Edible oil maker Adani Wilmar Ltd said it could invest in regional companies in categories such as spices, condiments and ready-to-cook meals, aiming for a larger share of the packaged food market.
“After we bought the Kohinoor (rice) brand, we have not announced anything, but we are working on it,” Angshu Mallick, MD & CEO of Adani Wilmar, said during a virtual interview with Mint Tuesday. “We are very eager to do it. Maybe by the year end, if we can.”
The acquisitions would be in the kitchen essentials space, he said, adding that more targets are available among regional companies.
“It should be in the space of kitchen essentials, ready-to-eat, ready-to-cook, and also spices, condiments, anything in that space,” he said. “In these categories, there are mostly regional players, there are very few national players. Those present nationally, I don’t think they have any reason to exit. It is all the local, regional players, with presence in one or two states, those who have grown, but now they can’t compete with the multinationals or large companies, so they look at exiting at a fair valuation.”
The company recorded revenue of ₹51,262 crore in FY24, with underlying volume growth of 10%. The food and FMCG vertical consisting of wheat flour, besan, rice and soya nuggets reported 23% growth in revenue to ₹4,994 crore. Edible oil revenue stood at ₹38,788 crore.
Adani Wilmar reported a profit of ₹313 crore for Q1 on Monday, on the back of stable edible oil prices. Revenue rose 10% to Rs 14,169 crore in the quarter.
Shares of Adani Wilmar gained 2.3% to ₹352.35 on the BSE on Tuesday. The stock has declined 15.3% in the past one year.
Assessing targets
The company, which listed on the stock exchanges in February 2022, had set aside ₹500 crore of its initial public offer proceeds for acquisitions and investments. In 2022, the company acquired basmati rice brand Kohinoor from McCormick Switzerland GMBH.
“We have already spent close to ₹125 crore on acquiring Kohinoor in May 22, so we are still left with a kitty of close to ₹400 crore from the IPO money” for use if there is a good acquisition opportunity, Shrikant Kanhere, chief financial officer of Adani Wilmar, said Tuesday.
Adani Wilmar said on 11 July it would acquire a 67% stake in Omkar Chemical Industries Private Ltd, a specialty chemicals company, at an enterprise value of ₹56.25 crore. While there is no immediate deal on the table, the company keeps evaluating potential targets, Mallick said.
“As part of an ongoing exercise, we have a lot of targets we keep studying. Some are available, some are not available,” he said.
Mallick said the second half of the year is set to see improved consumption.
“Overall, demand-wise, Q1 was okay. Going forward, demand should look better because we are approaching the festival season, and then the winter, then the marriage season. If the crop is going to be good, it is going to lead to better consumption,” he said.
Personal consumption in the country has failed to match the pace of economic growth. Measures propose din the budget to reduce personal taxes, provide incentives for new workers and support rural growth will put more money in the hands of the people and drive consumption, experts said.
Adani Wilmar is a 50:50 joint venture between the Adani Group and the Wilmar Group from Singapore. The two held a combined stake of 87.87% in the joint venture as on 31 March, short of the threshold of at least 25% public shareholding.
“It’s more to do with the regulatory compliance that a company or a promoter has to dilute another 13% by February 2025. The promoters are certainly working on that,” said Kanhere.
