Reports suggest that Kolkata-based conglomerate ITC is contemplating a return to the edible oil industry, sparking speculations about its interest in acquiring a significant stake in Adani Wilmar. This potential move marks a strategic shift for ITC, which divested its edible oil plant in Andhra Pradesh to Adani Wilmar around two decades ago.
Sources familiar with the matter indicate that ITC’s renewed interest in the sector stems from its growing focus on branded commodities. The company’s recent emphasis on branded commodities aligns with its strategy to bolster its presence in the food business. ITC, renowned for its diversified portfolio spanning cigarettes to fast-moving consumer goods (FMCG), has refrained from confirming or denying these speculations, as per an official spokesperson.
The Adani Group, however, remained unresponsive to inquiries regarding the purported stake sale in the Wilmar joint venture, underscoring the hushed negotiations and ongoing discussions within the sector. Recent indications suggest that the Adani Group aims to divest its nearly 44% stake in Adani Wilmar to redirect attention to its energy and infrastructure ventures. Media reports hint at ongoing talks with potential investors, hinting at a broader effort by the Adani Group to realign its focus across its varied business domains.
For ITC, the edible oil segment represents an opportunity for diversification within its FMCG arm, which has been a significant revenue driver, contributing nearly 83-84% to the company’s overall FMCG revenue in the fiscal year 2023.
Adani Wilmar stands as one of India’s leading refiners, boasting an impressive FY23 turnover of Rs 58,185 crore and a net profit of Rs 582 crore. Renowned for its Fortune brand of edible oils and food products, the joint venture serves over 113 million households, operating through 23 manufacturing plants and an extensive network of 5,700 distributors.
The Adani Group reportedly values its stake in the joint venture at around $2.5-3 billion (Rs 20,000-24,000 crore), engaging in discussions with various potential suitors, including multinational consumer goods firms, financial investors like GQG Partners and Qatar Investment Authority (QIA), and Wilmar among others.
The edible oil market in India features several prominent players such as Agro Tech Foods, Cargill India, Bunge India, Emami Agrotech, Marico, and Patanjali Foods, underlining the competitive landscape that both ITC and potential investors would navigate if a deal were to materialise.
