INDIA – Adani Wilmar Ltd, a prominent player in the edible oil and food sectors, has announced a substantial investment of Rs 600 crore (US$71.6M) aimed at expanding its processing capacities and enhancing solar power generation.
This announcement was made by the company’s Managing Director and CEO, Angshu Mallick, on July 30, 2024, during a press briefing in New Delhi. The investment is part of a broader strategy to increase production capabilities and introduce new food products for both consumers and institutional buyers.
The Ahmedabad-based company, a joint venture between the Adani Group and Singapore’s Wilmar International, is also navigating regulatory changes that require promoters to reduce their stake from 88% to 75% by February 2025.
This adjustment is necessary to comply with the Securities and Exchange Board of India (SEBI) regulations mandating a minimum public shareholding of 25%. Currently, Adani Wilmar holds a market capitalization of approximately Rs 45,794 crore (US$5.4B).
In the first quarter of the fiscal year 2024-25, Adani Wilmar reported a consolidated net profit of Rs 313.20 crore (US$37.4M), a significant turnaround from a net loss of Rs 78.92 crore(US$9.4M) in the same quarter the previous year.
Mallick remarked on the company’s performance, stating, “The June quarter was good for us. We achieved 12% volume growth and 10% value growth. In edible oil, which is our main business, we achieved one million tonnes, growing 12% in volume terms.”
This growth is attributed to stable prices of edible oils, which Mallick described as a “saviour” in a high-inflation market, noting that cooking oils represent a substantial portion of consumer grocery baskets.
The company’s food and fast-moving consumer goods (FMCG) sectors also saw impressive growth, with a reported increase of around 40% in both volume and value.
Mallick indicated that the volume growth was 19% when excluding government-to-government rice exports. However, he acknowledged that the industry essentials segment remained flat during this period.
Looking ahead, Mallick emphasized the importance of favorable monsoon conditions for achieving sustained growth. “Good monsoon rains with better distribution will lead to a good harvest of Kharif crops and boost overall rural income,” he explained.
This optimism is further supported by expectations of increased sales in the second half of the fiscal year, particularly due to the upcoming marriage season starting in November.
In terms of its expansion plans, the company is on track to complete ongoing capital expenditure programs worth Rs 2,200 crore(US$262.6M) within the current fiscal year.
Additionally, a fresh capital expenditure program of Rs 500-600 crore (US$59.7 -71.6) is set to be initiated, focusing on enhancing processing capacities for oilseeds such as sunflower and cottonseeds, while also increasing solar power generation capacity from 8 MW to 15 MW.
Chief Financial Officer Shrikant Kanhere highlighted that part of this investment will also be allocated to maintaining existing plants.
Adani Wilmar also plans to diversify its product offerings by launching new specialty products for institutional buyers and consumer items like noodles and pasta. During the April-June quarter, revenue from the edible oil segment grew by 8% to Rs 10,649 crore (US$1.27B), while the food and FMCG segment saw a remarkable 40% increase in revenue, reaching Rs 1,533 crore (US$183M).
As of the latest trading session, Adani Wilmar’s share price closed at Rs 352.35 (US$4.21) on the Bombay Stock Exchange, reflecting a 2.31% increase from the previous day. This positive market response underscores investor confidence in the company’s strategic direction and growth potential.
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