Adani Enterprises Contemplates Exit From $6 Bn Wilmar Joint Venture

Adani Wilmar, a significant player in the Indian food and beverage industry, is reportedly exploring the option of withdrawing from its consumer-staple joint venture valued at USD 6.17 billion with Wilmar International, as revealed a media report on Tuesday.

The scrutiny over the Adani-Wilmar partnership has intensified in recent months as the Adani conglomerate evaluates the possibility of divestment. Nonetheless, these discussions remain preliminary, and Adani Enterprises might ultimately decide to maintain its ownership share.

Should the sale proceed, there's a possibility that the Adani family could retain a minority stake, even while relinquishing control. Conversely, Wilmar International could opt to uphold its existing stake in the venture.

Requests for comments regarding the potential stake sale from Reuters have gone unanswered by Adani Enterprises, Wilmar, and Adani Wilmar.

Adani Wilmar is a multinational food and beverage conglomerate headquartered in Ahmedabad, Gujarat, resulting from a collaboration between the Adani Group and the Wilmar Group. Established in January 1999, the company has grown into one of India's largest Fast-Moving Consumer Goods (FMCG) enterprises. Its diverse product portfolio encompasses edible oils, rice, wheat flour, pulses, sugar, packaged foods, and other FMCG items. This conglomerate maintains a robust presence in both urban and rural markets across the nation.

With a workforce exceeding 20,000 employees, Adani Wilmar boasts an impressive production capacity of over 20 million tonnes per annum. Its operational network spans across 100 manufacturing plants, serving a vast customer base of approximately 100,000 distributors and retailers.

Adani Wilmar recently grappled with financial setbacks, evident from its reported loss in the first quarter. The decline in operational revenue by 12.2 per cent, totaling Rs 129.28 billion, was primarily attributed to a substantial 14.5 per cent drop in the edible oil segment. The industry essentials division also suffered, with a revenue decrease of 15.6 per cent, linked to notable price corrections in Oleo and Castor products. These financial outcomes led to a decline of up to 4.2 per cent in Adani Wilmar's share prices following the release of the results.

The broader context surrounding Adani Group's business landscape involves a decline in market value amounting to approximately USD 147 billion, prompted by concerns raised by U.S. short-seller Hindenburg Research earlier in the year. Hindenburg's report had raised questions about the conglomerate's corporate governance practices. Adani Group vehemently refuted the allegations, characterising the report as a malicious attempt to tarnish its reputation. In response, an Indian Supreme Court panel indicated an inability to definitively establish regulatory failure concerning allegations of price manipulation.

These developments signify potential shifts within the Adani Group's business dynamics, which could impact not only its joint venture but also its broader standing in the market.