it would enhance supply chain local oil and foreign prices will also be subdued. I don't think we'll see the inflationary pressure we've experienced in the last six months,” said Mallick. 

The Ahmedabad-based company has witnessed good growth in revenue and profitability in the last three years. 

Adani Wilmar 

Revenue 

Net Profit 

FY21 

Rs.37,090 

Rs.727 

FY20 

Rs.29,657 

Rs.460 

FY19 

Rs.28,797 

Rs.375 

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