Adani Group in talks to sell stake in Adani Wilmar, expected to focus on infrastructure

In a significant development, the Gautam Adani-led Adani Group is reportedly in advanced discussions to divest its entire 43.97 percent stake in Adani Wilmar Ltd., a major player in the food and consumer goods industry. This move comes as the conglomerate seeks to revamp its business strategy and concentrate more on infrastructure ventures.

The sale is expected to be concluded by December 2023. Adani Wilmar Ltd., known for its popular brands such as Fortune Oil and various packaged grocery products, has been a cornerstone of the Adani Group's diversified portfolio.

Adani Conglomerate aims to secure a substantial $2.5–3 billion from this stake sale, strengthening its financial position for future endeavors. The company has a keen intent to shift its focus towards infrastructure projects.

This strategic divestment decision follows a period of evaluation that gained momentum after the release of the Hindenburg report in January 2023.

This development comes at a time when Adani Wilmar Ltd. has faced financial challenges, posting consecutive losses for two consecutive quarters. In its most recent financial report, the company disclosed a consolidated net loss of Rs 130.73 crore for the July–September quarter. These losses have been attributed to the substantial impact on profitability in the cooking oil sector.

During the July–September period, the total income of Adani Wilmar plummeted to Rs 12,331.20 crore, down from Rs 14,209.20 crore in the corresponding period of the previous year. The company's total expenses during the second quarter of the fiscal year were Rs 12,439.45 crore, compared to Rs 14,149.62 crore in the year-ago period. However, the company did see a notable 11 percent increase in sales volume, reaching 1.46 million tonnes.

Adani Wilmar, Managing Director, and Chief Executive Officer, Angshu Mallick, remains optimistic about the company's future prospects. He stated that the abnormality in edible oils profitability had been impacted consecutively for the second quarter but believed it would soon reverse.

The company attributed the loss in profitability to challenges in the edible oil segment, which were partially offset by better margins in the Food & FMCG and industry essential segments. Adani Wilmar highlighted that the losses in the edible oil sector were primarily due to divergent trends in spot (physical) and future prices, resulting in hedging losses.

The impending sale of Adani Wilmar Ltd. signals a pivotal shift in the Adani Group's corporate strategy, reflecting its intent to streamline operations and reinforce its commitment to infrastructure ventures. The finalized deal is expected to reshape the landscape for both companies involved and will be closely monitored in the coming weeks.