How Adani Wilmar's little-known deal may propel its international biz in FY22

The steady growth in domestic demand and prices may have boosted edible oil major Adani Wilmar's (AWL) fortunes in FY21. But its next phase of growth may well be fuelled by its little-known international ventures.

Last year, the largest edible oil company managed to grow its top-line by 25 per cent to Rs 37,090 crore backed by superior sales in the local market - thanks to the rising edible oil prices. It also raked in Rs 2,746.2 crore or close to 7.5 per cent of its total sales, from its exports business.

However, the calculated steps that it has taken since has the potential to grow the share of its international business significantly in coming years. And behind it all lies a single deal that may propel the company towards its overseas ambitions.

In June this year, AWL took full control of Adani Wilmar Pte. (AWPL) - a Singapore-headquartered group entity with a paid share capital of Rs 57 crore ($7.6 million). While the entity was under the Wilmar International’s maze of dozens of companies in the South-East Asia region since 2009, AWL’s latest move has resulted in a chain of incidences that now positions it as a noticeable player in the region.

AWL has hit many a bird with a single stone. Apart from having full control over AWPL, AWL now has access to bunch of other crucial subsidiaries that used to come under AWPL's umbrella. Take Leverian Holdings Pte that shares the same office as AWPL, for instance. Leverian is a full-owned subsidiary of AWPL, and consequently is now under AWL’s direct fold.

Apart from trading (imports and exports) of edible oil, Leverian also owns Bangladesh Edible Oil Ltd. (BEOL) - one of the largest edible oil players in the neighbouring country. The Dhaka-based entity markets popular brands like Rupchanda and Meizen, and sells 30,700 tonnes of palm oil every year. According a to recent report by Roundtable on Sustainable Palm Oil, “BEOL was established in 1993 and has since been aggressive in the marketing of consumer pack edible oil under the well-known household brands”.

According to Angshu Mallick, CEO & Managing Director, Adani Wilmar, the Bangladesh business may give it an additional Rs 2,000 crore revenue per year. “Overall, we expect to get 15-20 per cent of our revenue from international business”, he told Business Today.

BEOL is now marketing AWL’s flagship brands like Fortune (rice bran oil) and King’s (sunflower oil) in the market. Industry estimates suggest, edible oil market in Bangladesh is currently pegged at Rs 16,000 crore and is growing at an impressive 9.5 per cent CAGR (compound annual growth rate).

The AWPL acquisition does not limit AWL’s influence in Bangladesh and Singapore. BEOL's refines crude degummed soyabean oil and crude palmolein and distributes them in the local market. Additionally, it procures mustard, rice bran oil and rice for sale. But it also owns another Dhaka-headquartered company - Shun Shing Edible Oil that is involved in crude oil transport and oil processing services.

“Our company has acquired the entire equity share capital of AWPL on June 25, 2021 and, accordingly, AWPL, Leverian, Bangladesh Edible Oil and Shun Shing have become subsidiaries of our company (AWL)”, Adani Wilmar declared in its DRHP (draft red herring prospectus).

While the company declined to comment on the projected rise in its revenue from these acquisitions in FY22, the additional business and access to new territories is expected to give significant bump up to AWL’s overseas business. Industry estimates suggest these may grow the share of its international business to over 10 per cent of its sales by next year.

According to AWL’s management, the company is already “one of the largest exporters of castor oil and castor oil derivatives, and one of the largest exporters of oleochemicals in India. Currently, China is its largest export market. In FY21, AWL exported oil and oil derivates worth Rs 1,055 crore or 38.4 per cent of its overseas sales to China.

Further, it claimed to be a global company in castor oil and derivatives, and being the “only company with storage facilities outside India”. Currently, the firm has storage facilities in Rotterdam (Netherlands) for Northern European markets; in Marseille (France) and Meer (Belgium)
for Southern Europe.

In its spree to expand the global footprint, AWL “is currently exploring distribution opportunities in other major castor consuming nations”, it said.

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