Adani Wilmar IPO likely to launch on January 27

FMCG company Adani Wilmar, which makes popular edible oil brand ‘Fortune’ and was set up in 1999 as a joint venture between Gautam Adani led Adani group and Singapore based Wilmar, is likely to launch it’s initial public offer on 27^th January, multiple sources in the know told Moneycontrol.

Ruchi Soya, HUL, Britannia, Tata Consumer Products, Dabur India, Marico and Nestle India are some of the firm’s listed rivals and the move for an IPO comes at a time when consumers are increasingly opting for branded & packaged food products, a trend accelerated by COVID-19.

“ The plan is to launch the issue on 27st January and close it on 31st  January” said one of the person’s cited above.  To be sure, 29th January and 30th January fall on a weekend and the Union Budget is scheduled on 1st February.

Two other persons confirmed the above likely launch timelines and a fourth person shared that the anchor investors portion may be available on 25th January.

All the four person’s above spoke on the condition of anonymity. Moneycontrol could not elicit an immediate comment from Adani Wilmar.

The initial plan of Adani Wilmar was to raise around Rs 4,500 crores via a pure primary issuance of shares. According to a PTI report on 14^th January, this was later reduced to Rs 3,600 crores. The IPO would not have an OFS ( offer for sale) component and the company had only reduced the portion of general corporate purposes and not reduced the core objects of the issue, the report added.

Moneycontrol was the first to report the firm’s listing plans on 10th June, 2021.

The firm, which aims to be the largest food company in India by 2027, is trying to muscle its way in the fast-growing consumer segment and unlock value through the IPO. If the plans fructify, it will be the seventh firm to be listed from the diversified Adani group’s stable.

WHY IS ADANI WILMAR MAKING A D-STREET DEBUT?

The IPO is intended to further the growth of Adani Wilmar’s operations by increasing its market visibility and awareness among current and potential customers. According to the firm’s DRHP, the proceeds of the IPO will be used for -

- Funding capital expenditure for expansion of our existing manufacturing facilities and developing new manufacturing facilities.

- Repayment/prepayment of our borrowings

- Funding strategic acquisitions and investments

- General corporate purposes

Kotak Mahindra Capital, JP Morgan, Bofa Securities, Credit Suisse , ICICI Securities, HDFC and BNP Paribas are the i-banks on the issue and Cyril Amarchand Mangaldas is the company counsel and Indus Law is the counsel to the i-bankers, according to the firm’s DRHP.

In the edible oil segment, Adani Wilmar competes with brands such as Nature Fresh, Gemini and Sweekar backed by Cargill, Saffola owned by Marico, Sundrop by Agro Tech Foods, Dhara by Mother Dairy and others owned by Emami Group and Patanjali.

Adani Wilmar is not the only player in the edible oil segment planning a 2021 debut on Dalal Street. Gemini Edibles, a prominent player down south and the Indian arm of Golden Agri-Resources, the world's second-largest palm oil plantation company, also plans to launch an IPO and raise Rs 1,500 crore to Rs 1,800 crore. It is backed by private equity firm Proterra Investment Partners as well.

A CLOSER LOOK AT ADANI WILMAR: PRODUCT PORTFOLIO, MARKET SHARE AND FOOTPRINT

According to the DRHP of Adani Wilmar, it is “one of the few large FMCG food companies in India to offer most of the essential kitchen commodities for Indian consumers, including edible oil, wheat flour, rice, pulses and sugar.”

It’s portfolio of products spans across three categories: (i) edible oil, (ii) packaged food and FMCG, and (iii) industry essentials. A significant majority of its sales pertain to branded products accounting for approximately 73 per cent of the edible oil and food and FMCG sales volume for the financial year 2021 ( excluding non-branded industry essentials)

As of March 31, 2021, the firm’s Refined Oil in Consumer Packs (“ROCP”) market share in the branded edible oil segment was  18.3 per cent, making it the dominant No. 1 edible oil brand in India with flagship brand “Fortune” - the largest selling edible oil brand in India.

The firm’s DRHP adds, “ We have also leveraged our brands and distribution network to offer a wide array of packaged foods since 2013, including packaged wheat flour, rice, pulses, besan, sugar, soya chunks and ready-to-cook khichdi. We are one of the fastest growing packaged food companies in India, based on the growth in revenues during the last five years ( Source: Technopark) and also offer a diverse range of industry essentials, including oleochemicals, castor oil and its derivatives and de-oiled cakes.”

Aiming to diversify revenue streams and generate high profit margins, Adani Wilmar has been placing an increasing focus on value-added products in recent years and has launched functional edible oil products, such as rice bran health oil, fortified foods, ready-to-cook soya chunks and khichdi and FMCGs like soaps, handwash and sanitizers.

As of 2^nd August, 2021, the firm had 22 plants located across 10 states in India, comprising 10 crushing units and 18 refineries. The refinery in Mundra is the one of the largest single location refineries in India with a designed capacity of 5,000 MT per day (Source: Technopak Report). As of March 31, 2021, Adani Wilmar had 5,566 distributors located in 28 states and eight union territories throughout India, catering to over 1.6 million retail outlets (Source: Technopak Report).